- Bored Ape Yacht Club's metaverse land sale pushed Ethereum gas fees to 100 or 200 times more than normal.
- Each piece of land in the Otherside metaverse costs around $5,800 APE, but the gas fees came to around $6,000.
- Try timing transactions for less-congested periods or using alternative networks to reduce gas costs.
Gas fees cost more than the Bored Ape Yacht Club land NFTs themselves.
Yuga Labs -- the company behind Bored Ape Yacht Club -- raised about $320 million in its metaverse land sale over the weekend. But there was a side effect to the largest ever non-fungible token (NFT) offering: Ethereum (ETH) gas fees reached thousands of dollars. According to Decrypt, gas fees were about 100 or 200 times higher than normal.
Paying thousands of dollars per transaction
Gas fees are essentially the cost of recording a transaction on the Ethereum blockchain, and they increase when the network is congested. Even in normal times, the fees can be prohibitively high, especially for small transactions.
Ethereum's hig gas fees are one reason a number of lower-cost alternatives have taken significant market share in recent years. Even so, Ethereum is the biggest smart contract crypto and hosts the lion's share of applications, especially decentralized finance apps. According to DeFi Llama, more than half the money tied up in blockchain applications is on Ethereum.
On Saturday, ApeCoin holders competed to buy so-called "Otherdeeds" -- parcels of land in Bored Ape Yacht Club's metaverse, Otherside. The frenzy pushed Ethereum gas fees to unprecedented levels. According to Bloomberg, each of the 55,000 NFT plots cost around $5,800 in ApeCoin (APE) plus gas fees. The cost of minting the Otherdeed NFTs came to around $6,000 per deed, more than the land itself.
The price spike impacted everybody trying to use the Ethereum network. If you'd wanted to, say, buy or sell crypto on an Ethereum-based decentralized exchange on Saturday night, you'd have faced eye-watering gas fees. One Twitter user complained of attempting a $5 transaction and being asked to pay over $4,500 in gas.
Yuga Labs apologizes
Yuga Labs tweeted, "We're sorry for turning off the lights on Ethereum for a while. It seems abundantly clear that ApeCoin will need to migrate to its own chain in order to properly scale."
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The company promised to refund money lost to failed transactions.
Yuga Labs attempted to avoid the spike in gas fees by limiting sales to two NFTs per wallet. However, some crypto experts point out it could have done a lot more. For example, Will Papper, co-founder of SyndicateDAO, tweeted that if it had implemented a few optimizations in the smart contracts, it could have saved $80 million in gas fees.
How to reduce gas fees
Cryptocurrency investors who stick to centralized crypto exchanges may not notice gas fees as much as those who live in the decentralized world. True, the fees on some crypto exchanges can feel unreasonable -- especially if you have to pay to deposit, trade, and withdraw your assets. But at least the fees are relatively standard and won't suddenly exceed $1,000 because of something a completely unrelated company is doing.
Gas fees really only come into play when you want to move your assets off a centralized platform -- for example to an external crypto wallet. However, if you begin to use, say, NFT marketplaces or decentralized finance products, gas fees can quickly add up. Paying thousands of dollars for a single transaction is extraordinary, but even "normal" fees can come to $50 or $100 per transaction. Given there can be several transactions involved in minting an NFT, investors ignore these fees at their peril.
Here are two key ways to reduce your gas fees:
- Wait until fees are lower. If the transaction isn't urgent, it is often possible to time your activity for when gas fees are low. There are even apps available to help track gas costs and pick the best times.
- Look for alternative blockchains. Ethereum fees are by far the most expensive, so check to see if you can use a cheaper blockchain. For example, Rarible NFT platform users can choose between Ethereum, Polygon (MATIC), Tezos (XTZ), and Flow (FLOW). Several DeFi apps now work on Avalanche (AVAX), Solana (SOL), Polygon, and others.
Ethereum gas fees will continue to plague the crypto industry until it completes its upgrade. Right now that's scheduled for 2023 but it may take longer. If you want to branch out and use decentralized finance apps or buy NFTs, make sure you factor in these additional costs.
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Emma Newbery owns Ethereum, Polygon, Tezos, Avalanche, and Solana.
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