Yahoo: How Yuga Labs’ NFT sale failed to put its community first

Yahoo: How Yuga Labs’ NFT sale failed to put its community first

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.

 

 

Original Source: https://finance.yahoo.com/news/yuga-labs-nft-sale-failed-030400730.html

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- “NFT: From Zero to Hero” and “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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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- “NFT: From Zero to Hero” and “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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Why Ownership is Vital to the NFT Community Following the Sale of CryptoPunks

Why Ownership is Vital to the NFT Community Following the Sale of CryptoPunks

When Yuga Labs, “the world’s premier NFT brand” and the creators of Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club, purchased the famous NFT collection, Crypto Punks, and Meebits, from Larva Labs, it appeared to be a ‘match made in heaven’. “Yuga Labs are the best in the world at what they do, and are the ideal stewards of the CryptoPunks and Meebits,” said the co-founders of Larva Labs, Matt Hall and John Watkinson, who created CryptoPunks: “In their hands, we are confident that they will continue to be vital, thriving projects in the emerging decentralized web.” Others in the CryptoPunk community aren’t so sure this is good news.

As DCinvestor pointed out, what’s to prevent Yuga Labs from selling the Crypto Punks IP to Apple or Disney at some point in the future? This difference of opinion neatly highlights a key tension currently in the web3 as a whole, between the passionate ownership rights of the NFT community and the drive by startups and VCs to secure their place in a multi-billion dollar market. Consider the words of Yuga Labs CEO Nicole Muniz, who is just as keen to allay the features of her BAYC community members: “We’re honored to take on the stewardship of these brands and the communities behind them and are very excited to build alongside CryptoPunks and Meebits holders as we step into this new world. That said, we want to make it abundantly clear to Yuga’s existing community that the BAYC ecosystem will always stay at the center of our universe.”

So, what’s the significance of the transfer of full commercial rights from the CryptoPunks NFT holders’ point of view? As Punk6529 explained on Laura Shin’s Unchained podcast the news was “bittersweet” for holders, as they got one thing they liked and one thing they didn’t like. The thing holders like was that CryptoPunk holders have the same commercial rights as BAYC holders, which represents “a substantive improvement in the rights of the punt holders” according to Punk6529. The part they didn’t like was having to be part of the same family of NFTs as Bored Apes: “The punks are the punks, right? The punks stand alone. The punks aren’t commercial guys trying to commercialize these things. And suddenly, it turns out that Larva Labs sold the rights to a very specific commercial entity, and this has caused a lot of discomfort.” And with that the worry that as part of a highly commercial entity there’s nothing to stop it being sold to a Facebook or Disney further down the road, he added.

In an interview with Corrales Cachola regarding the Yuga Labs purchase, a previous expert guest in the future of NFTs AMA hosted by BigONE, said he was worried about the purchase of CryptoPunks, and also concerned that there seemed to be so little concern within the NFT community. “The punks really represent; I mean they’re punks. They are the epitome of decentralized culture of anti-establishment anti trad art.” Cachola said it felt it was strange there was so little said within the punk’s community at the news. But maybe it was the power of the ApeCoin drop, which effectively silenced people, he suggested. As Punk6529 said in his interview with Laura Shin, “It’s one thing to be the counter cultural, crypto rebels. And it’s another thing to be the fourth collection in a conglomerate backed by venture capitalists that are going to be clearly commercial. It’s a different narrative.”

Clearly, these concerns are grounded in part by the positive price action caused by the sale on March 11 which also caused a spike in the floor price of Larva Labs-created NFTs like Meebits. A few days later, the $APE token, primarily aimed at BAYC and MAYC holders, was released, with BAYC holders receiving up to $100,000 in $APE tokens and MAYC holders receiving between $20 and $30,000 in $APE tokens. Upon its initial release, the $APE reached an all-time high of $39 before plummeting to its current price of $13. Although it is important to note that the $APE token has not been directly affiliated with Yuga Labs, but is rather created by ApeCoinDAO, an organizational unit governed by token holders. Indeed, the claim made is that it is neither a security nor run by Yuga Labs. That said it is not out of place to say there is some relationship with Yuga Labs, especially given the tokenomics of $APE in the whitepaper released by ApeCoin DAO, with Yuga receiving a significant cut of the entire $APE supply.

Finally, Yuga Labs also raised $450 million in a round led by venture capital firm a16z, bringing the company’s valuation to around $4 billion. Clearly Yuga Labs’ success with Bored Ape was not a one-time occurrence, and they have much larger goals in the crypto space. The metaverse concept, which has gained traction since Facebook changed its name to Meta, is at the heart of Yuga Labs’ plans. After completing its most recent funding round, Yuga Labs announced that it intends to use the majority of the funds to power its NFT-based gaming metaverse known as Otherside. According to BAYC co-founder Wylie Aronrow, the goal of Yuga Labs is to create an interoperable world that is gamified and completely decentralized. Yuga Labs’ position at the forefront of this movement would have a significant impact on the next bull run for cryptocurrencies and NFTs, no doubt a key reason for the level of VC funding.

The emergence of new types of web3 ownership

The current controversy over the purchase of Crypto Punks IP by Yuga Labs, which is currently reported to be in funding talks with A16z at $5B valuation, the role of VC investment in this space comes with both opportunities and risks, Lian observed. While Yuga Labs has now acquired a dominant position in the NFT market, and top VC interest along with that, there remains the challenge of keeping diverse communities onboard. I believe that the most powerful NFT projects have a deep motivation to build strong communities, which is not just a matter of saying you are community-led, but as with Yuga Labs by ensuring community ownership, said BigONE Chairman Anny Lian. “There is a lot of hype in the crypto market around DeFi and particularly NFTs right now. But one essential factor that sets the projects apart is the strength of their community. I think that community aspect needs to be clearly laid out when seeking VC investment,” Lian said.

While in the world of startups you traditionally started with a product or service and then sought to find and acquire customers in the DeFi and NFT world, these rules have changed. Indeed, during the ICO boom days when a white paper and a founding team with advisors was enough to gain funding, in 2022 that’s certainly no longer the case. While a strong project team is still essential, just as important is a clear vision of what the project is aiming to achieve together with real utility, said Lian. “There’s a lot of talk about projects being community-focused but what does that mean? It’s certainly true that building a community cannot just be based on a series of airdrops, otherwise the community will soon disappear once the incentives dry up. I believe there needs to be, along with an engaged community, a sense that the community has a real stake in the startup through its governance and its tokenomics,” Lian added.

 

Original Source: https://hackernoon.com/why-ownership-is-vital-to-the-nft-community-following-the-sale-of-cryptopunks

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- “NFT: From Zero to Hero” and “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