Over the past few weeks, the popularity of NFTs has been debated. A metaverse land sale sparked a frenzy that temporarily overwhelmed the Ethereum cryptocurrency. The application to become an owner in the Metaverse resulted in a sale of 55,838 Ether, or approximately $158 million, drawing criticism and providing fodder for skeptics that the Metaverse is a speculative bubble.
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So far, popular perceptions of the metaverse are so vast, so daunting, that only billion-dollar corporations like Facebook or Epic could afford to develop and implement the necessary infrastructure of a virtual universe. shared where we live, work and play. But what do we want (and need) in a metaverse that will inevitably be shaped by corporations and mainstream culture?
In the comment below, Jonathan Victor, Manager of NFT and Web 3 Storage at Protocol Labs, offers his perspective on the incident and why it’s important that we build an open ethical metaverse moving forward.
Why did this happen?
- In the background, sending a transaction takes up “block space” on blockchains. Within a given block, there is a certain amount of computation that can be performed, and the unit of “gas” is how you can gauge the complexity of the transaction in question. More complexity to a transaction, more gas consumed.
- In times of high demand the price of gas (using the network) increases – for non-complex transactions this is less of a problem – but for more complicated transactions it scales dramatically (during the minting process people were paying thousands).
What could Yuga have done differently?
- Like a number of commentators online pointed out, the Yuga Labs team missed a number of opportunities to optimize their contract. This could have cut millions in unnecessary fees – although it seems likely that they did not anticipate the overwhelming demand they had (even if they counted the number of KYC’D wallets and a cap per wallet) .
- As many members of the Ethereum community have pointed out, using Ethereum’s “L1” will only cost more as the number of users on board increases. The Ethereum community has pushed rollups like Immutable (built on Starkware), Optimism, and Aribtrum as solutions that keep fees low while maintaining security similar to the Ethereum network.
- It’s not entirely clear why Yuga chose to do his minting directly on the basecoat – but if he had chosen to use an L2, the cost could have been considerably lower.
What does the future hold for us?
- Obviously, there is still an overwhelming demand for the best projects in space – and for team building there is an incredible amount of resources available.
- – Unfortunately, there is still a fairly large gap in education on how best to use these protocols. We wouldn’t use a hammer to hang a picture, and we shouldn’t use an L1 like ETH for high-volume, low-cost transactions.
- Zoom out though – it’s important to note that Yuga plays a vital role in providing a credible alternative to closed metaverses. Despite the mint mayhem, they validate that we can build open 9-digit metaverses, where users own their digital objects (secured by a credible neutral base layer) – versus an entry in the database of a business (which may become worthless if they decide it is no longer profitable to support said ecosystem.)
- To emphasize this last point – when you pay a 50% royalty to Meta, you are the exclusive supplier of many services (the “property rights” of the object – which they keep in a database, the “interoperability of the object – which they control with the APIs they expose, and the “accessibility” of the object – which they control using their servers). In the case of NFTs – we are actually seeing an unbundling of these services – where decentralized networks give users more control. “Ownership rights” are enforced by the blockchain (e.g. ETH) – which relies on users and their private keys to show ownership. “Interoperability” is guaranteed by the public nature of the blockchain – anyone can read the chain and build an experiment that implements these NFTs. Object “accessibility” can be secured with decentralized storage (e.g. IPFS and Filecoin) – allowing the content to be served not only by a single company, but also by the user and their devices, or by neutral service providers.