Chart of The Day: Pain for Minters and Gains for Miners

Yuga Lab’s Otherdeed for Otherside had its mint over the past Sunday. While many users were elated to successfully mint their NFTs, others were left with a hole in their wallets.
The Otherdeed land sale was unprecedented in popularity and was likely the largest community to simultaneously compete and mint for an NFT project. This resulted in gas prices hitting as high as 79k Gwei from their low points of 25 Gwei on the same day. Otherdeed costed 305 APE per mint, but as gas prices spiked, users paid upwards of 2-3 ETH to front-run each other during the sale.
This front-running activity caused a lot of ETH to be burned. Over the seven-hour period shown in the chart, 68K ETH (~$190M) was burned, most of which was due to the Otherdeed sale.
Moreover, as the mints sold out, users started experiencing failed transactions that wasted the ETH they spent on gas totaling ~1.6k ETH. Fortunately, Yuga Labs will be refunding users that failed their transactions during the mint.
This sparked a discussion on Twitter that blamed Yuga Labs for not optimizing the minting contract which could’ve saved users millions in gas fees. Yuga Labs on the other hand think that migrating ApeCoin to its own chain could mitigate such issues in the future.
As a tip for users minting NFTs, one can consider using “Flashbots Protect RPC” for Ethereum as the failed transactions will not be included in blocks and hence users will not be charged gas fees for their transactions failing. Check here to learn how to add Flashbots RPC to your wallet.
For more on Ethereum, Delphi members can see our Delphi Pro Report about the upcoming Merge here.

Undervalued & Under Pressure

[Excerpt from Apr. 28th Market Insights]

Sentiment in crypto ebbs and flows like a tide rolling in and out. The last several months have been a mixed bag of “the bottom is in” to “the market has a one-way ticket to new lows”. One proxy to measure risk appetite is the ETHBTC pair, which has gone through multiple peaks and troughs over the last several months. Its latest mini topping pattern means we’re likely to see more consolidation for ETHBTC in the short run, though the trend is gradually moving up and to the right.
Looking at this chart prompts an interesting question though. At what point will we see ETH’s price decouple from BTC? And what will it take? Can all the bullish narratives surrounding ETH like the Merge and “ultrasound money” and its transition to a deflationary asset be enough to finally break the invisible chain that’s kept them tethered for so long?
We believe that day is coming, especially as the narratives driving them become increasingly disjointed. Productive assets have more appeal to a wider array of investors. That’s why we believe the interest in “post-Merge” ETH is only going to get stronger from here, especially as more people recognize the opportunity to earn higher real yields denominated in a deflationary asset.
The below excerpt from our latest report, Valuing Layer 1s, speaks to this concept in greater depth:
“Yield talks. It speaks loudest amidst the backdrop of fiat’s negative real (inflation-adjusted) yield. All else equal, investors want positive real yield (e.g., staked ETH) over deeply negative (e.g., US Treasuries). Denomination matters too…
- ETH staking – future cashflows are in a deflating currency in ETH (making the real yield even more attractive)
- US Treasuries – future cashflows will be inflated away by the time you receive them

For ETH, however, if you still denominate your returns in USD, then your dollar yield is exposed to ETH/USD volatility. If you denominate in ETH, you’ll happily stack your increasingly deflating asset. It’s a matter of perspective, and this is key – ETH needs to convince holders to denominate their investments in ETH (as we do in USD today). Emphasis on real yield here (as opposed to nominal).”

Early Summer Doldrums Loom Large

Common themes in our last two Market Insights posts have been volume and liquidity. Specifically, we have been discussing our observations around a decreasing volume environment coupled with a deteriorating liquidity situation. These discussions have included how markets actually move and function, and how market participants interact with each other and jockey for position within the market.
At a high level, capital continues to flow out of BTC markets as investors grapple with a murky macro backdrop and stagnant price action. But are there other factors contributing to this as well?

BTC futures volume shows a very similar picture to BTC spot volumes and on-chain transaction settlement volumes. The above chart takes into account two types of futures products; calendar expiry futures and perpetual futures. There has been a marked shift in futures regimes from calendar expiry to perpetual futures products. This is similar to the dynamic and regime shift from coin-margined futures contracts to stable-coin margined futures contracts over the last 10 months.
Futures volume has seen a significant decline over the last 8 to 12 months. Volumes measured during the bull market peaked at around $80Billion/day in notional value. We have seen these volumes continue to decline month-over-month. Current total futures volume is in the range of $30Bn/day notional value, marking a 55%-60% decrease from this time last year.
For more, Delphi members can see the latest Market Insights here.

Webaverse: Pioneering An Immersive, Open Source Metaverse Enabling Community-Built Worlds

[Excerpt from a Delphi Podcast]

In this episode, we sit down with Jin, Avaer, and Ahad from Webaverse, a fully open source and open license web metaverse. We discuss the ethos behind building on open standards, Upstreet, the MMO built on Webaverse, the NFT drop, and much more.
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For more, you can see our latest Delphi Podcast releases here.

Notable Tweets

Optimizing Otherdeed’s contracts

Nearly $100M has been spent on gas for the BAYC land sale in one hour. This is money that could have gone to Yuga or stayed in user’s pockets.

The contract had nearly zero gas optimizations. I’ll explain a few gas optimization tricks that could have saved many millions below 👇

—Will Papper ✺ (@WillPapper) May 1, 2022

Rainbow Bridge SAFU

🧵 on the Rainbow Bridge attack today.
TL;DR: attack was stopped automatically, no bridged funds lost, attacker lost some money, bridge architecture was designed to resist such attacks, additional measures to be taken to ensure the cost of an attack attempt is increased

—Alex Shevchenko 🇺🇦 (@AlexAuroraDev) May 2, 2022

Anchor Semi-Dynamic Rates Kicks In

Terra lending platform Anchor officially launched floating interest rates yesterday, and the interest rate this week was 18%, down 1.5% from last week. Reserves now total $209 million, a net outflow of about $30 million from last week.

— Wu Blockchain (@WuBlockchain) May 2, 2022