After much ado, Yuga Labs held its long-awaited digital land sale on Saturday evening – a public debut for its “Otherside” metaverse project. While the resulting land rush generated roughly $285 million for the company, it also created some of the highest gas fees in the history of the Ethereum network: investors have spent over $176 million on fees alone in the past 24 hours.
Otherside is the biggest product launch yet from the company best known for creating the Bored Ape Yacht Club NFT (non-fungible token) collection. During last night’s sale, traders snapped up a limited supply of 55,000 “Otherdeeds” NFTs, which represent titles to plots of virtual land in a forthcoming 3D social space.
They cost about $7000 each, and were only available for purchase in ApeCoin (APE), Yuga Labs’ official cryptocurrency. On secondary marketplaces like OpenSea, the cheapest listed price for an Otherdeed was around 7 ETH (roughly $19,000) at publication time.
The night was a win for the firm, which previously raised $450 million from venture capital giant Andreessen Horowitz, and a kind of slow-burning disaster for everyone else. (The Otherside raise was worth even more last night – around $320 million – but the value of APE has since fallen.)
The company issued a public apology in the wake of the fee-related chaos:
“This has been the largest NFT mint in history by several multiples, and yet the gas used during the mint shows that demand far exceeded anyone’s wildest expectations,” reads a statement posted to Twitter. “We're sorry for turning off the lights on Ethereum for a while.”
The statement also gestures at the idea of refunding traders' gas fees, though it's not yet clear what that process would look like.
The average fee for an Ethereum transaction typically scales with the overall congestion of the network; when traders scramble for the same tokens at the same time, prices go up for everyone. It’s a phenomenon known as a “gas war” – users compete to have their transactions processed at the top of the miners’ queue.
Per a bespoke calculator on the blockchain data site Dune Analytics, the average gas price was hovering around 800 Gwei early Sunday morning, with spikes in the realm of 6000 and 7000. During these waves, a simple transaction (say, sending a few dollars’ worth of crypto to a friend) could cost upwards of $3,000.
The expensive evening threw into question Ethereum’s long-term viability as a host for large-scale NFT projects; Yuga Labs even floated the idea of building its own dedicated blockchain at the end of its apology thread:
“It seems abundantly clear that ApeCoin will need to migrate to its own chain in order to properly scale. We'd like to encourage the DAO to start thinking in this direction.”
Of course, the firm has taken great pains to assert that it doesn't actually control the ApeCoin DAO – maybe it can donate some of last night’s windfall to the cause.