If you were trying to complete a transaction on the Ethereum network last night, you might have been taken aback by the ridiculously high gas fees you saw.
For example, one user purchased a $25 NFT on Saturday evening. Their total price? $3,325. That’s $3,300 just in fees.
So, what happened?
The Ethereum network charges “gas fees” for every transaction on the blockchain. These fees are used to compensate Ethereum miners for verifying transactions on the blockchain. It’s a central component to how the platform works.
Gas fees can greatly range as they’re not based on the size of the individual transaction, but on just how many transactions are being made on the Ethereum network at any given time.
If your transaction is being processed during a busy period, for example, you can find yourself paying hundreds in fees just for the transaction to go through.
Users can even pay a higher amount in fees so their transaction gets bumped to the front of the line to ensure it gets processed.
Ethereum transactions can fail if a user doesn’t pay enough in gas fees. When this happens, not only does the transaction not go though, but the user is still charged the gas fee.
But, this past Saturday night, the popular Bored Ape Yacht Club (BAYC) brand by Yuga Labs launched a brand new NFT project called Otherside. The project offered 100,000 “deeds” for “virtual land” in the form of NFTs. The original Bored Ape NFTs can go for hundreds of thousands of dollars. So, cryptocurrency investors lined up to try and score at least one of the 100,000 NFTs in its latest series.
The result: An overwhelmed Ethereum Network that caused fees to skyrocket to astronomically high amounts.
For example, I checked how much fees were 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 handle. They’re basically a way to change your crypto wallet address from a string of numbers into something more memorable.
Each .eth domain costs $5 for a one-year registration plus the associated gas fees. Sometimes, those fees can be as much as $50. Other times a couple hundred bucks.
Last night, the gas fees put a single .eth domain registration at more than $4,666.
One cryptocurrency advocate noticed that from just the Bored Ape’s NFT sale, approximately $100 million were wasted during the first hour of the “land” sale in gas fees alone.
As mentioned earlier, transactions can often fail when the Ethereum network is facing unusually high traffic. And last night, many people paid thousands in gas fees for transactions that didn’t even go through.
Yuga Labs says it will refund users those fees, but it’s unclear just how the company plans to do that. Also, Yuga Labs will ostensibly only cover the fees from failed transactions directly involving the company. If you’re a user who was attempting an unrelated transaction, you can say goodbye to those thousands in lost fees.
Last night’s debacle is just another example of how cryptocurrency, NFTs, and really everything related to the blockchain just isn’t ready for the mainstream.
However, there was at least one winner from the Saturday night sale: Yuga Labs. The owner of the Bored Ape Yacht Club brand raked in $285 million from the NFT sale.