Opinion Article on Forkast : How Yuga Labs’ NFT sale failed to put its community first

Opinion Article on Forkast : How Yuga Labs’ NFT sale failed to put its community first

The ‘virtual land’ sale that broke Ethereum was also a fiasco for buyers. Should Yuga Labs have seen it coming and taken preventative action?

The largest and perhaps most highly anticipated NFT sale so far this year took place recently when Yuga Labs launched their sale of virtual land to ApeCoin holders for around US$5,800 (the clearing price was set at 305 ApeCoin). The huge level of demand for the hugely popular Otherdeed NFT mint, which raised about US$320 million, created a two-fold problem for the Ethereum-based sale. Firstly, the steep rise in the volume of transactions led to a spike in the price of Ethereum gas fees, requiring people to spend around two ETH (approximately US$6,000) in fees to mint. Secondly, many of the participants in the sale, due to the bottleneck in demand, both missed out on the minting and lost their Ethereum in the process.

Such was the chaos that soon after the sale, Yuga Labs tweeted: “We are aware that some users had failed transactions due to the incredible demand being forced through Ethereum’s bottleneck.” While YugaLabs promised “we’ve got your back” and that they would be “refunding your gas,” there was considerable pushback from the NFT (non-fungible tokens) community. Considering the stature of the sale, it is worth examining what happened in greater detail to understand what this means both for the NFT market going forward, not to mention its implications for the ideal of the core importance of the Web 3.0 community to the future of NFTs and the metaverse.

After Yuga Labs acquired CryptoPunks earlier this year, which put the VC-backed company valued at US$4 billion in the spotlight, this latest event certainly raises the stakes. Yuga Labs admitted the scale of the minting event not only crashed Etherscan but also seriously impacted Ethereum. “It seems abundantly clear that ApeCoin will need to migrate to its own chain in order to properly scale. We’d like to encourage the DAO to start thinking in this direction,” they added. But clearly with all the resources at their disposal, the chaotic result only created more skepticism on crypto Twitter.

But before diving into the organizational aspects, the upset among NFT newbies should not be ignored when crypto is so keen to gain mass adoption. That upset was voiced by NFT influencer ap3father.eth, who pointed out that he’d brought many friends into the space for the drop: “My friends said things like, ‘who would ever use Ethereum?’ ‘NFTs are only for rich people’ … and to be honest I agreed with them … although my initial reactions were filled with emotion … I agreed … How was this going to prove we are ‘innovating.’” It’s worth noting that Yuga Labs raised around US$320 million through the minting, with 55,000 tokens sold out in under three hours.

The key problem is that it’s not only an issue with scaling the number of transactions but also the number of smart contracts (“trustless computation”) — an issue also faced by so-called Ethereum killers like Polygon, Avalanche and Solana. While these chains may boast of a fast transaction per second (TPS) performance, only a small percentage is available for smart contract operations. It is interesting that in the example from U.K.-based Radix DLT that they’ve done away with the EVM (Ethereum Virtual Machine) and instead built their own engine, which meant “a transaction is a transaction, it doesn’t matter if that is minting NFTs, swapping on DEXs or taking out a crypto loan,” tweeted Radix Works CEO Piers Rudyard in response to the Yuga Labs mint bottleneck and proposed scaling solutions. “That means that TPS performance and DeFi performance on Radix are basically the same thing,” Now, while I appreciate Rudyard is using this opportunity to plug his solution, the Yuga Labs mint controversy is also highlighting the significant blockchain bottleneck challenges ahead for mass adoption.

Putting that high-level critique of Ethereum smart contract functionality aside, using optimized smart contracts, such as ERC-721A, could have made the mint more equitable by reducing gas fees to the bare minimum. As Will Papper, co-founder of SyndicateDAO, tweeted: “Modifying a few words would have saved $80M+.”

