Less than two weeks ago, Yuga Labs, the creator of the BAYC (Bored Ape Yacht Club) collection of NFTs, released a set of 55,000 NFTs of future properties for the metaverse they are creating, Otherside.
In just a few hours, the company made $320 million selling the Ethereum-based NFTs of title deeds (virtual land deeds), which Yuga Labs calls “Othersdeeds.” Between primary and secondary sales, they have already generated more than $558 million, according to data offered by CryptoSlam, making Otherdeeds the leading collection
of NFTs in recent times. But the problem was not for YugaLabs, but for its community of buyers and all Ethereum network users in general.
Due to the high demand to buy the land, Ethereum became congested as it could not process so many transactions at once which made it virtually unusable for hours. In addition, due to the network’s own operation, a record amount of ETH was permanently destroyed.
Many users who tried to buy these securities were left spending thousands in fees for failed transactions; Due to this problem the price of ApeCoin, the cryptocurrency linked to the Bored Ape Yacht Club, plummeted. In addition, gas fees reached all-time highs, having to pay between 7000 and 14000 USD per transaction.
The creators of YugaLabs and BAYC stated on their social networks, “We regret turning off the lights on Ethereum for a while. We are aware that some users have failed transactions due to the incredible demand forced through the Ethereum bottleneck. For those affected, we will refund the cost of the GAS lost on the failed transactions.” Apologizing for the tremendous impact it had on the network and community, loss-wise. It is estimated that around $158 million in ETH was permanently destroyed.
Due to the way Ethereum is set up, a portion of each transaction fee is permanently burned or destroyed, diminishing the total supply of ETH. This event has hinted at the flaws Ethereum’s network currently has and how its validation model is a bottleneck.