Yuga Labs launched Otherside, the largest NFT collection ever, on 1 May 2022. The mint consumed $177m in transaction fees and congested the Ethereum network. We’re going to look at why this happened, and how it could have been avoided.
The economy is rife with transaction costs. Waiting on the phone for customer service is just one example. What is novel about Ethereum is that there is a transparent price for its transaction costs, which can become very high when there is congestion as you detail so clearly. NFT project designers like a certain degree of congestion to signal to the market their project is hot and is driving lots of demand. However, if they overshoot and create a massive logjam as Yuga did then they risk alienating demand. So far, the heat has trumped the alienation. However, at these prices, Yuga as just signaled to the world that there are riches to be had in minting metaverse land. They have just triggered a lot more supply.
The economy is rife with transaction costs. Waiting on the phone for customer service is just one example. What is novel about Ethereum is that there is a transparent price for its transaction costs, which can become very high when there is congestion as you detail so clearly. NFT project designers like a certain degree of congestion to signal to the market their project is hot and is driving lots of demand. However, if they overshoot and create a massive logjam as Yuga did then they risk alienating demand. So far, the heat has trumped the alienation. However, at these prices, Yuga as just signaled to the world that there are riches to be had in minting metaverse land. They have just triggered a lot more supply.