How the Otherside Mint Crashed the Ethereum Blockchain
Bored Apes Yacht Club creator, Yuga Labs launched its much-anticipated Otherside Metaverse project last night to an enthusiastic uptake with the company selling 55,000 Otherdeeds NFTs and raking in close to $320 million, an amount that later fell to $287 million following the retracing of ApeCoin which was valued at $19 at mint time. This represents the largest NFT offering to date.
Demand for Otherside was so massive that it had some ripple effects on the whole Ethereum blockchain by disrupting activity and causing a skyrocketing of the transaction fees or gas fees. Due to crazy demand for the Otherdeeds NFTs in the Otherside metaverse, there was a whopping $174 million in gas fees in just 3 hours, or an equivalent of $1 million per minute.
Within the first 1.5 hours of the Otherside launch, there were more than $100 million in gas fees, and up to 47% of gas fees on the Ethereum network during that time were related to the frenzied minting on other Otherside. Users found themselves paying crazily high gas fees and a lot of the transactions failed. Some users found themselves paying as much as $10,000 in gas fees to mint land on the Otherside.
The Otherside mint was open to holders of the ApeCoin token who had gone through the relevant KYC procedures and verified their identities. They had to jockey for a limited 55,000 parcels of land located in the Otherside by purchasing virtual land deeds known as Otherdeeds. Otherside is Yuga Labs latest metaverse and an extension of its Bored Apes Yacht Club (BAYC) but one that is said to transcend the BAYC and incorporate other metaverse ecosystems. Even before the launch, there was wide anticipation that this would be a massive launch and that the deeds would be sold out thanks to the social capital that Yuga Labs and BAYC wield in the NFT world. The anticipation drove up the price of ApeCoin in the run-up to the launch.
On Saturday night, the price of ApeCoin stood at $19 so every plot on the Otherside cost approximately $5,800. On top of this, buyers had to pay transaction costs or “gas fees” (for Ether) and these transaction costs spiked after the Otherside sale went live last night due to the heavy demand that the land sale attracted. The transaction fees spiked to such an extent that buyers needed 2 Ether or $6,000 to mint. This was more than the actual price of one Otherdeed.
The Yuga Labs virtual land sale precipitated one of the biggest spikes in Ethereum transaction fees. How did this happen?
To mint a token or to make a transaction on the Ethereum blockchain, traders or token creators must pay those ordering the transactions on the blockchain network. The transaction fees skyrocket whenever the network is congested and higher fees are, thus, required to prioritize transactions. In a landrush like the Otherside launch where so many transactions needed to be prioritized in the minting process, the fees simply spiraled out of control. This also had an adverse impact on other Ethereum-based apps and services that had nothing to do with the Otherside minting as the transactions on those other platforms were slowed down considerably as the network responded to the high demand from Otherside buyers.
Yuga Labs had originally planned for a Dutch Auction format where the price of the Otherdeed NFT would gradually go down so as to avoid network congestion and high transaction fees on the Ethereum blockchain. It later shelved that format in favor of a rollout plan that capped the number of Otherdeeds that a user could buy per wallet for every wave of sale. However, even this new format caused congestion on the network with Yuga Labs later issuing a Twitter apology for “turning off the lights on Ethereum” and going as far as suggesting the creation of an ApeCoin blockchain.
The ApeCoins that were generated on the launch night are to be locked up for one year. They will not be sold over that time duration, thereby reducing coin circulation. Yuga Labs didn’t reveal to whom the money generated on the Otherside land sale would go.
Yuga Labs sold 55,000 Otherdeeds on Saturday and another 45,000 Otherdeeds were allocated to those who hold the Mutant Ape and Bored Ape Yacht Club NFTs as well as to Yuga Labs and other project developers. Some 100,000 Otherdeeds will be awarded later to some Otherdeeds holders according to information on the Otherdeeds website.
Although the sales for the 55,000 Otherdeed NFTs were concluded on Saturday by midnight New York time, Yuga Labs delayed the process through which BAYC and MAYC holders will claim their free deeds so as to forestall the further spiking up of gas fees. However, the claims process was later reopened once the fees had settled.
ApeCoin wants to be a widely used token in web3 apps that use blockchains and digital coins. It should enable owners to access different kinds of services, events, games, and merchandise. ApeCoin is also a governance coin of the ApeCoin DAO. In the run-up to Otherside launch, OpenSea also announced that it would accept ApeCoin.
ApeCoin’s March launch was supported by various venture investors such as Animoca and Andreessen Horowitz and they were among the biggest ApeCoin recipients. The coin had been created as an “airdrop” where certain groups of holders will automatically receive 1 billion tokens as a reward. These crypto holders as well as the other launch partners got 140 million tokens or roughly 14%. ApeCoin’s price has been on the upswing in the run-up to the Otherside launch although the price fell by the double digits following the launch.
The massive buzz surrounding the Otherside launch is in sharp contrast to the general sluggish performance in the crypto markets this year. Bitcoin has been down 18% since the beginning of the year and the monthly sales on the NFT marketplace OpenSea have dropped from January highs.
There have been other metaverse land launches in the recent past but those involved only a small number of users and limited transactions. Decentraland has seen a 35% drop in the number of transactions over the past 30 days.
Yuga Labs has yet to unveil the release date of Otherside. The company released a trailer that shows an ape flushing out a bottle and drinking its contents to launch an adventure.