Opinion Article on Forkast : How Yuga Labs’ NFT sale failed to put its community first

Opinion Article on Forkast : How Yuga Labs’ NFT sale failed to put its community first

The ‘virtual land’ sale that broke Ethereum was also a fiasco for buyers. Should Yuga Labs have seen it coming and taken preventative action?

The largest and perhaps most highly anticipated NFT sale so far this year took place recently when Yuga Labs launched their sale of virtual land to ApeCoin holders for around US$5,800 (the clearing price was set at 305 ApeCoin). The huge level of demand for the hugely popular Otherdeed NFT mint, which raised about US$320 million, created a two-fold problem for the Ethereum-based sale. Firstly, the steep rise in the volume of transactions led to a spike in the price of Ethereum gas fees, requiring people to spend around two ETH (approximately US$6,000) in fees to mint. Secondly, many of the participants in the sale, due to the bottleneck in demand, both missed out on the minting and lost their Ethereum in the process.

Such was the chaos that soon after the sale, Yuga Labs tweeted: “We are aware that some users had failed transactions due to the incredible demand being forced through Ethereum’s bottleneck.” While YugaLabs promised “we’ve got your back” and that they would be “refunding your gas,” there was considerable pushback from the NFT (non-fungible tokens) community. Considering the stature of the sale, it is worth examining what happened in greater detail to understand what this means both for the NFT market going forward, not to mention its implications for the ideal of the core importance of the Web 3.0 community to the future of NFTs and the metaverse.

After Yuga Labs acquired CryptoPunks earlier this year, which put the VC-backed company valued at US$4 billion in the spotlight, this latest event certainly raises the stakes. Yuga Labs admitted the scale of the minting event not only crashed Etherscan but also seriously impacted Ethereum. “It seems abundantly clear that ApeCoin will need to migrate to its own chain in order to properly scale. We’d like to encourage the DAO to start thinking in this direction,” they added. But clearly with all the resources at their disposal, the chaotic result only created more skepticism on crypto Twitter.

But before diving into the organizational aspects, the upset among NFT newbies should not be ignored when crypto is so keen to gain mass adoption. That upset was voiced by NFT influencer ap3father.eth, who pointed out that he’d brought many friends into the space for the drop: “My friends said things like, ‘who would ever use Ethereum?’ ‘NFTs are only for rich people’ … and to be honest I agreed with them … although my initial reactions were filled with emotion … I agreed … How was this going to prove we are ‘innovating.’” It’s worth noting that Yuga Labs raised around US$320 million through the minting, with 55,000 tokens sold out in under three hours.

The key problem is that it’s not only an issue with scaling the number of transactions but also the number of smart contracts (“trustless computation”) — an issue also faced by so-called Ethereum killers like Polygon, Avalanche and Solana. While these chains may boast of a fast transaction per second (TPS) performance, only a small percentage is available for smart contract operations. It is interesting that in the example from U.K.-based Radix DLT that they’ve done away with the EVM (Ethereum Virtual Machine) and instead built their own engine, which meant “a transaction is a transaction, it doesn’t matter if that is minting NFTs, swapping on DEXs or taking out a crypto loan,” tweeted Radix Works CEO Piers Rudyard in response to the Yuga Labs mint bottleneck and proposed scaling solutions. “That means that TPS performance and DeFi performance on Radix are basically the same thing,” Now, while I appreciate Rudyard is using this opportunity to plug his solution, the Yuga Labs mint controversy is also highlighting the significant blockchain bottleneck challenges ahead for mass adoption.

Putting that high-level critique of Ethereum smart contract functionality aside, using optimized smart contracts, such as ERC-721A, could have made the mint more equitable by reducing gas fees to the bare minimum. As Will Papper, co-founder of SyndicateDAO, tweeted: “Modifying a few words would have saved $80M+.”

Furthermore, limiting the number of KYC (know-your-customer)-approved wallets to only those required for the mint would have helped avoid gas wars and provided a positive minting experience for all parties involved. But for some, such as @DrNickA of FactoryDAO, this was missing the point because the fact that the number of NFTs outstripped KYC’d wallets was intentional. After all, Yuga had the KYC information in advance for all the prospective buyers, they could have created a whitelist to manage demand.

While Yuga Labs has since confirmed it would refund the fees for transactions that failed due to the problems, it’s clear that lessons need to be learned from its minting debacle. While the likes of Yuga’s VC backers, a16z, point to the core importance of “community ownership” to Web3, including NFTs and the metaverse, surely how that ownership is delivered is important?

Particularly coming so closely after its purchase of CryptoPunks, it’s worrying — and not helpful to the cause of mass adoption — when the leading NFT company is so careless with its community. It’s certainly my hope that ApeCoinDAO, which styles itself as independent of BAYC and community-led, lives up to its responsibilities and shows that Web3 is more than a business model for the metaverse, but also a way for people to engage in this new (virtual) world.

 

Original Source: https://forkast.news/how-yuga-labs-otherdeed-nft-mint-failed-put-community-first/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Anndy Lian’s article on Asia Franchise Magazine: Franchising- The Use of Blockchain Technology

Anndy Lian’s article on Asia Franchise Magazine: Franchising- The Use of Blockchain Technology

Anndy Lian wrote an article titled Franchising- The use of Blockchain Technology on Asia Franchise Magazine, April- June 2021 edition. This magazine is a bilingual magazine started by Albert Kong, Editor in Chief and veteran in the Franchising industry.

In this article, Anndy covered basic topics from what is blockchain and cryptocurrency to how companies can use this technology to help with their brand loyalty, payment and fundraising process. He went on to give a regulatory overview of cryptocurrencies

Lastly, Lian gave his advice on how to evaluate the need for blockchain for your business.

Evaluate the need for blockchain for your business

In the near future, you may receive many tempting grants for blockchain adoption. Consultants will often sell with a generic concept and a long list of alleged benefits.

But looking at the business environment, the first database-related question you need to ask yourself is “Do you need to store state?” If your answer is no, then you do not need to implement blockchain. If your answer is yes, then the second question you need to ask is “Are there multiple participants?” If your answer is no again, then you do not need blockchain.

Assuming, you need multiple participants, then the third question would be “Can you use an always online trusted third party?” And this time round, if your answer is no, then there is no need to use blockchain. If your answer is no, then there is a need to look at what kind of blockchain suits your environment.

“Are all the participants known?” is the next question you need to ask yourself. If the participants are not known, then you should consider permissionless blockchain. Permissionless blockchains are blockchains that require no permission to join and interact with. They are also known as public blockchains.
Most of the time, permissionless blockchain is ideal for running and managing digital currencies. If the participants are known, naturally you need to ask if all the participants are trusted. If they are all trusted, then blockchain is not needed.

Again, if the participants are not trusted and there is no need to have the public to verify, you should choose private permissioned blockchain. A private blockchain allows only selected entry of verified participants; the operator has the rights to override, edit, or delete the necessary entries on the blockchain.
A permissioned blockchain has properties of both private and public blockchains. If there is a need for the public to verify, then you should consider public permissioned blockchain.

A trusted consultant or company should walk through the process with your company and answer your doubts. The golden rule for companies is not to rush when you make any technology decision. This same theory works the same for the adoption of blockchain technology.

 

“Innovate your business with blockchain.
You will love the surprises that come with it.”

– Anndy Lian

 

You can read this issue at https://www.asiawidefranchise.com.sg/publications/. Alternatively, you can download it at this link.

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j