The Great Yuga Gas Wars
The release of Otherside land plots and its resultant exorbitant spikes in gas fees set a bad precedent for how web3 should function.
Yesterday, the team behind the Bored Apes, Yuga Labs, launched their sale for Otherside, a metaverse project in which participants can buy virtual land. Shortly after sales opened, gas costs on Ethereum spiked to the point basic transactions cost thousands of dollars. Over a hundred million dollars — $100M — was spent on gas fees in failed transactions alone. Simply put, it was a nightmare that ground the entire network to a halt for hours. For web3 to succeed, we must do better.
Yuga Labs was quick to decry the incident as proof that they needed to move their activities over to an ape-specific chain. At the risk of sounding conspiratorial, this feels manufactured. A better structured sales process and a more well-optimized smart contract — the on-chain code — could have prevented this problem. Though it is undoubtedly true much of the burgeoning Yuga metaverse ecosystem should move onto L2 chains of Ethereum to reduce transaction costs, they instead seem to want to have control over their own chain.
L2s — Layer 2s — are Ethereum’s future for serious scalability. The main chain can only process about 15 transactions per second. Though that equates to 54,000 transactions per hour, that is not nearly enough to support a global financial system. These blockchains use the same wallet system as Ethereum and can make use of “rollups” to use the main Ethereum L1 for security purposes while processing the transactions on these secondary chains. These provide a decentralized way to give the Ethereum ecosystem more bandwidth — assuming large players do not simply create their own chains, as Yuga seems wanting to do.
In 2019, Dapper Labs, behind the popular NBA Top Shot NFTs, created their own chain optimized for their unique needs: Flow. However, this chain is opened up for anyone to use how they wish, though it was an uphill battle to secure enough liquidity to make assets on the chain easy to cash out. Perhaps Yuga will go a similar route, inviting others to develop on the platform. However, the company increasingly seems most concerned with extracting as much money out of the web3 space as possible as quickly as possible.
While an inevitable business model in our global capitalist economy, it goes against the goals necessary to see that web3 and cryptocurrency see widespread adoption. Ethereum, while it is a reliable chain that carries a lot of prestige, is expensive to use even when not being bogged down by a scramble to mint digital land. To foster universal adoption, both transaction fees and the value of the currency itself must be fairly predictable.
Yuga’s launch has attracted its defenders, such as the man seen as the father of Ethereum itself: Vitalik Buterin. He argued that gas optimizations in the contract would simply just drive up gas costs further, as the true market value of the land during the mint was the maximum price people were willing to pay — gas inclusive. Even if the mints were to use less gas, those minting would pay more for that gas. While true, this ignores how different strategies for high-demand mints like dutch auctions or raffles have greatly reduced the gas price impact.
This is why the whole incident feels intentional. They have the resources. They could have, if they pleased, done the launch elegantly in terms of its impact to the chain. However, done this way, they can simply bemoan how obvious the need is for you to lock your assets up even more in an ecosystem more under their control. They are able to do so because they command so much influence in the NFT market that people assume everything they touch must turn to gold. But that trend will not last forever.
When writing contracts myself for projects with nowhere near the demand, I get gas down as low as I can in part to save my collectors money — but also to be a good neighbor. By optimizing mints, you make it easier for others to go about their business on-chain. In the case of the Otherside mint, it instead feels as if the neighborhood was trashed, and that was just used as justification to move somewhere else.
The problems facing web3, like many emerging technologies, are complex but solvable. We must work as the community of early adopters to help shape the ecosystem to ensure it is usable and appealing for normal, everyday commerce. This requires well-engineered code for smart contracts that directly use blockchain resources, thoughtful releases of high-demand projects, and construction of a cross-chain ecosystem that benefits the masses — not just the big players. If we build it, they will come.
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