Business

ETH gas price surges as Yuga Labs cashes in $300m from sale of Otherside NFTs

As the community witnessed the largest NFT coin to date, Ethereum (ETH) gas prices soared to unprecedented levels, in addition to users facing failed transactions due to blockchain bottlenecks.

Bored Ape Yacht Club creator Yuga Labs launched a sale of non-fungible Otherdeed tokens (NFTs), which represent digital land charters on their new venture, the Otherside metaverse. With every piece of land sale At 305 ApeCoin (APE) or almost $5,800 at the time of sale, Yuga Labs made $319 million after 55,000 NFTs sold out almost immediately.

While the Otherdeed NFTs could only be minted in APE, it also required ETH for gas fees. The minting mechanic set by Yuga Labs called for the sale of NFTs in phases while anticipating a temporary spike in gas prices, which would then slow down the number of users minting the NFTs:

“This pattern of Mint → Bump Limit → Mint → Bump Limit will continue until the NFT supply is exhausted. This approach is designed to prevent an apocalyptic gas war while encouraging the widest possible distribution.”

blank
Ethereum gas tracker. Source: Etherscan

The screenshot above was shared by Redditor u/jeux99 who shared his experience of high gas fees at the time and asked:

“Why is gas $450 right now??? I have seen high gas fees but never anything like this!”

As rightly pointed out by another Redditor, u/johnfintech, Etherscan data shows that numerous users paid between 2.6 ETH ($6500) and 5 ETH ($14000) in gas fees.

blank
Data on the largest contributors to gas fees. Source: Nansen

Citing some of the issues surrounding the use of ether during the NFT launch, Yuga Labs specified:

“We’re sorry to have turned off the lights on Ethereum for a while. It seems perfectly clear that ApeCoin needs to migrate to its own chain to properly scale.”

For those who lost their ETH holdings to Gas due to failed transactions, Yuga Labs has promised to refund the Gas amount to users.

Related: Vitalik Buterin proposes per-block calldata limit to reduce ETH gas costs

Ethereum’s infamous gas fees have long been a concern of the community due to the influx of ecosystems hosted on the blockchain, including NFTs.

In November 2021, Ethereum co-founder Vitalik Buterin proposed a new block-wide limit for total transactional call data to lower the overall transactional call data cost over the ETH network.

While the community welcomed the proposal, it took over four months to implement EIP-4488 on the Ethereum sidechain testnet on Geth. Community member Qi Zhou on April 27 confirmed plans to update the testnet within a month.