Through OpenSea, Yuga Lab sold Otherdeed NFTs. To claim resources and real estate in the upcoming Yuga metaverse game, Otherside, tokens were sold by the collection. Within a very short time, the NFT drop made about $310 million.
The sale, however, attracted more traffic on the Ethereum blockchain than expected, which was not a good sign for Yuga Labs. This exponential traffic on the blockchain resulted in an increased gas fee, up to $14,000 for some users, and even failed transactions for some other people. To compensate users for the computing energy involved in processing Ethereum transactions, charges known as “Gas fees” were passed to users.
During this period some users with failed transactions still got charged for the energy costs. As reported by Crypto Briefing, a sum of $165 million was paid by users due to Otherside’s poorly developed smart contract code in gas fees.
A feature of Ethereum’s ERC-20 is what is known as “small contracts.” The contracts, stored on the Ethereum blockchain, are automated as they execute at a specific time. It requires no third party. In place of a third party, a small contract starts up action between two parties when all the afore-stated criteria are met and the transaction has been confirmed across the Ethereum network. This then caused congestion and exorbitant transactions across the network.
NFT Scamming
Coupled with the technical issues, some users were enticed and defrauded through illegal sites offering gas refunds and some other minting opportunities. The scammers got the users to register and link their wallets for a gas refund, thus exposing their assets to harm.
Through the activities of the scammers, NFTs worth millions of dollars were stolen and funds diverted to the scammers’ wallets. A victim of the scammers’ activities known as ZachXBT and an investigator of on-site transactions have highlighted some sites and wallets to be for scammers, one of which has taken advantage of some users to earn about $5 million.
Yuga Lab, this week, stated that users who started transactions but had them fail due to the NTF’s minting network issues are now being paid their gas fees. While this move might help some investors, others still will not be able to regain what has been lost.
The recent attack is not the first of its kind. In April, the company had its social media accounts hacked and infiltrated with unhealthy links that also led to funds being lost. With the recent activities of scammers, it is important that users stay more guided in protecting their information and assets so as not to fall victim.
