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.
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.
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.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.