No, Ethereum didn't "break", it worked exactly as designed.
No fees were "wasted". If people were willing to make a transaction knowing that this was going to be the cost, it is a reflection of people's time preferences.
Unfortunately HN is so vehemently anti-crypto that articles like this get upvoted regardless of the accuracy of their content.
I don’t like crypto either for many of the same reasons - most notably crypto’s horrendous environmental impact. But we need to stick to facts when we criticise crypto, and avoid mindless bandwagoning just because it’s currently the in thing to hate on all things crypto.
I will agree that the "broke Ethereum" rhetoric is stupid. It relies on elevating Yuga Lab's tweets to a level of credibility that they lost, their community should turn on them for deflecting responsibility.
But I would say that there are unintended consequences of Ethereum's EIP1559 burning. A lot of tokens sold off as people were positioning for this sale. In the past, this money would have been recirculated from miners back into these leading tokens and projects and economy. This time it hasn't really happened because it was burned. Ethereum hasn't "priced in" any scarcity based on this burning, its still swung by the general tech sector swinging. Not a fan of this outcome personally. But yes, I'm all for letting the burns continue, just want communities and projects to be more discerning.
This isn’t completely true. There are 2 types of gas fees - the first is the type you are discussing. The 2nd is the inherent fee of executing the smart contract. $100MM of the fees went to contract execution, over half of which could have been avoided with a more efficiently coded smart contract.
It completely destroys the mechanism of an auction. Especially an online auction
During an auction you always know the price and hence the bids are somewhat incremental. You can bid in 1$ increments or even lesser increments.
When the network is congested people put a fee on their transaction without knowing anything except that more = better.
It is a market failure. The time preference BS is something made up by "true believers" who think that "bad news is good news" because it supposedly supports the winner take all mindset that crypto enthusiast love.
Except when the winner is Ken Griffin, in that case we should stop playing , throw a tantrum and ask the refs for a redo lmao
'Code is law' must be the new 'the free market is always right'. The starting assumption is that any interaction that happens is a priori 'as designed' merely because it happened and we just reason back from there to justify any insanity.
"Besides high fees, the transaction load resulted in a bottleneck that resulted in failed transactions that people still had to pay fees for—now in the thousands of dollars for nothing in return, not even an NFT."
If someone designed Ethereum with this in mind I have to assume masochism is pretty high up on their list of design goals
> No, Ethereum didn't "break", it worked exactly as designed.
These aren't mutually exclusive. The design sucks.
> No fees were "wasted". If people were willing to make a transaction knowing that this was going to be the cost, it is a reflection of people's time preferences.
On the contrary, money spent over nothing but FOMO is absolutely wasted.
Another thing to consider is that, if it were real money*, the gas fees incurred by Otherside could have bought 6 million Covid vaccines. We ought to pause and raise at least some ethical questions, because even pro-crypto folks are saying this was money people knew they were burning.
* Lately I'm of the opinion that assigning USD amounts to large ETH amounts is overlooking how much of ETH is house money. The miners are mining ETH, rewarded in ETH, by people who already have ETH. It's monopoly money going in a circle and 64K ETH ≠ $180 million in any real sense.
Usurious and predatory loans also work as intended. The person signing the document knows what they are getting into it, and presumably have done the cost/benefit analysis.
Are we looking at the same thing? I'm seeing 6,000 sales just today, with an average price of 9.8 Eth [1]. That looks like a lot of buying and selling to me.
I'm an outsider to the whole NFT thing but I'm pretty sure you're misreading this.
I clicked the "on auction" filter and see 192 'parcels' or w/e for sale right now, the rest are listed on OpenSea but that doesn't imply that someone can buy them.
I pray that the inevitable nft/crypto bubble pop does not trickle into the rest of the economy. I’d love to believe the ape nft stuff is also mid 20s kids like me messing around, but I’d imagine there is a whole lot of institutional money fooling around with similar projects.
I figure NFTs are an attempt to materialize cryptocurrency so that it does trickle into the rest of the economy.
