The hype surrounding ApeCoin (APE) and related metaverse Otherside has taken a hit. ApeCoin slides into the red for the third day in a row after Saturday’s chaos in Otherside’s first NFT sale.
Probably no other crypto new project of the year 2022 is discussed so controversially as ApeCoin (APE): ApeCoin’s stock market debut in mid-March brought APE straight into the top 50 cryptocurrencies with the most capital – although not much is known about possible applications at the time. The huge attention given to ApeCoin comes from the fact that this project is linked to the Bored Ape Yacht Club, the most commercially successful NFT collection in 2021. But among the investors who have jumped on the ApeCoin bandwagon, there are also many losers so far. During the last days of April, the APE traded above $20 almost consistently and the price curve peaked at $26. Less than a week later, ApeCoin fell back to around US$15 and had to accept a real price drop.
In addition to the negative trends in the overall crypto market, it is the NFTs at ApeCoin that are causing disillusionment. You should know that ApeCoin should become the home currency of a planned Metaverse Otherside. Otherside was mysteriously announced at the end of March, and this metaverse kicked off on Saturday. It was announced in advance that there would be virtual properties for Otherside to be auctioned off in the form of NFTs. In order to be able to hit it, many interested parties have stocked up on APE. But just a day before the auction, the rules were changed and a fixed price of 305 ApeCoin per NFT was set. That’s not all: when the Otherside NFT sale went live, demand was overwhelming. This then led to those willing to buy paying horrendous Ethereum transaction fees. These have become necessary in addition to the actual price in APE because ApeCoin is an ERC-20 token and NFTs are also based on the Ethereum standard.
Ethereum had to deal with ApeCoin Moment
Ultra Sound data shows how nearly 56,000 ETH Ethereum transaction fees for Burning came together in relation to Apecoin and Otherside. The volume was several times that of normal trading days for Ethereum, where the bulk of transaction fees come primarily from NFT marketplace OpenSea and decentralized crypto exchange Uniswap. During NFT sale hours for Otherside with ApecCoin, Ethereum transaction fees of up to US$10,000 had to be taken into account temporarily – this momentum suspended all other activities in the Ethereum ecosystem due to the inefficiency.
In retrospect, the Ethereum community still finds something good in the situation: since the transaction fees are partially automatically destroyed (“burned”), they also have a deflationary effect for ETH. This principle has applied to Ethereum since the London update with EIP-1559 in August 2021. So you can get something positive out of ETH worth almost 160 million US dollars, which have now been pulled from the market by ApeCoin and Otherside, with a deflationary effect for Ethereum.
Conclusion: stormy times for ApeCoin
Among so-called Metaverse tokens, ApeCoin has so far been able to defend its top spot ahead of Decentraland (MANA) and Sandbox (SAND) despite falling prices. But soon after the launch of ApeCoin, there were serious criticisms of the APE concept, which were triggered by distribution mechanisms and self-government that were perhaps only simulated. Reverberations from NFT sales for Otherside should not be suitable to rank ApeCoin as solid. On the other hand, the Apecoin/Otherside project is still in its infancy and will still have opportunities to learn from its mistakes.