Yuga Labs: The Success and Chaos of the NFT Sale in the Metaverse – May 11, 2022 – Le Journal des Arts

In the short history of NFTs, this is a day in red letters. American startup Yuga Labs hit hard: on April 30, it happened “Tashkeel” (subject to specified conditions) and offered for sale a set of 55,000 NFTs “other works” Which brought him close to 303 million euros, the largest non-fungible token issue ever. In less than 24 hours, this trade generated a trading volume of more than 230 million euros in the secondary market, or nearly half a billion euros in total transactions. Numbers that make you dizzy, especially when you know that these NFTs correspond not to digital business but to parts of the earth in “the other side”the metaverse (or virtual world) developed by Yuga Labs.

The young company, valued at more than $4 billion (€3.8 billion) today, distinguished itself in 2021 by launching its chain boredom monkey yacht club, 1,000 NFTs correspond to the hugely successful cartoon monkey figurines. Since December, these tokens have become the most expensive coins on the market, collected by celebrities such as Neymar and Madonna, with a total value of about one billion euros. Enough to crown Yuga Labs as the undisputed leader in the crypto art sector.

From cryptography to the metaverse

“the other side”as presented by the startup, is supposed to expand the world of Bored Ape in the form of a multiplayer online role-playing game: so we can, if we have “other works”Claim ownership of a piece of land there and even bring your monkey to life as a playable character, if you have an NFT for a bored monkey.

The exact performance of this virtual world is not yet known, but its close presence is already giving the startup the means to establish itself as a pillar Web 3.0an internet that is no longer governed by large multinational corporations (Google and Facebook) but is governed by the decentralized technology of blockchain. As a reminder, this serves as a kind of record that contains the list of transactions that take place between users and ensures their security: this is what made it possible to develop NFTs, various metavers and, of course, cryptocurrencies. Yuga Labs has also launched a “ApeCoin”last March: with her, alone, you can buy “other works”.

Totally crowded platform

But every medal has its downside, and Yuga Labs has found itself a victim of its own success. The April 30 sale surely broke all records and will go down in history as a moment of great chaos in the world of NFT: on that day, transactions were so numerous that the monetary ecosystem through which NFT exchanges are conducted became crowded. and that blockchain became unusable for several hours; A record amount of cryptocurrency has been permanently destroyed; The price of ApeCoin collapsed late in the day and users were forced to spend thousands of dollars in transaction-related fees, some of which eventually failed.

The demand was already so high that gas fee, The fee paid per NFT transaction has gone up for all users, reaching prices between €6,000 and €13,000: double the initial cost of NFT “another act”It was launched in the morning at a price of 5500 euros. “I just paid $14,000 in fees to forge 4 Otherdeeds for Otherside. I will vomit now,” “Hustler,” a collector, testified on Twitter. Bloomberg calculated that more than €116 million was spent on April 30th in transaction fees alone.

“con man” They can still consider themselves lucky. Many buyers find themselves owing such costs without being able to recover them “other works”with transaction failures due to the saturated exchange system. “This was by far the largest NFT issuance in history and yet the transaction fees incurred show that demand has far exceeded even the toughest expectations,” Yuga Labs explains in an apology statement.

The startup has pledged to refund transaction fees to anyone who fails to get their tokens. “We are aware that some users have noticed that their transactions have failed due to unreasonable demand, Yuga Labs tweeted on the same day. For those affected, please know that we appreciate your desire to be a part of our journey – we are with you and we will pay you back. »

However, the consequences go beyond just selling “other works” On April 30th of this year, many buyers of NFTs unrelated to Yuga Labs’ products also saw their transaction fees rise and struggled to complete their exchanges. Cryptocurrency expert Molly White spotted several examples of NFT sales of less than €500 that resulted from fees of more than €2,000. Transaction fees, which increase with network congestion, have reached shocking levels.are comments.

Many people in the community “encrypt”Criticize the way the sale was made. Oxfoobar, a programmer for crypto lending firm Alchemix, says the increased transaction fees and their devastating effects on the ecosystem. blockchain It could have been avoided: The real reason for this price war is “over-recording.” This means that Yuga Labs would have intentionally had to pay more buyers in the sale than the sale could handle.

Others saw this sale as evidence that the crypto industry was not yet ready to provide services at scale: “We talk a lot about the promise of Web 3.0. But at these rates, any other sales mechanism generates 100 times lower fees.According to sector specialist Gergeli Oroch. If it is too expensive and unreliable to use, it is not yet ready for wider use. »

In the UK, NFT is recognized as private property

justice. The UK High Court of Justice decided in a ruling at the end of April that NFTs should be considered private property: in practice this means that victims of theft can seek, through legal action, to freeze the missing NFTs. If it is spotted in someone else’s crypto wallet. The decision comes amid frequent thefts in recent months, as hackers have developed increasingly sophisticated schemes to illegally seize highly valuable NFTs. Just before the sale on April 30, Yuga Labs saw itself as extracting nearly $3 million (€2.8 million) from NFT, including four “Bored Ape”, after its Instagram account was hacked. So far, victims of theft have had few remedies, given the decentralized and unregulated nature of the NFT market. So that has to change, in the UK at least. Which is not necessarily to the taste of all members of the “cypto” community associated with deregulation: This law contradicts the principle of decentralizationLaura Dorman, a programmer who has been investing in cryptocurrency since 2014, comments. You might think it’s your responsibility to know how to protect your NFTs, after all. »

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