>I’d imagine there is a whole lot of institutional money fooling around with similar projects.
If it's your trashcoin/NFT/whatever, you're at the top of the pyramid no matter what. There's no downside in convincing people to contribute cold hard cash to your new soared-coin.
So it essentially means that Ethereum is unable to globally scale or to be usable for anything on-chain at all except for millionaires wasting (and losing) $10k - $100k in fees for silly JPEG images, otherwise why are these same Ethereum proponents complaining that it is a problem?
Regardless, Both Ethereum, and Solana were unusable on that day and as it stands are still unsuitable for anything 'high demand'.
Right, “burned” suggests it was destroyed. Instead this was paid to miners.
The service the miners are providing is auctioning off time-slots in the network. This is load-shedding in action; if you don’t think your transaction is worth the fee, wait until the network is less congested. (Sure, this is probably an indictment of Ethereum-as-currency, but I don’t think that’s a use-case that is seriously contemplated by most market participants right now.)
Also, it's not like Ethereum is a physical good that can be destroyed. It's just a bookkeeping tool and what happened is people trying to mint NFTs gave up their portion of the total supply in exchange for having their transactions go first. The "wasted" fees were in effect distributed equally to every other ETH in existence.
Did ~$200 million dollars worth of electricity & hardware depreciation get burnt as part of this land sale?
If so, I'd say that it's close to 'wasted', given that as I understand, the only thing of value that has been created is only useful for financial speculation.
We're paying people to dig ditches, and then fill them. Just because the ditchdiggers got paid doesn't mean their effort isn't wasted!
I don't really understand how a "$25 NFT with a $3300 transaction fee" can exist. Isn't that a $3325 NFT? The purchaser was willing to pay that.
It seems like the main difference is that the seller didn't receive what the purchaser was willing to pay, creating a rather unique dead-weight loss. Wouldn't it be better if the seller received the additional $3300?
The purchaser paid that fee to the protocol (miner + burn), not the seller, to have their transaction processed before others in the mempool and settle the trade in < ~30 sec. They could have set a smaller fee ($10-100) and gone for lunch, and their transaction would have been accepted within an hour or two.
This is most likely a UX issue. Users aren’t aware they can set normal fees even during congested periods.
>A Twitter thread by Molly White, creator of Web3 Is Going Great, documented how exorbitant fees affected people buying NFTs from different projects, often outstripping the underlying asset: a $3,500 fee for a $500 NFT, a $3,800 fee for a $270 NFT, a $3,950 transaction fee for a $260 NFT, and a $3,300 transaction fee for a $25 NFT were just some of the many ridiculous trades executed during the gas war caused by Otherdeed's NFT launch.
Instead of talking about these "gas fees" in terms of their monetary value, we should measure them in terms of tons of CO2, or perhaps its equivalent acres-of-the-Amazon-rainforest-lit-on-fire. I'm 100% serious.
All of this, over gifs, jpgs and fake land in a theoretically infinite digital universe that was probably procedurally generated anyway.
> Instead of talking about these "gas fees" in terms of their monetary value, we should measure them in terms of tons of CO2, or perhaps its equivalent acres-of-the-Amazon-rainforest-lit-on-fire. I'm 100% serious.
That's.. not how this works. The miner receives a block reward which is a combination of a fixed reward (2 ETH right now) + tips from people trying to get their transaction (typically ~0.2 ETH) [0]. The rest of the transaction fees are burned by the network.
In effect this means that miners are motivated to mine (and hence use CO2) based upon the block rewards. During periods of high network usage, they aren't magically procurring more miners, and hence they aren't actually using more electricity. And since the vast majority of the reward is burnt anyways, during high periods of usage, the miner reward doesn't actually go up that much.
Regardless of all of that, Ethereum will be on proof of stake within a year (wouldn't be surprised if it's 3 or 4 months at this point), at which point the CO2 argument will go away altogether).
