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Bored Ape Yacht Club New NFT Collection crashed the Ethereum Blockchain

Author: Wenitte Apiou Date: June 10, 2022

Yuga Labs, the company behind the Bored Ape NFTs recently announced their newest project,  a forthcoming multiplayer game called Otherside. On April 30th, a sale of NFTs representing plots of land in the Otherside metaverse was listed for sale. While a grand total of 200,000 plots of virtual land will be available on Yuga Labs’ new Metaverse, only half will be openly available for anyone to purchase and the other half is reserved to be given out to the developing team. A total of 55,000 plots were sold, at a flat price of 305 ApeCoin, Yuga’s token. For context, 305 ApeCoin is about $8,500 at the time of writing.  Unfortunately, the Ethereum blockchain could not handle the rush of demand.

BAYC-Otherside-NFT-mint-Ethereum-crash

What’s The Significance of This Event?

Gas refers to the fee, or pricing value, required to successfully conduct a transaction or execute a contract on the Ethereum blockchain. The gas required for a transaction scales with the activity level on the chain. Due to the rush to purchase these NFTs, Ethereum was congested and gas fees were extremely high. Not only were gas fees high, some users even paid gas for failed transactions.  Because the number of would-be buyers was greater than the supply of Otherside NFTs, not every attempt was successful. Typically, failed transactions cost around $30, but because gas was so insanely high, failed transactions ended up costing some people up to $4,500 (1.6 ether).  Over $175 million was spent on gas alone. Ethereum’s blockchain has a deflationary protocol that burns most ether spent on gas — so much of that $175 million is now simply gone. Yuga Labs has made $600 million from this NFT mint.

Yuga Lab’s Response

Yuga Labs said in a Twitter statement that it would refund those failed transaction fees and that due to the dramatic failure of this event and the scalability constraints of the Ethereum blockchain, they are considering creating their own layer 0 blockchain network. Some argued that the fault isn’t with Ethereum, but with the way Yuga Labs set up the sale and the inefficiency of its smart contract.

Analysis

You might be asking yourself why these NFTs are worth so much? Similar to physical art, assessing the value of an NFT is not so straightforward. The hype of NFT projects is built through a combination of branding and utility. The previous success of the Bored Ape Yacht Club collection has driven “Fear of Missing Out” (or FOMO) with this new collection.  BAYCs are owned by high-profile individuals within the tech community such as Alexis Ohanian as well as celebrities like Justin Bieber. This has caused the NFT to be a sort of status symbol and many BAYCs have been resold for millions of dollars. Besides the status symbol, being an NFT holder provides some utility. These can take the form of being in-game characters, exclusive access passes, or in the case of Otherside, virtual land in the metaverse.

Otherside is Yuga Labs’ take on the metaverse, a large virtual world. Metaverses have existed for decades, with the Sims, Second Life, and Fortnite being examples. Blockchain proponents believe that cryptocurrencies and NFTs will revolutionize the space. The argument is that NFTs allow for true ownership of digital assets and cryptocurrencies are the best means to facilitate a digital economy. Metaverses like Sandbox and Decentraland allow players to create in-game items and own plots of land, on top of which they can do whatever they want, whether that’s building a house, using it for advertisements, or running a virtual business. The idea is that if these metaverses come to be inhabited by millions, the value of the land will also increase.

Bored Ape Yacht Club Simplified Timeline

Yuga Labs has big off-chain and on-chain plans for its Bored Ape Yacht Club brand. Here is the timeline of their achievements and the projections they already have in the pipeline.

  • The Bored Ape Yacht Club NFT project is made up of 10,000 distinct Bored Ape NFTs. The project was launched on April 23rd, 2021, for a mint price of 0.08 ETH, which was equivalent to $200 at the time. Bored Ape Yacht Club was sold out 12 hours after it began minting.
  • In only 9 months, Bored Ape Yacht Club rose to second place in total volume sold on Opensea, with 379,912 ETH totaling $1 billion in sales.
  • The Bored Ape Yacht Club has been featured on CNN and The New Yorker, and athletes such as Steph Curry, Dez Bryant, and Von Miller have acquired Apes to use as Twitter profile pictures. Celebrities like Jimmy Kimmel, Post Malone, Snoop Dogg, and others have aped into the Bored Ape Yacht Club. Eminem, who has 55.8 million Twitter followers, is using his Bored Ape as his Twitter profile picture, as is soccer superstar Neymar. Justin Bieber paid 500 ETH for a Bored Ape and uploaded the NFT on Instagram, where it garnered over 1.7 million likes.
  • Yuga Labs is collaborating on a trilogy of films with Coinbase, the biggest crypto exchange in the United States. The first will be available at NFT.NYC in June coincides with Coinbase’s much-anticipated NFT marketplace launch.
  • Yuga Labs secured $450 million in funding in March to build “Otherside”, a decentralized metaverse with gaming open world aspects. While it is intended to include Yuga Lab’s NFT brands, such as the recently acquired CryptoPunks and Meebits, the company hopes to encompass support to include NFTs from other entities. There is still a lot hidden about the Otherside, but that hasn’t stopped its enthusiastic community from investing in the project.

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