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The creator of the popular NFT games in the Bored Ape series raised approximately 285 million euros this month (€270 million). This was made possible by selling digital land, a quite popular and big contribution to creating the metaverse. The sale by Bored Ape led to a rush to buy land through the company Yuga Labs, which ultimately slowed down the entire Ethereum blockchain. Due to this, the price of ApeCoin (APE) fell by up to 11%. The company is popular for its Bored Ape Yacht Club NFT (non-fungible token) collection. This includes 10,000 computer-generated cartoon apes worth thousands of dollars. In March, the Bored Ape company received $450 million (€427 million) for the Otherside, a decentralized virtual world with a Bored Ape theme. Even though little is known about Yuga Labs' virtual world, fans rushed to purchase Otherdeeds NFTs. They believed they could exchange them for plots in its virtual land. There were only 55,000 "Otherdeeds" NFTs available for purchase, costing around $700. Investors can only use ApeCoin (APE), a Yuga Labs-created digital currency, to buy them. Because of the high demand, the Ethereum network experienced the most expensive transaction fees, also known as gas fees, in its history. According to a source, it was at this particular time that crypto investors paid more than 176 million dollars (167 million euros) in fees within 24 hours.
Why Was This Done?
On Twitter, Yuga Labs stated, "This was the largest NFT mint in history by several orders of magnitude. The gas used during the mint demonstrates that demand was far greater than anyone could have predicted. We regret that Ethereum will be unavailable for a short time." As a result, the Ethereum transaction tracker eventually failed, slowing down transactions on Ethereum-connected services. The main argument for DeFi is that it saves money by eliminating the middleman. However, this costly incident makes MANY wonder if Ethereum-to-NFT sales will work in the long run. In response to its apology tweet, Yuga Labs hinted that it might create its blockchain. [embed]https://twitter.com/yugalabs/status/1520612362986078208[/embed] The company also stated that it was working to reimburse all Otherdeed minters for their gas fees whose transactions failed.
What Is The Ethereum Gas Fee?
In Ethereum, the term gas describes a unit of measurement that refers to the amount of computational power needed to execute specific transactions and operations of the network. Every Ethereum transaction uses up computational resources. Furthermore, each transaction requires a fee to make one of these computational resources. Ethereum fees can only be paid in ether (ETH), the native crypto of Ethereum. Prices are denominated in a unit known as Gwei. 1 Gwei is equal to 0.000000001 ETH. Each transaction paid in this unit of account requires a gas limit. If the network is more congested, it is necessary to pay more gas fees to speed up the transaction. The gas limit is how much you are willing to spend on a maximum transaction. For example, you can use gas of 21,000 gwei for transactions between ethers. So, to calculate the price of gas, you have to see how many gwei you need and multiply it by the current price of ether.
Why Are Gas Fees High?
One of the biggest criticisms that Ethereum has is the gas fee that is necessary to pay in each transaction. That is why it is important to understand that gas rates rise overtime for two main reasons. These reasons are-
Ether Price
You can pay the Ethereum gas fee in its native crypto, ether. Unfortunately, the price of ether has increased by more than 10,000% in the last five years. When ether goes up in price, it also goes up in fiat or traditional currency, which is necessary to pay for transactions.
Network usage
The Ethereum network is becoming increasingly popular, not only because of the adoption that it has had and transactions you can make directly with it but because it is the base of thousands of decentralized applications (Dapps). Over 3,000 Dapps are on the Ethereum network, including thousands of NFTs and Play2Earn games. All these decentralized applications compete to include their transactions in each block. The greater the use, the greater the network congestion, and the greater the amount of gas paid to participate. Ethereum 2.0 seeks to make the network more scalable, thus solving part of the blockchain problems. When the network is more scalable, it will be able to process a higher volume of transactions faster, which would reduce the gas fee.
How to Reduce Gas Fees
The developers of Ethereum hoped that with the London Fork, the gas fees would decrease. However, to date, it has not happened. Furthermore, as individual users, they have little or no control over gas fees since the rate is determined by the current state of use of the network. Because the space of each block is limited, the more transactions made at a time, the greater the competition in the transactions of that block. This results in higher gas fees as users compete to confirm their transactions. That said, there are a few ways that we as users can try to reduce the gas fees that are paid:
Make Transactions on Weekends
In general, the gas fee is higher on weekdays and lower on weekends due to the natural use of the network.
Make Transactions After Midnight
Some applications and pages check the status of the network and gas rates. However, research has shown that the use of the network, and what you have to pay to use it is less between midnight and 4 in the morning, according to the New York time.