I'm not a fan of Yuga or "land" sales on blockchains, but this argument comes out every time there is something even tangentially related to proof of work blockchains. There is not a significant marginal expenditure of electricity per nft minted or transferred. The same order of magnitude of energy is expended to ensure the security of the blockchain whether a large NFT mint happens or not so long as the blockchain exists.
What really happened here was that the company that launched this did it in a way that congested the ethereum network and an auction essentially occurred in "gas" to use the network for this purpose for a couple hours. Instead, the company should have pre-allocated guaranteed minting on a lottery basis so it didn't devolve into a "gas" auction or, increased supply to match demand, which they knew in advance (like you said, limits here are artificial).
The best way to get people to care about carbon emissions as a cost is to tax carbon emissions. But unfortunately, we live in a world where increasing gas prices immediately cause calls for gas subsidies even from supposedly progressives.
> And a gas war did begin, as soon as the 9 PM ET sale kicked off. 64,219 ETH was burned over the weekend on transaction fees according to Etherscan—that's over $180 million at today's prices, most of which is now gone forever due to Ethereum’s burn.
Probably impossible to know, but I wonder how much actual gas (or other fossil fuel) got burned to power this episode.
A significant source of waste in Ethereum/Bitcoin is transaction tips in order to process a transaction within a certain timeframe. This is in turn tied to the notion of wanting a consistent global state for everyone to operate under.
If there was not a global state, but a set of transactions that flow across nodes this would significantly improve the throughput of the overall system. In other words, the state of an account gradually flows across the system of nodes. Are there any projects out there like that?
Bitcoin's lightning network achieves this by using the base transactions stored on the blockchain only as a fall-back, so that many transactions can be performed without needing to be globally synchronized. Only in the case that a partner fails to follow the established rules of engagement between nodes, a transaction must be created on chain, to "force" the correct outcome.
You'd think that after Dan Olson had excoriated NFTs in his viral 2-hour video rant with now 7.4 million views that they might have lost their allure just a little bit.
But no, it looks like people are still falling for this billion dollar scam.
I always wondered why a gas fee future or option never was developed to mitigate gas fees indirectly. Since gas fees are heavily dependent on smart contract conplexity, a secondary market based on gas fees, and not on ETH spot price, seems like it would be a useful financial innovation in this space
It's amazing how much people care how other people spend their money. It's their money, if they want to spend it on ape pictures so be it. Nothing to see here, move along.
Fees rising isn't the same as 'breaking'. Also this was clearly intentional marketing to promote their chain.
Fees would get that high on every single blockchain because the mint price was below the empirical market price, leaving gas prices as the only remaining market. The only difference is that it would be over faster on something with more tps. That's why it's obvious it was intentional.
That money is not exactly wasted, it's gone to miners.
And how does Ethereum "break" exactly? It was just bloated with many transactions, creating a bottleneck, which is perfectly expected for a hyped project like this.
[+] [-] rglullis|3 years ago|reply
No fees were "wasted". If people were willing to make a transaction knowing that this was going to be the cost, it is a reflection of people's time preferences.
[+] [-] soared|3 years ago|reply
[+] [-] HL33tibCe7|3 years ago|reply
I don’t like crypto either for many of the same reasons - most notably crypto’s horrendous environmental impact. But we need to stick to facts when we criticise crypto, and avoid mindless bandwagoning just because it’s currently the in thing to hate on all things crypto.
[+] [-] vmception|3 years ago|reply
But I would say that there are unintended consequences of Ethereum's EIP1559 burning. A lot of tokens sold off as people were positioning for this sale. In the past, this money would have been recirculated from miners back into these leading tokens and projects and economy. This time it hasn't really happened because it was burned. Ethereum hasn't "priced in" any scarcity based on this burning, its still swung by the general tech sector swinging. Not a fan of this outcome personally. But yes, I'm all for letting the burns continue, just want communities and projects to be more discerning.
[+] [-] akgoel|3 years ago|reply
[+] [-] McLaren_Ferrari|3 years ago|reply
During an auction you always know the price and hence the bids are somewhat incremental. You can bid in 1$ increments or even lesser increments.
