Yuga wouldn’t be the first major NFT company to spin out of Ethereum onto its own blockchain. This weekend’s events were particularly reminiscent of a similar incident in 2017 which saw CryptoKitties – the first NFT project to gain significant traction on Ethereum – grind the Ethereum network to a halt as a result of high demand. The creator of CryptoKitties, Dapper Labs, has since launched the Flow blockchain in order to scale its NFT gaming empire. The most notable NFT company to leave Ethereum for its own chain is Sky Mavis, which launched the Ronin network in order to handle the transaction volume of its play-to-earn gaming juggernaut Axie Infinity. In order to scale, Ronin appears to have made sacrifices to security and decentralization that enabled hackers to siphon over $600 million away from the network in March. Given the (much maligned) centralization of Flow and Ronin relative to Ethereum, Yuga’s most vocal critics feel the company might’ve felt the need to front-run criticism that would come if it launched its blockchain. Saving face While Yuga’s screwups were immense, it’s hard to believe they were premeditated. A less cynical interpretation – the one Papper subscribes to – is that Yuga simply put the blame on Ethereum as a way to save face. “I don't believe that Yuga would leave $100 million to $150 million on the table for a marketing stunt. … The rumors circulating that this was intentional and done to promote a new chain are incorrect,” Papper said. While it is probably fair to criticize Yuga for its apparently poor engineering practices, Papper notes “gas optimization standards are still emerging.” It is possible (albeit embarrassing) that Yuga’s engineers merely screwed up. Yuga also did seem to anticipate demand for the mint by requiring verification and originally planning a Dutch auction, and it’s possible they really did believe changing to a fixed-price model would’ve increased equity without spurring a gas war. Finally, there’s not even any guarantee that Yuga (or its DAO) will build out its own chain when all is said and done. Ultimately, it wouldn’t be surprising to see Yuga move over to an Ethereum developer-friendly blockchain that already exists like Polygon or Avalanche. (Given how the Otherside smart contracts were engineered, it’s hard to imagine people would trust a Yuga-made chain anyway.) Ethereum scaling It’s been a while since Ethereum faced a slowdown of this magnitude, and Yuga certainly made mistakes in the lead up to the Otherside launch. Still, it’s hard not to view this past weekend’s debacle as yet another example in a long list showing that Ethereum desperately needs to increase its transaction capacity. Read more: Ethereum’s Rollups Aren’t All Built the Same The much-anticipated Merge, which will soon turn Ethereum into a proof-of-stake network, will not, at least in the short term, have much of an impact on the network’s throughput. The shift to proof-of-stake will improve the environmental impact of Ethereum, but it isn’t expected to have much of an effect on gas fees or network speeds. Sharding, an Ethereum upgrade that could theoretically improve upon these aspects, was delayed in favor of expediting the switch to proof-of-stake. For now, it doesn’t look as if sharding will be coming anytime soon. The main way the Ethereum community is currently working to scale is through layer 2 rollups, such as Optimism and Arbitrum, which process transactions on separate blockchains before bundling them up and passing them back down to Ethereum. Though rollups have experienced growth over the past year, they’ve yet to reduce prices to the level of chains like Solana and Polygon (which is building out its own rollup). Unless layer 2 solutions manage to expand their developer communities and userbases, Ethereum will continue to see more teams like Yuga running for greener pastures. - Sam Kessler | 