There's an old investing aphorism that goes something like this: "buy land, because God ain't making any more of it".
And while that still holds for the real estate market here on Earth, in the metaverse, it's a different story entirely. While the market for digital assets has been in rough shape lately (one only needs to glimpse the formerly high-flying market for NFTs to arrive at this conclusion), a weekend auction of "virtual land" sponsored by the creators of the Bored Ape Yacht Club - purveyors of one of the most widely hyped and most highly valued NFTs - raised about $320 million in crypto in what has been seen as the largest offering of its kind.
In fact, demand was so intense that activity related to the event caused ripple effects across the entire Ethereum blockchain, disrupting activity and causing transaction fees to soar, Bloomberg reports.
The 'virtual land' will feature in a new metaverse platform game called "Otherside" which is being developed by Yuge Labs, the creators of the BAYC.
Holders of the ApeCoin token who verified their identities jockeyed to buy deeds for 55,000 parcels of virtual land in Otherside, the project’s planned metaverse game and the latest extension of the Bored Ape franchise. Anticipation that interest would be strong for the plots - Ethereum-based NFTs called Otherdeeds - had pushed up the price of ApeCoin last week ahead of the sale.
Each plot cost about $6,000, and buyers paid in ApeCoin. For what it's worth, the project has the implicit backing of major venture capital funds like the fund formerly known as Andreessen Horowitz.
Each plot cost a buyer around $5,800 based on ApeCoin’s price of $19 as of Saturday, plus transaction costs, or “gas fees,” in Ether, which skyrocketed after the sale went live at 9 p.m. New York time as the land grab attracted heavy demand. Transaction costs just to mint Otherdeed NFTs after the launch reached $123 million, with each Otherdeed requiring about $6,000, or 2 Ether, in transaction fees to mint, according to data from Etherscan -- or more than the price of the deed itself.
Experts said that the sale led to one of the largest increases in gas fees in recent memory on the Ethereum blockchain.
"Yuga Labs' virtual land sale has triggered one of the highest spikes in transaction fees on Ethereum," said Jason Wu, founder of decentralized lending protocol DeFiner. "I have seen other NFT launches causing high gas fees, but this is definitely one of the highest."
In addition to the virtual land sold on Saturday, another 45K plots have been allocated to holders of BAYC and MA NFTs as well.
Besides the 55,000 Otherdeeds sold Saturday, another 45,000 were allocated to holders of Bored Ape Yacht Club and Mutant Ape NFTs, as well as Yuga Labs and other project developers, with another 100,000 of the tokens expected to be awarded later to certain Otherdeed holders, according to the Otherside website. While the 55,000 Otherdeed NFTs were sold out around midnight New York Time, the process for BAYC and MAYC holders to claim their free Otherdeeds was initially delayed to avoid sending gas fee even higher. That one-time claim eventually reopened for those NFT holders as gas fees settled.
ApeCoin is striving to become widely used in a variety of so-called web3 apps, using digital coins and blockchains. The idea is for owners to be able to access a variety of events, services, merchandise and games. It’s also the governance token of ApeCoin DAO, whose board includes Reddit Co-founder Alexis Ohanian, FTX’s Amy Wu and Animoca’s Siu. Ahead of the Otherdeed sale Saturday evening, OpenSea said it would accept ApeCoin.
For what its worth, the Otherside land sale is bucking a broader trend: for example, while many apps have sold virtual land for cryptocurrency before, most have seen only a small number of users and transactions. On Decentraland, for example, the number of transactions is down 35% in the last 30 days, according to data tracker DappRadar.