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The creator of the most recognizable NFTs is back in the news for the wrong reasons. Bored Ape Yacht Club creator Yuga Labs recently made its Otherdeed collection available for purchase. The company touted NFT as a way for users to get land in their upcoming cryptocurrency MMORPG. Unfortunately, many fans got only frustration, high transaction fees, and stolen funds instead.
Yuga Labs sold NFT Otherdeed through Opensea. The Collection was selling (or at least trying to sell) tokens to claim real estate and resources in the upcoming Yuga metaverse, Otherside. In just a few hours, NFT sales generated about $310 million.
Unfortunately for Yuga Labs, the sale generated much more traffic than expected on the Ethereum blockchain. The increase in traffic resulted in some users paying up to $14,000 for Ethereum gas, while others failed to go through. A gas fee is a fee given to users to offset the computational energy used to process transactions on Ethereum.
To make matters worse, some of those who experienced unsuccessful purchases were forced to pay the cost of energy anyway. Due to Otherside’s poorly designed smart contract code, users paid $165 million in gas fees at the time of the sale, according to Crypto Briefing.
Smart contracts are a feature of Ethereum’s ERC-20 token and the bread and butter of Ethereum-based applications. Contracts are small programs stored on the Ethereum blockchain that automatically execute at specific times. Contracts do not require input or action from a third party. Instead, they initiate actions between two organizations when all given criteria are met and the transaction is confirmed on the Ethereum network. In this case, poorly designed smart contracts and their vague execution criteria led to massive congestion and high transaction fees on the Ethereum network.
But what’s a good NFT story without scammers trying to get their share of the profits? In addition to technical issues and outrageous transaction fees, some NFT faucets have been recruited and taken advantage of by phishing attacks through scam sites offering gas refunds and additional NFT mining options. Many scammers required users to register and connect their wallets in order to receive a full gas refund and access the Otherside Lands lottery list, leaving their assets vulnerable to inadvertent access.
As a result of the attack, millions of dollars in NFTs were stolen and sent to scammers’ wallets. ZachXBT, a self-proclaimed crypto scam survivor and online transaction explorer, has exposed several fraudulent websites and wallet addresses, one of which apparently made over $5 million from unsuspecting users.
But it’s worth noting that Yuga Labs, behind the Bored Ape Yacht Club (BAYC) franchise, tweeted today that it “reimbursed gas fees to anyone who made a failed transaction” during Otherdeed’s chaotic pollock last weekend. According to Etherscan, Yuga Labs spent 90.57 ETH, or about $265,500, on the refund. The largest individual refund cost Yuga 2.6 ETH (approximately $7,500), while gas fees incurred by the company during the refund process amounted to approximately $780.
But, apparently, no one will reimburse the funds to those who have become victims of scammers, due to their inattention.
