Not-So-Boring Ape Yacht Club: NFTs, Metaverse Land, and a Haywire Blockchain

Virtual Land Craze

The Bored Ape Yacht Club is a collection of NFTs or non fungible tokens that have been growing in popularity recently. Represented by images of cartoon apes, the company behind the NFTs is Yuga Labs. Yuga Labs sold virtual land deed NFTs this past weekend, which connect to its highly-anticipated metaverse project called Otherside.

Demand was so strong that Yuga Labs raised close to $320 million dollars selling these “Otherdeeds,” which are backed by Ether (ETH), a cryptocurrency sold along the Ethereum blockchain. After the digital plots went up for sale, the Ethereum blockchain became so congested it was more or less unusable. A record amount of the Ether crypto was destroyed, and people wasted thousands of dollars on failed transactions.

Gas Fees

Transactions costs, sometimes called “gas fees” with these types of sales, were a big culprit behind the chaos. As NFTs are minted, token creators or traders are charged a fee, which goes higher as activity increases. This affects apps that are based on Ethereum and slows down activity on the blockchain.

Yuga Labs originally planned to use a “Dutch Auction” method, in which the price of the NFT would fall as the network becomes more congested, to offset the rise in transaction fees. The company instead tried to put a cap on how many NFTs could be purchased per digital wallet, but that failed to control the crippling surge in user activity.

Possible Adjustments

After the gas fees had cooled down and the sale of the NFTs were settled, Yuga Labs went on Twitter and apologized for “turning off the light on Ethereum.” The company also hinted it may establish an ApeCoin (APE) blockchain, which highlights the surging demand behind these digital products. ApeCoin is not a part of Yuga Labs, but is associated with the Bored Ape Yacht Club.

Meanwhile, the strong demand for virtual land inside the metaverse is quite different from what’s been going on with cryptocurrency lately, as benchmark Bitcoin (BTC) is down 18% since the start of 2022. Proponents of the metaverse suggest it will eventually be a place where people interact, work, play, and buy products. Clearly, the land rush is already underway.

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