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The company behind NFT collection Bored Ape Yacht Club (BAYC), Yuga Labs, netted north of $560 million in the first 24 hours of selling its Otherdeed NFTs over the weekend. BAYC launched the Otherdeed NFTs in a culmination towards its Otherside metaverse project.
The Otherside metaverse
BAYC, which launched as an NFT collection of Apes, debuted last year, and its collectable tokens have boomed in value, making the project one of the most lucrative NFT series. Recently Yuga Labs announced plans to launch its native metaverse – Otherside. This project would create a gamified decentralized world with multiple NFT collections in participation, where players could use their tokens as playable characters.
The metaverse would also include CryptoPunks, Meebits, and many other collections.
The project availed Otherdeed NFTs, which serve as title deeds to virtual pieces of land on Otherside. The Otherdeeds are available to Bored Ape and Mutant Ape holders.
An unprecedented scale of NFT buys sent fees through the roof
Yuga Labs organized the first drop of 55,000 Otherside NFTs last weekend. The drop was anticipated to attract high demand, and as part of the measures to contain it, eligible participants were determined by registration status on a website the firm provided a few months ago. The site required completion of KYC requirements with an exception of the rule for Mutant Ape and Bored Ape NFT owners.
The virtual land NFTs were planned for distribution in two waves (each 100,000 tokens) – the remaining 45,000 Otherdeeds of the first drop were reserved for members of the BAYC and MAYC. The second wave is planned to have another 100,000 Otherdeed NFTs.
The structure of the drop was such that buyers required both Ether (ETH) and ApeCoin (APE) to complete a token acquisition. ETH, which was used to pay gas fees, was the troublesome component of the drop. Yuga Labs had anticipated momentary bumps in gas price levels which would regulate minting of the NFTs. However, the NFT creator had approximated the probable demand wrongly, as users chasing the NFTs ended up spending astronomical gas fees with prices spiralling out of ordinary ranges.
How did this happen?
After launch, the mint blew up quickly, and the Ethereum network could not handle the competitive demand volume. With transaction incentivization spiking, the gas prices broke through the roof. The explosion of the drop was so much that the Etherscan tracker crashed.
Eventually, minters paid over $175 million, and given that Ethereum employs a deflationary protocol, most of the gas fees was taken off the network. This is simply to mean a huge chunk of the gas fees that could have been saved by chain efficiency is now simply gone!
To learn more about Ethereum visit our Investing in Ethereum guide.
Possibly an ApeCoin chain?
Making matters worse is that with such demand also comes congestion on the network. Given Ethereum's unimpressive throughput, a number of users ended up seeing failed transactions. The minters parted with gas fees worth multiples the value of the tokens they were minting, even though they couldn't complete the process of buying the NFTs.
Apologizing to the community for the big mishap that this token sale was, Yuga Labs explained that the massive size of the drop couldn't have been anticipated, and the curtails placed to manage sudden demand were not enough to contain the situation. Altogether, the BAYC creator committed to refunding gas fees to users who suffered failed transactions.
The recently funded firm ($450 million in seed money) confirmed that it is now apparent that it must exist on its chain into the future to scale its metaverse ambitions properly.
It remains to be seen how Yuga Labs will handle the second wave drop of the Otherdeed NFTs, which will now target specific Otherdeed holders.
Ethereum News: Buterin’s View on L2 Gas Fees, Ether Projected To Cross $5,700 By End Of The Year
Sam is a financial content specialist with a keen interest in the blockchain space. He has worked with several firms and media outlets in the Finance and Cybersecurity fields.