While many were excited when Yuga Labs announced its first ordinals NFT collection last month, the exact nature of its auction process is proving highly controversial.
Casey Rodarmor – the inventor of Ordinals – called the NFT giant’s sale “degenerate” due to putting its participants’ Bitcoin holdings at risk.
The Problem With Bitcoin Auctions
In a Twitter thread on Sunday, Yuga Labs published details surrounding how its upcoming “Twelvefold” auction would work. Twelvefold includes 300 NFTs – 288 of which were listed for auction, with the remaining 12 going to “contributors, donations, and philanthropic efforts.”
The firm instructed followers to visit the Twelvefold website to enter the auction and place their bid – which involved sending Bitcoin to a unique Bitcoin address owned by Yuga.
The top 288 bids will win an inscription. There will be a leaderboard throughout the auction that will display current bid placings. Winning bidders will receive their TwelveFold ordinal inscriptions within one week of the end of the auction.
— Yuga Labs (@yugalabs) March 5, 2023
The auction began at 3pm PT on March 5, and is set to last for a full 24 hours. Yet only hours after it kicked off, the bidding process drew scrutiny from certain community members worried that the auction involved too much trust in Yuga.
Twitter user @veryordinally, for example, said Yuga was establishing a “really bad precedent” for auctioning in the still nascent Bitcoin NFT space.
“They are taking custody of bidders’ bitcoin with a promise to send back unsuccessful bids,” he explained. “Not doubting they’ll do that, but this model is a scammer’s dream, and credible players need to set better example.”
Rodarmor later quote tweeted Ordinally’s response, saying he agreed, while adding in some vicious criticism of Yuga:
Dear @yugalabs,@veryordinally is right. Actions like this prove that for some entities and people: “Once a shitcoiner always a shitcoiner.”
If I, personally, Casey Rodarmor, ever see you, Yuga labs, the entity, fuck around with degenerate bullshit like this again, I will wash… https://t.co/COARsn4X0o
— Casey Rodarmor (@rodarmor) March 6, 2023
“Anyone who has worked at Yuga Labs for long enough has shown their true colors,” said Rodamor regarding the auction on Monday. “They lack some combination of spine, intelligence, character, acumen, talent, empathy, or experience.”
Ethereum VS Bitcoin NFTs
When Ordinals popularity surged in February, proponents argued that Ordinals NFTs had the advantage of being directly inscribed into Bitcoin’s blockchain. Ethereum NFTs, by contrast, simply store files on a server and point to their corresponding directories.
However, Bitcoin has long lacked the smart contract capabilities of Ethereum, which allow for various forms of decentralized trading – including escrow services. Without this, running a trustless escrow service necessary for facilitating auctions becomes more difficult with Bitcoin.
Some Twitter users argued that Bitcoin auctions should use Partially Signed Bitcoin Transactions (PSBTs) as an alternative. The technology allows multiple parties to sign a transaction before it is broadcast to the network.