Yuga Labs Otherdeed Mint: A Rant
Hello and welcome to MadeMeThink! Once a week I send out this newsletter with curated content, events and examples that have sparked my interest. It's a review of my last 7-days in Web3, NFTs and the Metaverse. Want to follow my thoughts on a daily basis? Then connect with me via Linkedin and Twitter. This article is also available in German.
This weekend, the most prominent startup in the NFT space, Yuga Labs, held a virtual land sale, named Otherdeed for Otherside. Yuga Labs raised $450 million in investment upfront from Andreessen Horowitz, at a valuation of 4 billion1. The sale of 55,000 virtual land parcels as NFTs raised about $310 million for Yuga.
I have been following Yuga's Otherdeed landmint from the front row. Tried to buy land myself, but unfortunately it didn't work out. Why? The Otherdeed mint (= the sale of the NFTs) was a pure disaster. Yuga Labs declared in advance that it would ensure that no "Gas War" would occur. A "Gas War" is a drastic increase in transaction fees on the Ethereum Blockchain, which is caused by many people simultaneously trying to execute their transaction in a time-sensitive environment and consequently being willing to pay more money for the transaction. I had 1 ETH (= about 2,600 euros) for the transaction fee in my wallet. However, that was not enough. Most transactions I saw were between 4,000 and 8,000 euros, just covering transaction fees! Therefore, this was a Gas War of unbelievable proportions. In total, 180 million USD were burned in Gas Fees (= transaction fees)2, unnecessarily. A simple lottery of KYC wallets registered for mint and a subsequent minting in waves with an optimized smart contract, would have been a simple solution to the problem.
The land NFT itself had to be purchased using Yugas own $APE token, which was something like 20 euros in the days leading up to Mint. A piece of land cost 305 $APE, which is about 6,000 euros depending on the exchange rate, in addition to transaction fees. The Otherdeed mint took place at 9pm ET. Here, Yuga paid no attention at all to finding a time that would fit reasonably well on other continents. It was Sunday 3am when the mint started in Central Europe. Yuga Labs was also careless with small details. For example, instead of displaying the mint time via Discord in each user's time zone, which is easily doable, they simply posted "9pm ET" and let the users themselves do that work instead, one of many customer service fails if you ask me…
It pains me to see how much GAS fees were burned on this mint. A lot of this money was drained from other NFT projects. In the last few weeks, we have seen many NFT projects take a hit as people unloaded their bags to build up liquidity for the Otherside mint. Many people who saw the Otherdeed Mint as an opportunity were left with a frustrating experience and high losses. The fact that Yuga is now replacing the gas fees for transactions that did not go through is good, but the big financial hit was probably when most people traded back their $Ape, whose price soared after the Mint and today stands at 14.60 euros.
The Otherdeed NFT floor price today is a good 12,000 euros. Rare Otherdeed NFTs, like the one below, have also been sold the days even at high prices, like in this case of 250 ETH, which is about 667,000 euros.
Disclaimer: The thoughts published in this publication are my personal opinions and should not be viewed as investment advice. I am not a financial expert. My specialty is entrepreneurship, innovation & marketing. Readers should always do their own research. I own various cryptocurrencies and NFTs, however in many cases it is for the sake of researching the field and gaining a deeper understanding of Web3, NFTs and the Metaverse and not for investment purposes.