When the network is congested people put a fee on their transaction without knowing anything except that more = better.
It is a market failure. The time preference BS is something made up by "true believers" who think that "bad news is good news" because it supposedly supports the winner take all mindset that crypto enthusiast love.
Except when the winner is Ken Griffin, in that case we should stop playing , throw a tantrum and ask the refs for a redo lmao
[+] [-] chemmail|3 years ago|reply
[+] [-] Barrin92|3 years ago|reply
"Besides high fees, the transaction load resulted in a bottleneck that resulted in failed transactions that people still had to pay fees for—now in the thousands of dollars for nothing in return, not even an NFT."
If someone designed Ethereum with this in mind I have to assume masochism is pretty high up on their list of design goals
[+] [-] philipov|3 years ago|reply
[+] [-] TomGullen|3 years ago|reply
[+] [-] Tao332|3 years ago|reply
These aren't mutually exclusive. The design sucks.
> No fees were "wasted". If people were willing to make a transaction knowing that this was going to be the cost, it is a reflection of people's time preferences.
On the contrary, money spent over nothing but FOMO is absolutely wasted.
Another thing to consider is that, if it were real money*, the gas fees incurred by Otherside could have bought 6 million Covid vaccines. We ought to pause and raise at least some ethical questions, because even pro-crypto folks are saying this was money people knew they were burning.
* Lately I'm of the opinion that assigning USD amounts to large ETH amounts is overlooking how much of ETH is house money. The miners are mining ETH, rewarded in ETH, by people who already have ETH. It's monopoly money going in a circle and 64K ETH ≠ $180 million in any real sense.
[+] [-] bdcravens|3 years ago|reply
[+] [-] Animats|3 years ago|reply
So what happened? 96,000 of those "Otherdeeds" are now for sale on OpenSea.[1] Some of the rest are for sale on Rareable. Few buyers.
[1] https://opensea.io/collection/otherdeed
[+] [-] onepointsixC|3 years ago|reply
[1]: https://opensea.io/collection/otherdeed?tab=activity
[+] [-] samatman|3 years ago|reply
I clicked the "on auction" filter and see 192 'parcels' or w/e for sale right now, the rest are listed on OpenSea but that doesn't imply that someone can buy them.
[+] [-] soared|3 years ago|reply
[+] [-] rhizome|3 years ago|reply
>I’d imagine there is a whole lot of institutional money fooling around with similar projects.
If it's your trashcoin/NFT/whatever, you're at the top of the pyramid no matter what. There's no downside in convincing people to contribute cold hard cash to your new soared-coin.
[+] [-] paxys|3 years ago|reply
[+] [-] SlyShy|3 years ago|reply
[+] [-] rvz|3 years ago|reply
Regardless, Both Ethereum, and Solana were unusable on that day and as it stands are still unsuitable for anything 'high demand'.
[+] [-] bluedevil2k|3 years ago|reply
I wouldn't say it was "wasted" - some people made a lot of money out of it.
[+] [-] theptip|3 years ago|reply
The service the miners are providing is auctioning off time-slots in the network. This is load-shedding in action; if you don’t think your transaction is worth the fee, wait until the network is less congested. (Sure, this is probably an indictment of Ethereum-as-currency, but I don’t think that’s a use-case that is seriously contemplated by most market participants right now.)
Edit: this first part may be false, fees are apparently actually burned now. Sorry. https://news.ycombinator.com/item?id=31241054#31241311
[+] [-] solveit|3 years ago|reply
[+] [-] vkou|3 years ago|reply
If so, I'd say that it's close to 'wasted', given that as I understand, the only thing of value that has been created is only useful for financial speculation.
We're paying people to dig ditches, and then fill them. Just because the ditchdiggers got paid doesn't mean their effort isn't wasted!
