Bored Ape Yacht Club’s NFTs clogged Ethereum’s Blockchain, and it does not bode well

The sale of the new project from the studio behind the very popular Bored Ape Yacht Club NFTs has succeeded in overloading the Ethereum blockchain. A worrying sign for the network on which more and more projects are being built.

Yuga Labs was best known for the Bored Ape Yacht Club, NFT’s collection of impressive popularity and soaring prices. But Yuga Labs may soon become known for something else: for almost breaking the Ethereum blockchain.

On the night between April 30 and May 1, 2022, Yuga Labs organized the first sale of their Otherdeeds, the NFTs, representing pieces of land from its future metavers, called Otherside, whose release the group is preparing. The 55,000 NFTs listed for sale on 305 ApeCoin ($ 5,800), the project’s cryptocurrency, sold out very quickly. So fast that the entire Ethereum blockchain on which the project is based was completely clogged.

Bore Ape Yacht Clubs metavers is named
Bore Ape Yacht Club’s metavers are called “The Otherside”. // Source: Yuga Labs

An “overloaded” blockchain

How can a blockchain that is not genuine be blocked? To explain how such a thing could happen, we need to understand the mechanism that blockchains use.

All blockchains share a few characteristics: it is roughly a decentralized register, that is, a notebook in which all the operations performed by users are registered. Anyone can consult the operations, anyone can access them, and to ensure that no one enters false information in this notebook, there are several solutions: the proof of the working protocol or the proof of the effort, which we discuss in more detail in this article.

Here, the question of protocol is not central, but it does matter to what interests us: the number of transactions per second that a blockchain can process. This number varies dramatically from network to network – and it is crucial for the future of blockchains.

Ethereum blockchain has been messed up.  // Source: Batyrkhan Shalgimbekov / Unsplash
Ethereum blockchain has been messed up. // Source: Batyrkhan Shalgimbekov / Unsplash

For example, bitcoin blockchain can only process 7 transactions per second because it takes 10 minutes to validate a block with its proof of work protocol. This is an extremely low number for a network that is used around the world and which has ambitions to grow. Ethereum faces a similar problem: the network can only validate up to 15 transactions per second. Only the Ethereum network is more and more saturated: more and more DAO (decentralized independent organizations, or decentralized autonomous organization, note) is built on its blockchain. And since the start of 2021, NFTs have messed up the blockchain even more.

To this must be added another peculiarity of Ethereum: gas costs (or gas fees English). These are fees that blockchain users have to pay, some of which go to the miners who run the network. The price of gas fees varies according to the speed of use of the blockchain: during peak periods, an operation will cost more to perform than when the network is less used.

What do Yuga Labs NFTs have to do with this?

The sale of the new Yuga Labs NFTs on April 30 has further strained the network. The Otherdeeds were especially awaited by the fans, who rushed to the 55,000 tokens on the market. According to CoinTelegraph, they were all sold out almost instantly for almost $ 5,800 / coin. The number of transactions recorded on the blockchain at this time peaked (but did not break the record).

The Otherdeeds, Yuga Labs' metaverse NTFs.  // Source: Yuga Labs / Open Sea
The Otherdeeds, Yuga Labs’ metaverse NTFs. // Source: Yuga Labs / Open Sea

That gas fees which at the time applied to the transactions were particularly high: Users are talking about gas charges between $ 6,500 and $ 14,000 to be paid in addition to the price of their NFT. During the few minutes that the sale lasted, more than $ 123 million was paid in gas fees. Breathtaking buzz that shows how strong the enthusiasm for the universe created by Yuga Labs is, but above all, how much the Ethereum network needs to change.

The creators of Ethereum designed the network to ultimately accommodate a large community and several projects. The number of transactions that blockchain has to process will only increase. And in order to achieve this, Ethereum must be able to process a larger number of transactions per second.

Ethereum needs to get faster

Proposals have already been made to answer these questions. The London update in August 2021 should thus solve the problem of fluctuations in gas fees by setting up basic fees, calculated according to a fixed and precise grid to avoid surprise costs. The Larva Labs story shows that the method is not enough. The other way forward by Ethereum developers is the transition to proof of action, an event that is highly anticipated by the community and known as ” The merger “.

The Ethereum logo.  // Source: Ethereum
The Ethereum logo. // Source: Ethereum

Only there is still no specific date for the change, which should normally take place in 2022, and the Merger has already been delayed. Vitalik Butterin, one of the co-founders of Ethereum, estimates that when the change to proof of action is made, the network will be able to accept 100,000 transactions per second – but at least 2 years after the protocol change.

While waiting for the transition to proof of effort and the increase in Ethereum’s capacity, others are taking advantage of it. Solana blockchain, which also hosts NFT and DAO projects and boasts very low gas charges, can already record up to 1500 transactions per second.

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