Promoted as the biggest NFT event in history, here’s everything you need to know about Yuga Labs’ Otherside NFT mint — and why the Bored Ape Yacht Club creator is catching flak.
On Saturday, April 30, following the launch of Yuga Labs’ Otherside Web3 project, the Ethereum blockchain network crashed.
Yes, the whole thing.
Yuga Labs launched Otherside, a gamified metaverse in which users can turn their NFTs into playable characters, on Saturday at 9 p.m. ET with a mint for 55,000 “Otherdeeds” — virtual, tokenized land deeds required to claim space in Otherside. At mint, Otherdeeds sold for 305 ApeCoins per plot, and buyers were limited to purchasing only two plots per crypto wallet. The much-anticipated project from the creators of the Bored Ape Yacht Club NFT community brought in over $300 million from this initial mint event, and it has already witnessed another $300 million from resales on OpenSea.
But between the Ethereum network crash, the surging gas prices, and potential phishing scams, the NFT community has been vocalizing concerns about the project’s sustainability. Here’s a breakdown of what’s happening.
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Why did Ethereum crash?
Two days before the big launch, Yuga Labs announced that the Otherdeeds mint would no longer take place via dutch auction format; the company detailed its reasoning in a blog post titled “Dutch auctions are actually bullshit.” Instead, Yuga Labs sold Otherdeed NFTs for the flat rate of 305 ApeCoin and limited sales to two NFTs per Know Your Customer-approved wallet in an attempt to avoid gas wars and surging fees.
Unfortunately, the opposite happened since, technically, the Otherdeeds mint has been the largest NFT minting event in the industry’s history.
In the crypto world, gas refers to a transaction fee on the Ethereum blockchain. Developers have to pay this fee in the native crypto — in this case, ETH — to the network to use the system. While Otherdeed NFT holders paid for their virtual land in ApeCoin, gas fees still had to be paid in ether.
Because of the high demand for Otherdeed sales, a couple of events led to the Ethereum crash:
- Gas prices surged to the upper $5,000 range, CoinTelegraph reported, with a Reddit user noting fees that reached as high as $14,000.
- Over $200 million worth of ETH was lost to gas fees due to failed transactions. Yuga Labs tweeted that it would return these funds to anyone affected.
Notably, the surge in gas fees didn’t just affect people trying to purchase Otherdeeds; anyone making purchases on the Ethereum blockchain paid astronomical gas fees during this period. One Twitter user pointed out that some collectors paid $3,500 in gas fees for NFTs valued at $550.
Much like trying to purchase Beyoncé concert tickets on retail website, blockchain network transactions can fail when sale traffic is high. Ethereum transactions can also fail if users don’t have enough to cover the gas fees that were unpredictably rising by the second on Saturday.
This Twitter user thinks Yuga Labs could have reduced gas usage by roughly 60% to 70% per transaction by removing something written into its smart contracts that caused the price to skyrocket:
A community divided
Transparency is the name of the game in the NFT community, especially given that there have been so many rocky NFT collection launches in the last few months. While Yuga Labs explained, called for action from the ApeCoin DAO, and promised to reimburse users affected by the failed transactions, some community members don’t think that’s enough.
Several NFT holders alleged that Yuga Labs caused the uproar in gas prices to make a more significant profit, while other community members are concerned that being a retail investor in the Bored Ape NFT community isn’t feasible.
Meanwhile, some users are happy with their Otherside purchases:
Elsewhere, some supporters are showing loyalty and optimism in the BAYC community:
ApeCoin’s price
The Otherdeeds mint caused expected volatility in the cryptocurrency market, with ApeCoin catching most of the attention in the past week. Before the mint event on Saturday, ApeCoin traded for $27 per unit. Since Otherside sales began, the project’s native coin dropped to $17.74 and is now sitting at $14.66 as of this writing according to Coinbase.
ApeCoin prices skyrocketed before the Otherside mint because the sale was initially supposed to happen via a dutch auction. When Yuga Labs announced that it was changing those plans, ApeCoin’s price dropped because holders suddenly no longer needed to hoard the coin ahead of the minting event. The coin’s price rose a little after OpenSea began accepting ApeCoin on its platform last Friday before dropping again.
While Bitcoin and Ethereum are still trading lower than their usual prices, the price for these cryptocurrencies has risen by 1.8 percent since yesterday.
Phishing scams
Scammers mimicking Otherside websites stole $6.2 million worth of NFTs through a phishing scheme. The perpetrators lured people to fake Otherside webpages that required them to link their wallets. NFTevening reported that the scammers used three wallets linked together to carry out their schemes.
Fraudulent Otherside gas refund websites are popping up, too.
Staying vigilant out there.
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