Furthermore, limiting the number of KYC (know-your-customer)-approved wallets to only those required for the mint would have helped avoid gas wars and provided a positive minting experience for all parties involved. But for some, such as @DrNickA of FactoryDAO, this was missing the point because the fact that the number of NFTs outstripped KYC’d wallets was intentional. After all, Yuga had the KYC information in advance for all the prospective buyers, they could have created a whitelist to manage demand.

While Yuga Labs has since confirmed it would refund the fees for transactions that failed due to the problems, it’s clear that lessons need to be learned from its minting debacle. While the likes of Yuga’s VC backers, a16z, point to the core importance of “community ownership” to Web3, including NFTs and the metaverse, surely how that ownership is delivered is important?

Particularly coming so closely after its purchase of CryptoPunks, it’s worrying — and not helpful to the cause of mass adoption — when the leading NFT company is so careless with its community. It’s certainly my hope that ApeCoinDAO, which styles itself as independent of BAYC and community-led, lives up to its responsibilities and shows that Web3 is more than a business model for the metaverse, but also a way for people to engage in this new (virtual) world.

 

Original Source: https://forkast.news/how-yuga-labs-otherdeed-nft-mint-failed-put-community-first/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Forkast News: Why DeFi holds the key to metaverse success

Forkast News: Why DeFi holds the key to metaverse success

A profound shift is underway in online culture, writes Anndy Lian of BigOne Exchange. Here’s how decentralized finance might one day power the NFT and metaverse economy.

Visa buying a CryptoPunk NFT for around $150,000 recently may be the first sign that these unique digital assets are starting to be taken seriously for commerce. Up until now, the sale of these “non-fungible” assets has been associated with high-priced artwork, but Visa’s purchase, while also about art, is really about promoting their expertise to businesses in the field of using NFTs for commerce. Indeed, in a report, coinciding with the CryptoPunk purchase, Visa states a longer-term vision: “While the prices of individual NFTs fluctuate, fascinating use cases for NFTs are still emerging and the groundwork is being laid for the long-term utility of NFTs.”

One such use case led by big consumer brands from Facebook to Coca Cola is the use of NFTs in the virtual world, called the metaverse. Indeed, if you heard the news that Facebook is about to launch its own crypto wallet Novi (which is — in true metaverse fashion — interoperable with other wallets) then you may also recall it’s also due to work with NFTs as well as stablecoins.

What you may not know is that Facebook’s CEO Mark Zuckerberg sees the future of the global social network in the metaverse. Indeed, Zuckerberg recently said that within five years Facebook would be a “metaverse company,” while Satya Nadella, Microsoft’s CEO, said they were investing in the “enterprise metaverse.” Simply put, whoever can integrate NFTs and payment with the metaverse may well lead the biggest change in online culture and economy since the birth of the web in the 1990s. This view is also supported by David Raszucki, head of the US$50 billion Roblox Corporation, who sees the emergence of the metaverse as profound a shift as the invention of the internet and the World Wide Web.

Certainly, it’s along those lines in terms of potential of the wider metaverse, coupled with the key role of NFTs that software developer Alethea AI, which claims to have created the world’s first “intelligent NFT,” recently raised US$16 million in funding to create a metaverse populated by its bots. The NFTs that will fill the metaverse will be talking, intelligent NFTs (iNFTs) created by Alethea: machine-learning bots that can have human-like conversations.

“Alethea’s thesis is that NFTs will provide a definitive property rights infrastructure for the emerging Metaverse driven by interactive and intelligent Avatars,” according to the company. “The AI infrastructure built by Alethea will serve as the underlying connective tissue to enable NFTs to ‘come alive’ as interactive media assets, with personality traits, preferences and real-time interactive capability.”

In a recent interview in The Verge, Zuckerberg laid out his vision of a metaverse bringing “enormous opportunity to individual creators and artists; to individuals who want to work and own homes far from today’s urban centers; and to people who live in places where opportunities for education or recreation are more limited. You can think about the metaverse as an embodied internet, where instead of just viewing content — you are in it.”

