GM frens,

It's been a crazy week in the Web3 world.

New records were set as Yuga Labs sold virtual land for a grand total of $335+ million dollars in ape coins, however, they simultaneously drained over $100 million USD from their community in the form of gas (transaction) fees.

In today’s edition of The Ground Floor we will be breaking down how this happened, and more importantly how this could have been avoided.

The $100 Million Dollar Mistake

Breaking down how Yuga labs cost their community over $100,000,000+

Remember the date 04/30/2022

Last Saturday was arguably the most important day in the history of Yuga Labs.

Humongous Hype

When we last spoke, the lowest priced NFT from any of the collections Yuga Labs has created was the Bored Ape Kennel Club priced at 12 ETH.

As such, when Yuga Labs announced their next NFT — plots of land in “The Otherside” there was no shortage of demand.

To ensure the maximum number of people had the opportunity to purchase one of these NFTs, and to avoid an all out gas war, Yuga Labs made the wise decision to have a fixed price and to allow people to make purchases in waves.

Good Intentions

To start, everyone would be able to mint 2 deeds in The Otherside.

Anyone interested in purchasing more would have the opportunity to purchase an additional 4 deeds in further waves until they minted out.

In theory this sounded like a very solid plan, however, in practice this plan fell apart faster than an egg falling on the floor.

For reasons we remain confused by, Yuga’s supply / demand model didn’t come close to accurately predicting the true level of demand they would experience relative to the available supply of 55,000 deeds.

Unfortunately for Yuga Labs, this mistake would cost them the means to remember this historic occasion in a positive light.

Profits Created Problems

Yuga Labs choose to conceal the number of wallets who were approved to participate in this mint, which prevented the public from forecasting their chances of being able to mint one of these 55,000 NFTs.

Nonetheless, based on Yuga Labs communication earlier in the day where they suggested people would have the opportunity to mint in both the first and second wave — the consensus was that everyone would have the opportunity to participate.

This did not turn out to be the case. Whether willingly, or unwillingly Yuga Labs created a situation whereby it was profitable for people to pay 2 ETH in gas (transaction) fees to mint NFTs from their new collection.

The Consequences

This error resulted in people collectively spending over $100 million in transaction fees alone to complete this mint.

Per the previous edition of The Ground Floor, Yuga Labs generated $165.63 million in revenue up until this point which means Yuga Labs left 60% of its total revenue to date on the table in the form of transaction fees to mint this single collection.

Worse yet, those who had the least — lost the most during this mint.

Unfortunately unless you had 2 ETH set aside to cover gas fees, then you were effectively locked out of participating in this mint which left well over 20,000 people sitting on the sidelines, watching as this mint took over 90 minutes to mint out.

The Alternative

Consumers deserve better than this.

To avoid making such expensive mistakes in the future projects can complete a raffle off chain to determine who’s allowed to mint.

This way, projects can ensure that the supply and demand for their NFTs is equal.

This eliminates the incentives for people to pay 2 ETH in gas fees as there remains very few reasons to rush minting if everyone knows how many they will receive.

3 things you need to know

1) STEPN - Move to Earn?

What if every step you took was worth something?

With STEPN, you earn tokens for walks, jogs or runs that can be then traded in for SOL or USDC.

The app has doubled its user base from March to April 2022 and has achieved Unicorn status.

Move over Play-to-earn, make room for Move-to-earn?

Building a great Play-to-earn is a difficult.

The tokenomics are hard to balance and make sustainable, and it requires a lot of time and money from users to become participants…usually.

But with STEPN, your daily activity of walking or running *is the game*.

That means it’s not time intensive.

Have STEPN solved one half of the ‘to earn’ puzzle?

2) Okay Bears are record breaking on Solana

These bears became the most traded NFT collection on Solana in a 24 hour period…

Opensea announced SOL integration on the 7th of April and this sell out and major success bodes well for the future of NFTs on the layer 1 solution.

Okay Bears are currently sitting at a 90 SOL floor price (~$8000) and 700,000 SOL (~$60m) worth of bears have been traded on the secondary market on OpenSea.

It remains to be see just how well SOL based NFTs will do in the future, but Okay Bears do seem to have a sticky community, the volume is strong and the art is clearly well liked.

Questions do have to be asked as to whether it matters in a multi chain future what chain NFTs are minted on, or whether specific chains will have to leverage their respective advantages over Ethereum to create more novel concepts.

3) RTFKT x Nike AR Genesis Hoodies…

In the future dressing your online avatar is going to be as important as dressing yourself.

In fact - for many people - their avatar and video game character skin is even more important.

Unlike Adidas who required NFT holders to burn their original NFT to claim a limited edition physical hoodie, Nike and RTFKT are giving holders the best of both.

Digital wearables are going to be big.

Earlier this year Fortnite made $50m from selling one set of NFL branded skins.

People care about what they look and feel like digitally.

Don’t sleep on wearables. 

Stunting will be happen in the metaverse.

Tweet of the week

We have seen dips but not bear markets.

When it comes it will probably be savage.

But NFTs are like a genie. They’re out of the bottle now and won’t come back.

So even if there is a lull, or a bear market - they’ve already most likely changed the trajectory of the future internet.

Community Update

Is early OpenSea verification alpha?

The Floor Discord’s #alpha channel is at it again this week.

Something Token - which is an NFT that plans to give early access and discounts to Americana marketplace this summer. The marketplace is set to turn collectible physical goods into NFT’s.

The Floor community caught on that the collection was verified on OpenSea with only 1 ETH traded. Normally OpenSea does not consider collections for verification until 100 ETH traded and must be “revealed”. Something token did not meet either of those requirements but had a blue checkmark nexts to its name.

Community members started to load up around .13 and to the community’s very pleasant surprise some woke up to a .77 floor in the AM.

News came out that Americana raised $6.9 million in seed funding led by Alexis Ohanian’s venture firm Seven Seven Six along with participation from OpenSea.

Floor Community Meetups

Last week the Floor community member James Hamlin organized a meetup in Sheffield, England where community members came together to chat about their favorite NFTs! Some members even travelled 2+ hours all the way from London to join!

Thanks for the read,

See you next time! — 0B1, Pet & Corwin.

This newsletter is for informational purposes only and does not constitute financial or business advice to any person or entity.