$100M spent on ETH gas fees for $200M of NFT sales | Hacker News Reader

$100M spent on ETH gas fees for $200M of NFT sales

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70 pointsgregdoesit41 comments

ETH has the same problem as the current financial industry: too much momentum. It's crazy that even in the world of crypto, history just repeats itself.

Ethereum is a flawed chain, and just not suitable for global scale DeFi. But people continue building on it.

Even many Solidity devs refuse to move on to other chains. Maybe it's the sunk cost fallacy.

>Maybe it's the sunk cost fallacy.

It is 100% a sunk cost fallacy. Can't blame them, though, if you had 10-100M in virtual money, gimmick or not, would you let it go? Of course, not.

I wouldn't "let it go" but I would convert it into fiat as quickly as possible.

It doesn't convert, you sell it to the next rube. The cycle continues.

maybe people have such gains on ETH that they don't care the price of gas

That's unsustainable and short-sighted. Good point though, that can very well be the reason for lots of devs.

It's not difficult to cash out 8~9 digit sums though.

> Maybe it's the sunk cost fallacy.

Indeed it is. It is precisely a sunken cost fallacy for Ethereum holders and the chain itself to be useful for anything if one has to spend $150k in fees just to send $300, which is hilariously inefficient and has been so for years after promising for a reduction in fees since the problems first surfaced.

Like the creators of CryptoKittes which is one of the first NFT projects on Ethereum have complained about this and built their own blockchain, now the creators of Bored Ape Yacht Club (BAYC) has also realised that Ethereum cannot globally scale and are considering building their own blockchain.

Ethereum after all these years hasn't improved, and is still unsuitable for even for basic payments. Everyone was hyping for 'The Merge' to happen next month or so, but was delayed again.

Why would anyone tell businesses, clients and partners to 'Wait 7+ years for the bugs to be fixed and optimised first' only for it to be delayed again? They'll just give up and look elsewhere.

The current financial industry's momentum is just fine, because people make use of it every single day.

Crypto momentum OTOH seems crazy, not least because people appear to be cheerleading extortionate gas fees as the solution to avaricious banks charging $7/mo for a checking account.

As a dev, you build on mainnet because that’s where the liquidity is. Your project will get less trade volume on any other chain (even compared to an EVM compatible chain like polygon, where transaction times are faster and gas fees are lower.)

The story may be different on Solana but it’s not really my area of expertise. My guess is many ethereum devs haven’t moved to solana because of its lesser decentralization.

Anecdotally I know a lot of ethereum devs are excited about building on layer 2s like zksync / arbitrum but there’s a learning curve and relatively little liquidity there too

Who cares about the liquidity if most users in the world can't even afford it? And it's unsuitable for a large array of applications?

L2s are like a last-ditch effort. If they are the main scaling mechanism, the chain is done.

L2s are the PayPals etc that make "the internet" (cryptocurrency) useful for "the normies" (later adopters).

zkEVM and Starknet liquidity sharing between dozens of L2s is what will end up changing the game.

Letting people provide liquidity to each other, all individually transacting with a decentralized app, such as buying a Disney Princess NFT, or notorizing a deed to a property, or trading a gun on a first person shooter on GameStop's network.

> L2s are the PayPals etc that make "the internet" (cryptocurrency) useful for "the normies" (later adopters).

That's a lie people tell themselves to justify Ethereum's platform.

The reality is that I can build scalable L1 dapps on Algorand that "normal" users can use at extremely low cost.

The cost of having nobody else on the network your app is using is arguably pretty high.

That's a good argument if you're a short-sighted business looking for short term profits.

As a dev however, that sounds foolish to me.

Also, chains like Algorand or Cosmos don't have "nobody else on the network".

To the multiplier that is ETH numbers in comparison? Effectively nobody.

Exactly. This is admitting that Ethereum is not designed to scale at all for anything on-chain such that it needs half-baked "Layer 2" contraption like Polygon, zkEVM, zkSync, Optimism, etc to be remotely useful for people who are not millionaires wasting >$100k in fees to send $100.

