If you ever wanted to purchase an Ethereum-based NFT, you would have to pay a transaction fee to register it on the blockchain. That cost skyrocketed last week. In this article, you will find out what are the reasons for that jump in the price of Ethereum transaction fees.
For each activity that must be recorded on the blockchain, Ethereum charges a price known as a gas fee. The term “gas” refers to the amount of energy required by a miner to validate transactions on the blockchain. The fee is dynamic, changing depending on the volume of transactions taking place on the blockchain at the time.
You can pay higher gas costs to process your transaction as soon as possible. However, as processing costs, you must pay the minimum gas fee at the moment, multiplied by the quantity of gas used in a specific transaction.
Last week the price of gas fees skyrocketed. Here are two possible reasons for that:
- Yugalabs NFT launch
- ENS domains demand
On Saturday night, Yuga Labs’ famous Bored Ape Yacht Club (BAYC) brand launched a fresh new NFT project called Otherside. The project provided 100,000 “deeds” in exchange for “virtual land” in the form of NFTs. The original Bored Ape NFTs may bring thousands of dollars. As a result, cryptocurrency investors hurried to try to grab at least one of the 100,000 NFTs in the latest series.
Nearly $100M has been spent on gas for the BAYC land sale in one hour. This is money that could have gone to Yuga or stayed in user's pockets.
The contract had nearly zero gas optimizations. I'll explain a few gas optimization tricks that could have saved many millions below 👇 pic.twitter.com/CsYvWdEQKc
— Will Papper ✺ (@WillPapper) May 1, 2022
Yuga Labs made $319 million when 55,000 NFTs sold out almost instantaneously, with each piece of land selling for 305 ApeCoin (APE), or nearly $5,800 at the time of sale.
While Otherdeed NFTs could only be issued in APE, they also required Ether (ETH) for gas fees. Yuga Labs’ minting mechanics anticipate the selling of NFTs in stages while anticipating a temporary increase in gas costs.
Ethereum is broken. I just spent $1,000 for a transaction. What happened!?
— twan (@dantwany) May 1, 2022
Response from Yuga Labs
Yuga Labs recognized that the mint had disappointed many people who were attempting to join the community. They also stated that it will refund gas expenses to users whose transactions did not go through. However, because this mint raised transaction prices across the Ethereum network, those who paid high gas fees for non-Otherside transactions now have nowhere to go. And the company refused to admit this.
Needless to say tonight didn't go how anyone wanted it to. I want to say sorry to the apes, and to everyone else who eagerly looked to join into the project. It’s especially a sour moment since Otherside has been a passion project for so long.🧵
— Garga.eth (@CryptoGarga) May 1, 2022
Yuga Labs blamed Ethereum’s limits indirectly and stated that ApeCoin, Yuga Labs’ own token, will require its own blockchain.
#Decentralization should never be used as an excuse for decisions of centralized venture-backed companies. “We’d like to encourage the DAO to start thinking”🤦🏻♂️ as if your DAO board is not made up of your VCs. Time to take responsibility, be accountable to the community @yugalabs https://t.co/VcsPSOXGka
— Lin Dai (@ThePointsDai) May 1, 2022
With its existing infrastructure, Ethereum can handle 15-45 transactions per second. When it moves to a proof-of-stake approach, it may become much quicker. But no one knows when that will happen. Yuga Labs can wait for this event and expect for smoother mints in the future. Instead, it can switch to another blockchain and ensure that the process of claiming NFTs does not leave a bad taste in people’s mouths.
While Yuga Labs’ initiatives are almost certain to raise a lot of money, the company must deal with scalability difficulties that might leave many people unhappy.
Bored Ape sets up a new record for the registration of the Ethereum domain
The Ethereum Name Service (ENS) is the Ethereum blockchain’s domain name supplier. The ENS is run by a DAO, or decentralized autonomous organization, which makes collective decisions using governance tokens. It was founded in 2017 and has close ties to the Ethereum Foundation. ENS names are domains that finish in “.eth.” Each one is an NFT that is created and sold like any other NFT, which is a unique blockchain-based token that represents ownership.
In the last week of April, 72,300 new domains were registered. That is a 187 percent increase over the previous week. Also in the previous week, Open Sea domains were resold on the Ethereum marketplace for more than 2438 ether (ETH), which is around USD 7 million. This represents a 2,827 percent increase over the previous week.
SOURCE: nonfungible.com
The collectible NFTs from the Bored Ape Yacht Club appears to be the driving force behind this increasing trend. These tokens are numbered, so each of the 10,000 in the collection has a four-digit number that identifies it. That amount, followed by the .eth domain, is what many are looking for in the ENS market right now.
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