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- Why is Ethereum used for NFTs?by Onkar Singh on 21/05/2022 at 7:00 PM
Read this guide to understand the relationship between Ethereum and NFTs, and explore why Ethereum is used for NFTs. Which blockchain is best for NFTs?When choosing any blockchain for minting NFTs, such as Ethereum for NFT development, ensure the robustness of its smart contracts, check the blockchain’s fee structure, security measures and transaction speed, and assess the possibility of forking.In the cryptocurrency market, NFTs are a significant niche. They provide further exposure to cryptocurrencies for people who might not otherwise have come into contact with these assets. In addition, they actively contribute to the mass adoption of blockchain technology because they are so closely linked to digital art and gaming.However, the resilience of a blockchain’s smart contracts is a major component of the overall security of distributed ledger technology. Smart contracts must go through extensive testing to provide the highest level of reliability and efficiency, ensuring minimal risk of downtime, breaches and hacks.Additionally, cost-effective solutions are required for NFT-based transactions, which is critical for using and adopting nonfungible assets. As a result, the cost structure for NFTs on the blockchain is an important factor to consider, with feeless being the ideal option.Hard forks can jeopardize nonfungible features, as duplicating NFTs calls their integrity into question. Therefore, it is critical to design NFTs and their marketplaces on fork-resistant blockchains.Similarly, as blockchains are immutable by design, faster finality means attackers have fewer time frames in which to compromise the digital ledgers. Therefore, any platform that achieves faster transaction finality while maintaining decentralization is ideal for creating NFT marketplaces.Other than these considerations, the final selection of blockchain for NFT development depends on your goals, like why you want to own NFTs, your budget and your investment objectives. If you are clear on the questions, you need to do your research and compare various NFT blockchains before spending your hard-earned money.Why do NFTs use Ethereum and not Bitcoin?The fundamental goal of Ether is to make the Ethereum smart contract and decentralized applications (DApps) platform operations easier to use and monetize, rather than to establish itself as a new monetary system. However, Satoshi Nakamoto called Bitcoin a peer-to-peer electronic cash system.Smart contracts that assign ownership and govern the transferability of NFTs are used to create nonfungible tokens, which the Bitcoin blockchain doesn’t support. NFTs are not fungible since they are not interchangeable. While each Bitcoin will have the same value, each NFT could represent a different underlying asset and hence, have a distinct value.Related: Fungible vs nonfungible tokens: What is the difference?For example, when someone generates or mints an NFT, they are executing code that is stored in smart contracts that follow various standards, such as ERC-721. This data is stored on the blockchain, which is where the NFT is managed.In addition to the above, each token has a distinct identity that is tied to a single Ethereum address. That said, each token has a unique owner who can be easily identified as they are Ethereum-based and can be purchased and traded on any Ethereum-based NFT exchange or market.Why are most NFTs on Ethereum?Ethereum is the leader among other blockchain networks and NFTs were born on the Ethereum blockchain. As a result, NFTs sell for a substantially higher price on average, so creators prefer them over other platforms.Because of its highly-secure network and data architecture, the Ethereum blockchain leads the decentralized finance (DeFi) market, with the bulk of NFT projects running on it as ERC-721 coins. In addition, the blockchain provides NFTs with extensive exposure to a large and growing market. Moreover, NFT systems should continue to be Ethereum virtual machine compatible so that Ethereum wallets like Metamask can support them.However, the high volume of network traffic causes a significant transaction backlog, leading to a substantial increase in transaction fees. Rarible, OpenSea and Nifty Gateway are three popular Ethereum-based NFT marketplaces. Nonetheless, because of the Ethereum blockchain’s limitations, NFT creators have turned to other solutions, such as the Solana blockchain, to overcome these difficulties.Ethereum NFTs vs. Solana NFTsThe consensus process used