Yuga Labs, the web3 company behind the Bored Ape Yacht Club, disrupted the entire Ethereum blockchain when a flood of users rushed to buy NFTs representing virtual plots of land in the upcoming metaverse project, across† A total of 55,000 Otherdeeds sold at a fixed price of 305 ApeCoin, or approximately $5,800 at the time of purchase (via CoinTelegraph), raising about $320 million in what was considered the “largest NFT coin in history”.
Otherdeeds are minted in BAYC’s native ApeCoin, but still need Ethereum for gas costs† A gas fee is the cost associated with a transaction on the Ethereum blockchain. Costs typically increase as the network becomes more congested as it becomes more work to process a transaction.
Such a large number of trades during the Otherdeed coin caused gas prices to skyrocket. As noted by CoinTelegraphReddit user u/johnfintech pointed out that some buyers were paying anywhere from 2.6 ETH ($6,500) to 5 ETH ($14,000) in gas costs alone — more than the cost of an Otherdeed NFT (and in some cases, more than double the cost). By the time the virtual land deeds sold out, buyers paid a total of about $123 million to transact on the Ethereum blockchain (via Bloomberg†
Yuga Labs apologized on Twitter shortly after the currency ended. “We’re sorry we turned off the lights on Ethereum for a while,” Yuga Labs said. “It seems obvious that ApeCoin will have to migrate to its own chain in order to scale properly. We want to encourage the DAO [decentralized autonomous organization] to start thinking in this direction.” The ApeCoin DAO, the entity responsible for making decisions within the ApeCoin community, exists separately from Yuga Labs. The DAO’s decisions are carried out by the board of the Ape Foundation, made up of Reddit co-founder Alexis Ohanian, Animoca co-founder Yat Siu, and others.
We’re sorry we turned off the lights on Ethereum for a while. It seems obvious that ApeCoin will have to migrate to its own chain in order to scale properly. We want to encourage the DAO to start thinking in this direction.— Yuga Labs (@yugalabs) May 1, 2022
The disruption slowed down transactions on Ethereum-linked services, such as Uniswap, and caused the Ethereum transaction tracker, Etherscan, to crash. A number by users also reported that he lost thousands of dollars in gas costs in failed transactions. Yuga Labs promised to refund users for the gas charges associated with failed transactions, but it is unclear what the refund process will look like. The edge contacted Yuga Labs with a request for comment, but didn’t hear back immediately.
As explained in a post days before the coin, Yuga Lab’s original goal was to prevent an “apocalyptic” gas war, or a sudden surge in gas prices due to high demand. It said it would do away with the popular Dutch auction style of minting, where an NFT is put up for sale at a certain ceiling price and then reduced incrementally over time. It instead used an alternate method, selling NFTs at a fixed price and opting to allow more mints gradually over time:
Instead of resorting to a fake Dutch auction, Otherdeed’s coin will use the following mechanism: the sale price will remain the same throughout its duration and at the start of the sale there will be an intentionally low limit per wallet on the number of NFTs that can be hit (note, this is not “struck at once”, but “struck in total”). Once the first wave of relatively low gas trades has been submitted and the network begins to calm down, the wallet-level coin limit will be increased to allow for a second wave of coins – those that are saturated will sit out this wave, while those who will cash in with more ApeCoin to spend.
The mess of a coin prompted some users to suggest ways to improve the process in the future. Will Papper, the co-founder of Syndicate DAO, a platform that allows users to create web3 investment clubs, suggested that Yuga Labs optimizes its contracts to reduce gas costs and adjust the coin mechanism.
Of course, gas optimizations are only part of the equation.
You need better coin mechanism design (admission list, Dutch auction) + gas optimizations.
Money spent on gas is money that can go to builders. This is done both through the coin design + the smart contract.— Will Papper ✺ (@WillPapper) May 1, 2022
In March, Yuga Labs raised $450 million in funding to across, a decentralized metaverse with elements of gamification. While it should include Yuga Lab’s NFT brands such as newly acquired CryptoPunks and Meebits, the company has goals to expand support for NFTs from other entities. Much is still unknown about the upcoming acrossbut that clearly doesn’t stop the enthusiastic community from investing in the project.