If you were trying to complete a transaction on the Ethereum network last night, you might have been surprised by the ridiculously high gas fees you saw.
For example, a user bought a $25 NFT on Saturday night. Their total price? $3,325. It’s $3,300 just in fees.
So what happened?
The Ethereum network charges a “gas fee” for every transaction on the blockchain. These fees are used to compensate Ethereum miners for verifying transactions on the blockchain. It is a central element of the operation of the platform.
Gas fees can vary widely as they are not based on individual transaction size, but on the number of transactions made on the Ethereum network at any given time.
If your transaction is being processed during a busy time, for example, you may find yourself paying hundreds in fees just to get the transaction completed.
Users can even pay a higher amount in fees to have their transaction pushed to the forefront to ensure it is processed.
Ethereum transactions can fail if a user does not pay enough gas fees. When this happens, not only does the transaction not go through, but the user is still charged the gas fee.
But last Saturday night, Yuga Labs’ well-known Bored Ape Yacht Club (BAYC) brand launched a brand new NFT project called Otherside. The project offered 100,000 “deeds” for “virtual land” in the form of NFTs. Original Bored Ape NFTs can cost hundreds of thousands of dollars. So, cryptocurrency investors have lined up to try and score at least one of the 100,000 NFTs in its latest round.
The result: A outmoded Ethereum network that skyrocketed fees to astronomical amounts.
For example, I checked the fee amount at 10:30 p.m. ET on Saturday night for a .eth blockchain domain name.
You may have seen Twitter users put these domain names in their Twitter account. They are basically a way to change your crypto wallet address from a string of numbers to something more memorable.
Each .eth domain costs $5 for a one-year registration plus associated gas fees. Sometimes these fees can reach $50. Other times a few hundred dollars.
Last night gas costs took a hit Single .eth domain registration over $4,666.
A cryptocurrency advocate noticed that from Bored Ape’s NFT sale alone, approximately $100 million was wasted in the first hour of the “land” sale on gas charges alone.
As mentioned earlier, transactions can often fail when the Ethereum network experiences unusually high traffic. And last night, many people paid thousands of dollars in gas fees for transactions that didn’t even go through.
Yuga Laboratories said it will refund those fees to users, but it’s unclear exactly how the company plans to do so. Also, Yuga Labs will apparently only cover the costs of failed transactions involving the company directly. If you are a user who was attempting an unlinked transaction, you can say goodbye to those thousands of lost fees.
Last night’s debacle is just another example of how cryptocurrency, NFTs, and really anything blockchain-related just aren’t ready for the mainstream.
However, there was at least one Saturday Night Sale winner: Yuga Labs. The owner of the Bored Ape Yacht Club brand raised $285 million from the NFT sale.