Speculators and quick flippers 3x their investment while gas fees in dollars peaked
Web3 company Yuga Labs has seen investors and enthusiasts pay some of the highest gas fees ever on Ethereum to get their hands on NFT land parcels in their upcoming virtual world Otherside. The community had anticipated the land sale for weeks, but Yuga Labs failed to deliver the 95,624 land parcels to the buyers smoothly.
The event most of the NFT and wider crypto industry patiently waited for is done and dusted. After a land sale for the Yuga Labs metaverse project, The Otherside, we’ve seen some of the highest gas fees ever paid on Ethereum. Buyers paid $6,000 per land parcel, while gas fees could potentially double that amount at the peak of the sale.
- 95,000 Otherside land NFTs sold for around $6000 each, netting around $600 million
- Ethereum gas fees reached an average of $474 per transaction on May 1st
- Gas fees in Gwei hit their 3rd highest point in the last five years
- Land floor price went from 2 to 6 ETH overnight
- Since May 1 price has come down from a high of 7 ETH to around 4 ETH
- ApeCoin dropped from a high of almost $26 on April 30 to $15.20 at writing
Otherside is perhaps the most significant launch from the company behind the now cult Bored Ape Yacht Club NFT collection. Land plots in The Otherside represented a low-value entry point to an otherwise walled garden for investors trying to join the exclusive club. Traders snapped up a limited supply of 95,000 Otherdeeds NFTs, representing titles to plots of land in the forthcoming virtual world experience.
Highest $ value gas fees ever
Yuga Labs didn’t expect that the sale went down to an auction format despite the NFTs being on sale for a fixed price. However, the auction wasn’t for NFTs; it was a battle between which buyers were willing to pay the highest gas fees.
Average fees hit nearly $500 on Ycharts on Saturday, May 1, surging from the average $40 seen lately. However, actual costs paid by buyers could be anywhere up 8000 gwei, or around $4,000 to make a transaction. Arguably this, alongside the need for buyers to KYC their wallets, probably stopped a lot of potential customers from getting involved.
From 2 to 7 ETH in 24 hours
Despite the high gas fees, flippers were active, and by May 2, the purchase price of a land plot on secondary markets had more than tripled from around 2 ETH to 7 ETH, or approximately $21,000. Even after paying $6,000 for the plot and, let’s say, a silly $3,000 gas fee, the profit for those that moved quickly was still worth the efforts, potentially bagging more than $10,000 in profit. Trading is still active on OpenSea, and Otherside land NFTs are changing hands for upto $100,000 at writing.
According to Ultrasound.Money, Otherdeed NFTs are responsible for more than 55,800 Ethereum being burnt at writing. That’s more than $165 million spent in gas fees on Otherside NFT lands so far. For comparison, OpenSea in the same time frame burnt around 7,000 Ethereum while MetaMask Swap hasn’t burnt that much in its entire existence.
ApeCoin takes a hit
Contrarily, after weeks of aggressive upward price action, ApeCoin suffered an expected price slide. This was caused mainly by the immediate sell pressure on ApeCoin as it was the sole currency used to purchase land plots in The Otherside. After building up to a high of almost $26 on April 29, it slid down to around $15 today. Nonetheless, those with an eye for detail and an understanding of market pressures could have made a tidy profit over the last two weeks.
The winner takes it all
Despite gas fee issues and the need for potential buyers to KYC their wallets, there is no debate the sale will go down as a massive win for Yuga Labs and BAYC. Essentially, Yuga Labs created an NFT collection based on current data with a market capitalization of $5.5 billion, eclipsing all other NFT collections. The organization, which recently raised $450 million from Andreessen Horowitz, has been on a roll of late, but while the sale was a clear win for the company, it could be described as less of a success for others.
The company issued a public apology in the wake of the gas fee-related chaos, stating that
“This has been the largest NFT mint in history by several multiples, yet the gas used during the mint shows that demand far exceeded anyone’s wildest expectations. We’re sorry for turning off the lights on Ethereum for a while.”
For those not interested in Otherside, BAYC, or Yuga Labs, everyday trading was severely affected by the NFT land sale. The cost of a simple transaction rose to $500, which except for the super-wealthy moving millions around, would be too much for an average trader that finds $50 already hard to stomach. Moreover, fees are still sky high, and until trading calms down, they will remain as such.
The gas issues throw yet more shade onto Ethereum as the network of choice, and its ability as a long-term platform to host large-scale NFT projects. Yuga Labs even teased building its own dedicated blockchain at the end of its apology thread: “It seems abundantly clear that ApeCoin will need to migrate to its own chain to scale properly. We’d like to encourage the DAO to start thinking in this direction.” However, that’s a decision for the ApeCoin DAO, which Yuga Labs has repeatedly reiterated it does not control.
What now for Yuga Labs?
After weeks of build-up and wild speculation, the big sale is over, and still, Otherside plot holders are none the clearer about what they hold. Yes, they have a very cool video trailer that would make anybody want to ape in, but what’s behind the curtain for Otherside will only become more evident over the coming weeks and months. Land comes in different types, and on those lands, enthusiasts can find different resources. Having a Koda character on your land adds value. Also, low mint numbers supposedly exist closer to the center of the game world, arguably increasing the land’s value.
One thing is abundantly clear. Yuga Labs has become one of the most important players in the entire crypto and NFT space. In the last six months, a few power moves have seen them shape up to be a powerful content, media, and IP company, capable of taking on household names and this recent sale only cements that further. Sure, they broke the Ethereum network, but that’s a badge of honor in many ways. Nonetheless, until they decide to reveal more information about Otherside, we suggest you watch the trailer.
The above does not constitute investment advice. The information given here is purely for informational purposes only. Please exercise due diligence and do your research. The writer holds positions in various cryptocurrencies, including BTC, ETH, and RADAR.