Of course, anyone who’s watched The Social Network, or has seen how Facebook can do harm through manipulating its online users’ behavior, is certainly going to wonder if the metaverse is going to be in safe hands with Facebook. As Tim Sweeney, CEO of Fortnite maker Epic Games famously once remarked: “This metaverse is going to be far more pervasive and powerful than anything else. If one central company gains control of this, they will become more powerful than any government, and be a god on Earth.”

Supporters of a thoroughly decentralized metaverse, where NFTs play a pivotal role in facilitating the DeFi (decentralized finance) necessary for this meta-project to come into being, gathered recently at the Paris-based ETH event EthCC. Key speaker Ben Lakoff , co-founder of NFT-protocol Charged Particles, led discussion of the need for permissionless, trustless financial services with a high transaction rate for a metaverse to function optimally. The metaverse would also necessitate a large amount of data to be stored and unaltered, where blockchain technology comes into play.

Lakoff underlined this point to the audience, connecting DeFi and identity in his presentation: “NFTs as identity, as a DeFi passport, this on-chain credit scoring — all of these things kind of mixed together. We can start to see how these things play together in a very, very unique way that paved the way for Web 3.0.” Lakoff became particularly passionate when talking about NFTs as financial products able to hold other tokens. “You have your NFT that acts as a basket, owning all of these different types of assets,” he explained, adding that baskets could contain social tokens and interest-bearing assets, as well as enabling easy transfer to another individual’s portfolio.

Certainly, there are many aspects of the metaverse to be figured out before the vision becomes a reality. Matthew Ball, a venture capitalist who wrote a key article about the metaverse in early 2020, also makes this point. A lot of the pieces of the jigsaw must come together before the metaverse can take shape, with Epic Games’ popular “Fortnite” game possibly the nearest to that future available right now, says Ball.

Putting aside the technological challenges of an “always on” environment capable of supporting thousands if not millions of people online in the same virtual space at the same time, what is certain is that a DeFi financial architecture involving NFTs is likely to be key to its success, what you might call the “MetaverseFi.”

Looking at the current cryptocurrency landscape for clues on what form these decentralized products and services might take in the metaverse it’s worth returning to the real world. Take the accelerating mainstream adoption of cryptocurrencies, and greater financial institutional involvement. From the legalization of Bitcoin in El Salvador, the implementation of crypto payments in PayPal, to the reformation of the Dogecoin Foundation to push its crypto payment potential, the trend is clear. At the same time, as we’ve seen over in the U.S. with the Infrastructure Bill inclusion of provisions on crypto, and the European Commission’s proposed Regulation on Markets in Crypto Assets (MiCA), there’s a parallel push for greater regulation from the government.

Clearly, any key players in creating the metaverse which includes large corporations like Facebook and Epic Games are going to have to be compliant with these emerging DeFi crypto regulations when creating its decentralized payment systems.

In an in-depth look at the prospects for a metaverse, U.K.-based blockchain VC company Outlier Venture has found the the need to have a crypto-decentralized core is paramount: “It needs its own economy and currencies native to it, where value can be earnt, spent, lent, borrowed or invested interchangeably in both a physical or virtual sense and most importantly without the need for a government.”

However, while the metaverse may reside in the virtual world, I believe its use of NFTs and DeFi to bring it to life are firmly rooted in the real world. The dream of an open metaverse is a motivating vision that engages individuals and attracts corporations, but if it’s going to include people from all around the world from Beijing to Boston, it’s also going to have to contend with the impact that increased government scrutiny and regulation will have on DeFi.

 

AUTHOR PROFILE: ANNDY LIAN

Anndy Lian is chairman of BigOne Exchange, a trading platform registered in the Netherlands. Anndy is a business strategist with over 15 years of experience in Asia, and he has worked in various industries for local, international and publicly traded companies. Anndy is also currently the chief digital advisor at the Mongolian Productivity Organisation.

 

Original Source: https://forkast.news/why-defi-holds-key-to-metaverse-success/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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