Over 71,000 ether were burned on Sunday amid demand for a new NFT project. But that did little to affect ether prices as the broader market traded flat.
ApeCoin (APE) prices slid as much as 11% on Monday in an otherwise flat crypto market after a much-awaited non-fungible token (NFT) project was sold for APE over the weekend.
Movement in other majors was mixed. XRP and Terra’s LUNA gained upward of 4%, while Solana’s SOL slid 1.2%. A dip in SOL followed a seven-hour network outrage on the Solana over the weekend as bots related to an NFT project spammed the network, causing temporary technical issues.
Investors in broader markets remained concerned about further rate hikes in the U.S., even as markets in Asia and Europe inched higher. Hong Kong’s Hang Seng finished 4% higher, while U.K.’s FTSE gained 0.47% so far. S&P500 and Nasdaq futures both lost as much as 0.38%, while crude oil prices fell 3.77%.
Record gas burn on Ethereum
A single NFT project contributed to a spike in gas prices on the Ethereum network over the weekend.
Virtual land on the “Otherside” metaverse, a part of the Bored Ape Yacht Club ecosystem built by Yuga Labs on Ethereum, went on sale for a fixed price of 305 apecoin, or over $7,000 at the time, late on Saturday to significant demand.
While the virtual land sold for a fixed price, the heavy demand pushed gas prices to several ether, running into thousands of dollars at one point. Some users claimed to pay upward of $9,000, to even $14,000, in fees. Gas prices returned to normal at the time of publication of this article on Monday, data shows.
Users paid over 71,000 ether – nearly $200 million at the time of publication as per CoinGecko – in gas fees trying to purchase land on Otherside. This is by far a record high for the network, surpassing a January peak of over 19,200 ether. The fees were burned, or destroyed permanently, effectively taking some $200 million in liquidity out of the market.
Demand for ether to pay gas did little to move overall prices over the weekend. Price charts show ether hit lows of $2,743 on Saturday night before jumping $100 on Sunday and then falling to the $2,800 mark at publication time.
Prices of APE, however, fell 11% in the past 24 hours to just over $15. The tokens and their futures were some of the most traded in the past week, attracting higher-than-usual volumes and liquidations.
The weekend’s price action meant some users lost money on both falling prices and failed mints.
“APE went down and people that wanted to purchase Otherdeed could not mint due to failed transactions on Ethereum, making them lose money on the two fronts,” shared Jolyon Horsfall, Co-CEO of NFT launchpad project SparkWorld, in an email to CoinDesk.
“[This] shows how inefficient it can be, which does not benefit the users that want to get access to NFTs and it might reduce the demand from NFT projects to utilize Ethereum as their network of choice,” he added.
Others seconded the sentiment. “High fees are a double sword for public blockchains,” said Nikos Kostopoulos, blockchain adviser at Netcompany-Intrasoft. “From one point, they validate the success of a project and indicate a growing user base willing to pay high fees to utilize the network, while on the other side [they] are becoming a reason for users to seek alternatives.”