Solana Crypto Breaks, Ethereum Trips Over Sky High Gas Fees: 5 Things To Know

Solana Crypto Breaks, Ethereum Trips Over Sky High Gas Fees: 5 Things To Know


Image: dulezidar / iStock, https://www.istockphoto.com/de/portfolio/dulezidar?mediatype=photography&excludenudity=true&sort=best

A proof-of-stake chain flood caused by high traffic demand from non-fungible tokens (NFTs) knocked Solana validators out of consensus, grinding block production to a halt and pushing Ethereum gas prices to unprecedented levels.

The Solana blockchain crashed on April 30 and May 1 and had to be restarted, while the cost of block space skyrocketed on Ethereum to levels not seen since 2020.

This was the second Solana network crash this year and the seventh since its April 2020 launch. The April 30 outage lasted seven hours and was reportedly caused by bots swarming the Solana Candy Machine, a popular application used by Solana NFT projects to launch collections.

The Solana network validators lost consensus because the network was overcrowded with 4 million transactions per second (TPS) – the highest ever recorded on that blockchain – up from the average 65,000 TPS.

The network resumed operation only after network validators performed a “cluster restart”.

For Ethereum, gas prices rose to unprecedented levels, in addition to users experiencing failed transactions due to blockchain bottlenecks. NFTs, including those of the Bored Ape Yacht Club created by Yuga Labs, said they had to halt transactions due to the high gas prices.

Gas price refers to the fee required to successfully conduct a transaction on the Ethereum blockchain. These fees are priced in small fractions of the cryptocurrency ether and are referred to as gwei or nanoeth.

The Ethereum average gas price spiked eightfold to 474.57 gwei between April 30 and May 1. It is at a current level of 55.17, according to YCharts.

Here are five things you need to know about the Solana crash and the Ethereum gas price jump:

1. Bots ‘blind mintingNFTs cause chaos

The Solana outage stemmed from extreme congestion due to activities of specialized bots trying to “blind mint” NFTs and immediately resell them on secondary markets. The traffic became so intense that the network suffered a breakdown in consensus, which ultimately shut the blockchain down.

“An enormous amount of inbound transactions (6 million per second) flooded the network, surpassing 100 Gbps of traffic at individual nodes,” according to developer documents. “There is no evidence of a denial of service attack, but instead evidence indicates bots tried to programmatically win a new NFT being minted using the popular Candy Machine program.”

2. Solana suffered similar outages in January

Solana suffered a similar major outage in January 2022 involving arbitrage and liquidation bots, rather than NFT flippers. Solana Labs co-founder Anatoly Yakovenko pointed, at the time, to an explanation on Twitter which cited market volatility as causing downtime, as bots rushed to earn bounties on leveraged positions eligible for liquidation.

3. Repeat outages could knock Solana off its pedestal

Billed as one of the fast-rising stars of the crypto-world, Solana’s repeated run-ins with bots, outages and frustrated traders during the recent market crash might be about to knock the blockchain network off its pedestal.

Solana is also facing tough competition from a number of projects that could take over its position as the network with the lowest gas prices. These include Bitgert (BRISE), which is building one of the most powerful blockchain ecosystems and is seen by crypto experts overtaking Solana in the next 90 days.

4. Bore Ape executed ‘the largest NFT mint’ just before Ethereum gas prices spiked

Yuga Labs’ latest NFT project — a virtual land sale called Otherside — went on sale on April 30 in what the company now is calling “the largest NFT mint in history by several multiples.” About 95,000 land plot NFTs are listed on NFT marketplace OpenSea with a floor price of 4.2 ether, or about $11,700.

With each piece of land selling at 305 ApeCoin (APE) or nearly $5,800 at the time of the sale, Yuga Labs made $319 million after 55,000 NFTs sold out almost instantly. But the spike in Ether gas fees forced Yuga to delay claims.

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“The Otherdeed NFT mint is sold out – we are awestruck at the demand shown tonight,” Yuga Lab’s @OthersideMeta tweeted on May 1.

“Apes and Mutants, the opening of the 21-day claim period is being delayed until the price of gas drops to reasonable levels. We’ll tweet when the claim opens.”

5. NFT projects are considering moving from Ethereum

The spike in gas prices on the Ethereum network after the Yuga Lab’s much-anticipated virtual land sale sent it into a tailspin, renewing questions about whether the smart-contract network is up to the challenges posed by new businesses built on it. NFT projects are now looking at the option to move their mints to Ethereum 2.0 networks such as ImmutableX or sidechains such as Polygon’s PoS chain, or building their own blockchain.

Image: dulezidar / iStock, https://www.istockphoto.com/de/portfolio/dulezidar?mediatype=photography&excludenudity=true&sort=best