- Disastrous Mint Otherside Leaves Many People Paying Thousands of Dollars in Gas Fees and Receiving Nothing
- Yuga Labs refused to apologize, instead blaming Ethereum and citing the need to create its own blockchain to scale
- The whole episode encapsulates the growing centralization of wealth in NFTs, with the average investor being outrageously priced
- In many ways, the Yuga ecosystem appears to be the exact opposite of what crypto intends to be
What a circus this weekend turned into in the NFT world, and I don’t mean the good kind (are there any good kinds of circuses? They have always struck me as a bit cruel).
Yuga Labs, the company behind the Bored Ape Yacht Club, got their highly anticipated Otherside currency on Saturday night, for land purchases in their upcoming Metaverse game. The startup, which was worth $4 billion before this weekend, had a great weekend by any measure, raking in around $320 million from the Mint.
However, the lucrative windfall was the opposite of what transpired for most investors. Due to the colossal demand, Ethereum gas fees spiked into the four-figures, leaving many investors to stump up massive amounts of gas – and still not get land that they wanted.
Foreseeable problems
The problem, however, is that everyone knew it was coming. Yuga’s actions were incompetent, and it wasn’t just their egregious failure to optimize the contract. They also dropped the originally bullied Dutch auction, in a complete lack of transparency, and belatedly announced the mandatory purchase of ApeCoin.
Furthermore, they failed to prevent the mass farming of KYC wallets. Perhaps worst of all, they donated 15k to their investors, again amid a lack of transparency, which quashed the supply even more and spiked up the gas even higher. All this led to an entirely predictable gas war and many hopeful newbies losing thousands of dollars.
Although Yuga said he would refund petrol to those who failed in the deals, that doesn’t help the thousands of people who couldn’t get land – as the company refused to allow those who ran out of preference in any ensuing sale, a move seen by many. in the community as very unfair.
But the fallout runs deeper, unfortunately. $100 million in liquidity was sucked from the NFT space, as traders sold their assets in order to stack up on the colossal amount of ETH required to purchase a plot (and also pay for gas). Etherscan crashed with all the activity, and Solana also suffered an outage due to the cascading failure of the blockchain’s validators, following a flood of bot activity after the mint. NFT collections elsewhere on Solana and Ethereum also saw prices drop as traders sold en-masse to get the funds in their wallets for the mint – a mint which then preceded to exclude many.
Yuga fails to read the play
The lack of transparency, consideration and empathy on Yuga’s part was quite sad to see. Worse still, after remaining silent for much of the disaster, they posted the tone-deaf tweet below, showing that they have completely lost touch with the average investor. Refusing to apologize, they instead blamed Ethereum for the whole mess, saying they needed a chain of their own to pursue their grand ambitions of Web3 dominance.
Anybody remotely familiar with crypto could have predicted this in advance, however, and the real blame is on Yuga for failing to optimise the contract. Their solution now is to create some sort of “BSC-style”, centralised blockchain, and expand their empire and power even more in the space?
As a reminder, this company already owns the largest NFT project on the planet in Bored Apes, the intellectual property rights to the second largest collection of CryptoPunks and their own coin with a market cap of over $4 billion. Now they also want their own blockchain?
Ethereum has problems, I won’t deny that, but with the Merge coming they are at least working on it. Not to mention the size of the community and the sheer number of incredibly intelligent individuals working on it. What exactly have Bored Ape Yacht Club done for the community? What has Yuga Labs done?
Centralization of wealth
This is the latest episode that shows just how exclusive the NFT world is getting. What average investor can afford to shell out four figures in gas, plus the price of the actual land (which was 305 ApeCoin, worth $7,000 on Saturday) for the chance to enter the Yuga club? More and more, it is becoming a playground for the extremely wealthy, where wealth consolidation is getting dizzier by the day. Unfortunately, this is the exact opposite of what so many people love about crypto – a more democratic, fairer, and accessible monetary infrastructure.
Additionally, many traders bought Yuga’s ApeCoin in order to make the purchase. ApeCoin, you may remember, was airdropped to all holders of Bored Apes in March. 10,094 coins appeared in each holder’s wallet, which is equivalent to $150,000 at current prices. Of course, already owning an Ape, which currently has a floor price around $300,000, means those who got airdropped the ApeCoin were already doing “well”.
Not to mention that ApeCoin’s tokenomics are wildly disparate, with 15% of the bid going to Yuga Labs, 14% going to BAYC founders, 15% to early BAYC owners, and 8% who worked on the launch. of CAD. For those who count, this represents more than half of the offer.
This week’s Otherside mint was meant to finally be a route for “normies” to enter the ecosystem. Yet most were unable to do so due to the gas war, and more were further hurt by the fact that ApeCoin plummeted 40% after the mint issues. The bagholders there, of course, are those same normies who failed to convert that ApeCoin into what they wanted – Otherside land.
Anti Crypto
As I said above, crypto was meant to be a fairer system; a more accessible, open and democratic monetary environment. Tell me, what is right here? A browse on Twitter will see Ape holders lambasting those complaining about the Saturday mint for not having the guts or the means to pay the steep gas charges. HFSP, or NGMI, are the common acronyms for those who failed to secure a plot of land. I wonder how different their attitude would be if they hadn’t gotten their hands on an Ape before the price skyrocketed to where it is now.
As a diehard crypto fan, who spends half his time defending the industry to sceptics in trad-fi and beyond, it’s an upsetting day. It’s symbolic of one of the oft-criticised features of crypto – the centralisation of wealth. This was always meant to be the place for the underdog, where anybody could make themselves into a somebody.
Sign out
I will probably be seen as a disgruntled person; a normie who is sad not to have a piece of the BAYC empire. Honestly, that’s kinda true – I don’t own any part of Yuga, and I’m sad, but not for that reason. I’m sad because I love crypto and I love the opportunities it presents. What I’m seeing in Yuga right now is the opposite of what makes me so excited to be in this space; contrary to why I stopped my trad-fi job to take the plunge.
Sure, it would be nice to be in the Bored Ape Yacht Club for financial reasons. But right now, it’s more like a Bored Ape 1% Club.
I might stay poor, but at least I’ll have fun doing it.