Even so. If the service is not on a layer 2, then you have go through the bridging process of moving your ETH to and from layers which is more complicated than directly using a layer 1 blockchain.

These 'solutions' are telling everyone that Ethereum is never going to fix these issues and the duck-taped layer 2 contraptions are now making it even harder for 'normies' to just 'use it'.

It is designed to be secure at scale. Not much else is doing that over a long period, yet.

Which popular alternatives to ETH are /technically/ insecure according to you?

In the context of the tweet, it's not like we have a better alternative for "global scale DeFi" and not using it.

Looking at the top L1s, you either have centralized chain and thus no integrity (e.g. Solana), or chains that are cheap now just because of lower usage and lower token price (e.g. Fantom).

Algorand is promising and can scale.

And also, decentralization is not achieved by technology. It's achieved by adoption.

You're never gonna find a new chain with strong decentralization. You have the wrong premise. Strong decentralization is the goal of DLTs, and we should select DLTs that have the best conditions to get us to that point.

It helps if the backing organization has integrity, which the Algorand foundation has shown many times.

I'm not familiar with Algorand. Has it had any event that's similar in scale to what's mentioned in the tweet?

Every chain can scale until it can't. And then it's either high gas fees or centralization. If you solved this problem, adoption would not be your concern. But that's a tall order.

Algorand can process 40k TPS, with transaction finality below 4 seconds - all without forking under the consensus assumptions.

This capacity is more than enough to power the entire world's financial infrastructure. They are also working on state proofs and side chains, making it suitable for CBDCs.

> If you solved this problem, adoption would not be your concern

I disagree. Because for decentralized projects, adoption and success go hand in hand. It's a chicken and egg problem.

And even if the tech is superior, it doesn't influence decision making of normal people. They are influenced by tons of misinformation from grifters, scammers and even mainstream media.

In this space, solving the problem is not enough. We need to educate people as well, which is arguably the biggest challenge of modern society.

> Algorand can process 40k TPS, with transaction finality below 4 seconds

But how many has it done?

> ETH has the same problem as the current financial industry: too much momentum.

Please explain what momentum in the current financial industry is and why it's a problem.

Additional context on the waste: gas fees are not only charged to those who have successfully minted an NFT - so those paying ~$5,500 worth of ApeCoin for the NFT plus ~$2,000 - $6,000 worth of ETH for the gas fee.

If a mint is failed because of the wallet ran out of ETH, those people lose all their ETH and get nothing in return. An outlier, but this how this person lost $6,900 of ETH to get nothing in return [1]

[1] https://twitter.com/existentialenso/status/15205751405636649...

> this person lost $6,900 of ETH to get nothing in return [1]

Is that any different from people that pay $6,900 and get a worthless jpeg in return?

It's the difference between "transaction failed" and "transaction failed successfully"

No problem, just make an NFT of "The time I lost 6.9k in ETH" and sell that for 100 million.

I can safely say that for all of today you can flip that jpeg for more (beyond that hazy). No such exit liquidity for a failed transaction

Is there a better word than “stupid” to describe how this “sale” works?

For someone who only casually watches crypto, is it a full-on emperor has no clothes at this point, or is it actually providing real value and there's just a lot of FUD?

Users exchanged $100M for the ability to mint an NFT on Ethereum. We can argue about NFTs, but I'm confident these users felt like they received something of real value in return.

Nah even Vitalik calls it a scam these days

Could you source that? It’d be a great post to read.

Ironically the Ethereum ecosystem was providing real value before the gas fees got too damn high. It just got too expensive for many use cases to be feasible.

Well, it’s providing significant entertainment value; does that count?

Yuga Labs damaged their up-to-then perfect brand by failing this hard, so at least there is some recourse here.

My understanding is that the fees could have been avoided with a better contract but were not due to negligence.

So 300M gross sales and 100M in fees. That’s 30%. How is that any different than Apple’s cut of in-app transactions.

No one is claiming to replace visa and Mastercard with apple store transactions

No one is claiming to replace Visa and Mastercard with NFTs either.

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