More than $157 million worth of Ether permanently destroyed, and 3 other things to know about the record Bored Ape Yacht Club metaverse land sale
It was a crazy weekend for the crypto community.
On Saturday, Yuga Labs, the creator of popular NFT collection Bored Ape Yacht Club, launched a sale of virtual land deeds for its yet-to-be released, highly anticipated metaverse project, Otherside.
Almost immediately, the company made $320 million selling the Ethereum-based, virtual land deed NFTs, which Yuga Labs calls “Otherdeeds.” Secondary sales have already surpassed $558 million since Saturday, according to data from NFT ranking site CryptoSlam, making Otherdeeds the top NFT collection in the last 30 days.
But although Yuga Labs did very well for itself, raising nine figures in days, chaos ensued for everyone else.
Ethereum became so congested with transactions that the blockchain was pretty much unusable for hours; a record amount of Ether was permanently destroyed; users were left spending thousands on fees on failed transactions; and the price of ApeCoin, the cryptocurrency linked to the Bored Ape Yacht Club, nosedived.
Here are the four most chaotic things to come out of Yuga Labs’ big sale.
Ethereum was overwhelmed
Once Yuga Labs listed its 55,000 NFT land deeds for sale on Saturday, the demand seemed to be too much for the Ethereum blockchain to handle.
The Ethereum network was congested, disrupted, and a bit overwhelmed, leading to a number of issues, including gas fees hitting record highs and transactions outright failing. Because of this, the blockchain was nearly unusable. CNET even said the Otherdeed sale “broke” Ethereum for a bit.
Yuga Labs apologized for the impact of its Otherdeeds sale on Ethereum over the weekend.
“We’re sorry for turning off the lights on Ethereum for a while,” the company tweeted on Saturday. “It seems abundantly clear that ApeCoin will need to migrate to its own chain in order to properly scale.”
Record-high gas fees
Gas fees, or transaction fees on the network, soared to record highs during the Otherdeed NFT sale over the weekend.
Users must pay gas fees as part of the price for any Ethereum transaction, including that of NFTs.
Some people trying to buy an Otherdeed NFT paid $6,500 to even $14,000 in gas fees alone, more than double the initial cost of an Otherdeed NFT itself, which was set at around $5,800 before skyrocketing late Saturday because of the value of ApeCoin.
Too many failed transactions
During the land grab frenzy on Saturday, Otherdeed NFT transactions also often failed, but users still had to pay gas fees that could total in the thousands.
Failed transactions, accompanied by thousands in gas fees, happened so often over the weekend that Yuga Labs promised to pay back those who were cut out of a deal.
“We are aware that some users had failed transactions due to the incredible demand being forced through Ethereum’s bottleneck,” Yuga Labs tweeted on Saturday. “For those of you affected, we appreciate your willingness to build alongside us—know that we’ve got your back and will be refunding your gas.”
But this network issue impacted the entire Ethereum ecosystem—not just Otherdeeds and Bored Apes. That means that users on Ethereum trying to conduct unrelated transactions were hit with record gas fees, and had difficulty trying to get those transactions to go through.
About $158 million worth of Ether was permanently destroyed
Due to the way Ethereum is set up, a part of each transaction fee is burned, or permanently destroyed, which declines the total Ether supply.
This is a result of Ethereum Improvement Proposal (EIP) 1559. Implemented last year, EIP 1559 created a new system under which transaction fees that were formerly all paid to miners were split into a base fee and a tip to the miner. Now the miner gets the tip, but the base fee is burned, or destroyed.
Because of the high volume from the Otherdeeds sale, more than 55,838 Ether, or about $158 million at current pricing, was burned in total.
This removes liquidity from the market and takes Ether away from users that could have spent on other assets.
In two hours after its launch, Otherdeeds was among the largest sources of Ether burned, ranking among OpenSea, the largest NFT marketplace, and Uniswap, an extremely popular decentralized cryptocurrency exchange.
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