A multibillion-dollar cryptocurrency company has apologized to consumers after its sale of “land of the metauniverse” sparked outrage that temporarily toppled the cryptocurrency Ethereum.
Yuga Labs, the company behind Bored Ape NFTs, a favorite of Jimmy Fallon and Paris Hilton, announced the sale of its latest tokens – representing plots of land in an upcoming multiplayer game called Otherside – on Sunday. A total of 55,000 plots were sold at a fixed price of 305 ApeCoin (a currency created by Yuga), which costs around £ 4,500 at current exchange rates.
Demand for the plots was so high that it overloaded Ethereum’s blockchain, a layer of infrastructure that all cryptocurrency projects rely on to operate. As consumers competed to be one of the lucky few to be able to provide Otherdeed, online transaction fees rose higher and higher, while a single purchase of NFT cost more than £ 2,500 in fees alone. One user who successfully provided two Otherdeed paid a transaction fee of over 5 ETH (£ 11,000) on £ 9,000 to purchase the land itself. Others lost thousands of pounds by failing to secure the tokens at all: if the user runs out of money while paying the transaction fees, the transaction fails, but the fees are not refundable.
For most of those who have provided the latest Yuga token, eye-irritating fees have paid off, at least in the short term: tokens sold for £ 4,500 are now being resold for more than £ 9,000. But people who were unlucky enough to try another cryptocurrency business at the same time made huge losses. Molly White, a cryptocurrency expert who runs a sector chronicle site, traced numerous examples during the day of NFT sales of less than £ 500 that were hit with transaction fees over £ 2,000.
$ 3,300 transaction fee for $ 25 NFT
(not a typo – they paid a transaction fee that was more than 100 times more than NFT) pic.twitter.com/mzNGMpAcGa
– Molly White (@ molly0xFFF) May 1, 2022
“Gas charges, which are rising due to network congestion, have risen to shocking levels,” White wrote. While most sales at OpenSea, NFT’s most popular market, were for Otherside, “some people strangely continued to buy and sell cheaper NFT,” she added.
A total of more than $ 100 million was spent on transaction fees for the purchase of Otherside NFT, while Yuga Labs took another $ 300 million in payments. When the sale was over, the company apologized for the chaos it caused. “We know that the Otherdeed Mint was unprecedented in size as a high-demand NFT collection, and that would bring unique challenges.
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“It was the largest mint of NFT in history several times, but still the gas used during the mint shows that demand far exceeds the most daring expectations of everyone. The scale of this mint was so large that Etherscan collapsed, “Yuga added, citing a cryptocurrency analysis website. “Sorry we turned off the Ethereum lights for a while.”
The company was already facing a crisis thanks to the sale of Otherdeed: a fake post on its hacked Instagram page announcing a free metaverse led to a phishing campaign that stole $ 3 million worth of NFT.
Some have argued that the consequences of such a relatively small sale are evidence that the cryptocurrency sector will struggle to scale to provide services to the mass market. “There is a lot of talk about the promise of web3. But at this speed, any sales mechanism outside of web3 works with ~ 100 times less wasted fees, “wrote Gergeli Oros, a prominent technology commentator. “If it’s too expensive to use or unreliable: it’s an alpha at best, not ready for mass use.”
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