Yuga Labs: Success and Chaos of a Meta Verse NFT Sale – May 11, 2022 – Le Journal des Arts

In the short history of the NFTs, this is a day of red letters. The American start-up Yuga Labs hit hard: on April 30, it hit “blacksmith” (according to the stipulated period) and put up for sale a set of 55,000 NFTs baptized “Other deeds” which brought him almost € 303 million, the largest non-fungible token issue ever. In less than 24 hours, these then generated a trading volume of more than 230 million euros in the secondary market, or almost half a billion euros in total transactions. Figures that make you dizzy, especially when you know that these NFTs do not correspond to digital works, but to parts of the country in “Other side”the metaverse (or virtual world) that Yuga Labs develops.

The young company, which today has a value of more than 4 billion dollars (3.8 billion euros), excelled in 2021 with the launch of its series Bored Ape Yacht Club, 1,000 NFTs equivalent to images of wildly successful cartoon monkeys. Since December, these have become the most expensive tokens on the market, collected by celebrities like Neymar or Madonna and worth a total of around 1 billion euros. Enough to crown Yuga Labs as the undisputed leader in the crypto art sector.

From crypto art to metaverse

“Other side”as presented by the startup, is supposed to expand the Bored Ape universe in the form of a massive multiplayer online role-playing game: we can therefore, if we have “Other deeds”claim ownership of a piece of land there, and even bring your monkey to life as a playable character if you have NFT from a Bored Monkey.

The exact function of this virtual world is not yet known, but its dense existence already allows the start-up to establish itself as one of the pillars of “Web 3.0”an internet no longer controlled by large multinationals (Google, Facebook), but by the decentralized technology of blockchain. As a reminder, this acts as a kind of register that contains the list of transactions performed between users and guarantees their security: this is what has enabled the development of NFTs, the various metavers and, of course, cryptocurrencies. . Yuga Labs has also launched its own, the “ApeCoin”last March: it is with her, and her alone, that you can buy yours “Other deeds”.

A totally overloaded platform

But each medal has its downside, and Yuga Labs found itself a victim of its own success. The sale on April 30 certainly broke all records, it will also go down in history as a moment of great chaos in the NFT world: that day the transactions were so numerous that the monetary ecosystem from which NFT exchanges take place has become overloaded and that blockchain has become useless for several hours; a record amount of cryptocurrency has been permanently destroyed; ApeCoin’s price plummeted late in the day, with users having to spend thousands of dollars on transaction fees, some of which ultimately failed.

Demand was actually so high that “gas fees”, the fees paid for each NFT transaction have risen sharply for all users, reaching prices between 6,000 and 13,000 euros: twice as much as the original price of an NFT; “Other things”launched in the morning for 5,500 euros. “I just paid $ 14,000 in fees to counterfeit 4 Otherdeeds for Otherside. I’m going to throw up now,” testified “Hustler,” a collector, on Twitter. Bloomberg estimated that more than 116 million euros were spent during the day on April 30 in transaction fees alone.

“Hustler” can still consider themselves lucky. Many buyers have been in debt for such costs without being able to recover theirs “Other deeds”with transactions that fail due to a saturated exchange ecosystem. “This was by far the largest NFT issue in history, and yet the accrued transaction fees show that demand far exceeded even the wildest forecasts,” explains Yuga Labs in an apology.

The startup has promised to refund transaction fees for anyone who could not get their tokens. “We are aware that some users have seen their transactions fail due to an incredible demand, Yuga Labs tweeted the same day. To those affected, know that we appreciate your willingness to be a part of our journey – we are with you and will reimburse your costs. »

However, the consequences go far beyond the mere sale of “Other deeds” : this April 30, many buyers of NFTs who have nothing to do with Yuga Labs products have also seen their transaction fees jump and struggled to complete their exchanges. Molly White, a cryptocurrency expert, discovered several examples of NFT sales with a value of less than 500 euros, generating fees of more than 2,000 euros. “Transaction fees rising with network congestion have reached shocking levels”she comments.

Many people in the community “crypto”, criticized the way the sale was conducted. “Oxfoobar,” a programmer working for cryptocurrency lending firm Alchemix, says rising transaction fees and their devastating impact on the ecosystem blockchain could have been avoided: “The real reason for this price war is ‘over-registration’.” That is, Yuga Labs would have deliberately pushed more buyers into the sale than the sale could handle.

Others saw this sale as proof that the cryptocurrency industry was not yet ready to offer large-scale services: “We talk a lot about the promise of Web 3.0. But with these rates, any other sales mechanism generates 100 times lower fees.says sector specialist Gergely Orosz. If it is too expensive to use and unreliable, it is not ready for wider use yet. »

In the United Kingdom, NFT was recognized as private property

Justice. The High Court of Justice of the United Kingdom ruled in a judgment handed down in late April that NFTs should be considered private property: this means in practice that victims of theft through lawsuits can apply for the freezing of their lost NFT ‘ is if they are detected in another person’s crypto-wallet. The decision comes amid repeated thefts in recent months as hackers have developed increasingly sophisticated schemes to illegally seize very valuable NFTs. Just before the sale on April 30, Yuga Labs saw itself extracting nearly $ 3 million (2.8 million euros) from NFTs, including four “Bored Ape”, after their Instagram account was hacked. Until now, victims of theft have had little recourse given the decentralized and unregulated nature of the NFT market. So that should change, at least in the UK. Which does not necessarily appeal to all members of the “Cypriot” society, linked to its deregulation: “This law goes against the principle of decentralizationcomments Laura Dorman, a programmer who has been investing in cryptocurrencies since 2014. You might think it’s your responsibility to learn how to protect your NFTs. »

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