[+] [-] dibujante|3 years ago|reply
It seems like the main difference is that the seller didn't receive what the purchaser was willing to pay, creating a rather unique dead-weight loss. Wouldn't it be better if the seller received the additional $3300?
[+] [-] mattdesl|3 years ago|reply
This is most likely a UX issue. Users aren’t aware they can set normal fees even during congested periods.
[+] [-] dralley|3 years ago|reply
Instead of talking about these "gas fees" in terms of their monetary value, we should measure them in terms of tons of CO2, or perhaps its equivalent acres-of-the-Amazon-rainforest-lit-on-fire. I'm 100% serious.
All of this, over gifs, jpgs and fake land in a theoretically infinite digital universe that was probably procedurally generated anyway.
[+] [-] xur17|3 years ago|reply
That's.. not how this works. The miner receives a block reward which is a combination of a fixed reward (2 ETH right now) + tips from people trying to get their transaction (typically ~0.2 ETH) [0]. The rest of the transaction fees are burned by the network.
In effect this means that miners are motivated to mine (and hence use CO2) based upon the block rewards. During periods of high network usage, they aren't magically procurring more miners, and hence they aren't actually using more electricity. And since the vast majority of the reward is burnt anyways, during high periods of usage, the miner reward doesn't actually go up that much.
Regardless of all of that, Ethereum will be on proof of stake within a year (wouldn't be surprised if it's 3 or 4 months at this point), at which point the CO2 argument will go away altogether).
[0] https://etherscan.io/block/14700751
[+] [-] _6hmp|3 years ago|reply
What really happened here was that the company that launched this did it in a way that congested the ethereum network and an auction essentially occurred in "gas" to use the network for this purpose for a couple hours. Instead, the company should have pre-allocated guaranteed minting on a lottery basis so it didn't devolve into a "gas" auction or, increased supply to match demand, which they knew in advance (like you said, limits here are artificial).
[+] [-] ajmurmann|3 years ago|reply
[+] [-] danans|3 years ago|reply
Probably impossible to know, but I wonder how much actual gas (or other fossil fuel) got burned to power this episode.
[+] [-] ChrisClark|3 years ago|reply
Creating a block costs the exact same energy whether it's full of high fees, low fees, or completely empty.
And orders of magnitude less energy than bitcoin uses.
[+] [-] tofuahdude|3 years ago|reply
[+] [-] er4hn|3 years ago|reply
If there was not a global state, but a set of transactions that flow across nodes this would significantly improve the throughput of the overall system. In other words, the state of an account gradually flows across the system of nodes. Are there any projects out there like that?
[+] [-] skulk|3 years ago|reply
A specific project: https://en.wikipedia.org/wiki/ACH_Network
[+] [-] sharperguy|3 years ago|reply
https://en.wikipedia.org/wiki/Lightning_Network
[+] [-] joshuamorton|3 years ago|reply
[+] [-] TazeTSchnitzel|3 years ago|reply
[+] [-] toraway1234|3 years ago|reply
[deleted]
[+] [-] jiggawatts|3 years ago|reply
But no, it looks like people are still falling for this billion dollar scam.
Link: https://youtu.be/YQ_xWvX1n9g
[+] [-] arthurcolle|3 years ago|reply
[+] [-] deevolution|3 years ago|reply
[+] [-] unknown|3 years ago|reply
[deleted]
[+] [-] Gordonjcp|3 years ago|reply
[+] [-] nootropicat|3 years ago|reply
Fees would get that high on every single blockchain because the mint price was below the empirical market price, leaving gas prices as the only remaining market. The only difference is that it would be over faster on something with more tps. That's why it's obvious it was intentional.
[+] [-] brutshucks|3 years ago|reply
Cryptocurrency really is a cult isn't it.
[+] [-] chris123|3 years ago|reply
[+] [-] sva_|3 years ago|reply
[+] [-] can16358p|3 years ago|reply
And how does Ethereum "break" exactly? It was just bloated with many transactions, creating a bottleneck, which is perfectly expected for a hyped project like this.
[+] [-] als0|3 years ago|reply