by Solana and Ethereum is different. Proof-of-work is used by Ethereum, which results in a more decentralized network with less scalability. The ETH 2.0 is designed to address the dreaded scalability issue that has threatened its NFT and DeFi market shares. As a result, the blockchain leader may lose its status unless the 2.0 upgrade is implemented quickly. In contrast, Solana uses a combination of proof-of-stake and proof-of-history, a less secure but more efficient method that allows for fast and low-cost transactions using its native currency called SOL. However, Ethereum is a mature project with a significant market position, increasing creators’ confidence in minting NFTs on the Ethereum blockchain.SolSea is Solana’s open NFT marketplace. When minting NFTs, it allows creators to choose and incorporate licenses. That said, collectors know what they’re buying and creators know what they’re selling. Solanart, a prominent NFT marketplace that launched before SolSea, is another popular NFT marketplace on Solana.Are NFTs based on Ethereum?Nonfungible tokens (NFTs) are compatible with any Ethereum-based project. You could, for example, trade a piece of a portrait for a ticket!Most NFTs are part of the Ethereum blockchain at a high level. Ether (ETH), like Dogecoin (DOGE), is a cryptocurrency, but the Ethereum blockchain also enables these NFTs, which store additional information that allows them to function differently from digital currencies.Related: What are NFTs, and why are they revolutionizing the art world?NFTs have incredible potential, and the ERC-721 was created to address the need for unique tokens. Moreover, due to its rarity or age, the ERC-721 standard is distinct and can have a different value than another token from the same smart contract. The Etherscan NFT Tracker ranks the top NFTs on Ethereum by volume of transfers. But do you need Ethereum to make an NFT? The answer is no. Ethereum is not a prerequisite to creating NFTs. Other blockchains like Solana (SOL), Cardano (ADA), Tezos (XTZ), BNB Chain (BNB) and Tron (TRX) are alternative platforms for minting or creating NFTs.So, if you want an answer to, “Is ETH the only way to buy NFT?” The answer, again, is no. Each platform requires the transaction fee to be paid in its native token. For instance, 2 ADA (Cardano blockchain’s native token) is the cost for the NFT-MAKER PRO platform, which is paid to the customers’ wallet together with the minted NFT (a requirement from Cardano).
- Crypto gaming and the monkey run: How we should build the future of GameFiby Alex Ye on 21/05/2022 at 3:16 PM
Tokens cannot make a game — but they can break one. We can envision a clearer future for a sustainable and decentralized GameFi space. You’ve seen it before. An amazingly talented gaming founder teams up with a top-tier studio, promising to create a wondrous game experience built on the industry’s most powerful engines. But then, it happens: It’s paired with a dubious shitcoin that launches well before even a morsel of game content drops.In the not-so-distant past, mainstream media may have referred to the hype-fueled crypto bull market — but, with Bored Ape floor prices still in the clouds, we’ll respectfully call it what it is: the monkey run. Market volatility aside, Metaverse evangelists still claim that Web3 finance will revolutionize the way that games monetize. I call BS.The focus right now is not on new monetization models. The only thing these token raises are challenging is the idea of capital formation — not monetization. However tempting, the monkey run has quickly deluded some of our brightest founders into believing that they should raise a nonsensically large amount of capital from tokens printed out of thin air, as a faulty substitute for a real monetization strategy.We’re ready for a change of mindset. The critical question is this: how can we make the hyper-capitalized, hyper-hyped Web3 Metaverse project work — for gamers, for founders, and for investors?Related: Blockchain games take on the mainstreamPath #1: Shilling is thrillingEveryone does well in a monkey run, financially speaking. From major smart contract platforms to experimental DeFi protocols to the next Axie Infinity copycat, the monkey market beautifully substantiates the notion that there actually are no shitcoins — only shit prices.For a clearer picture, journey with me through the deal pipeline into the heart of crypto venture capital, where shiny new metaverse and gaming projects relentlessly flood inboxes. Links to cinematic trailers, Unreal Engine mockups, and convoluted “token economics diagrams” abound, parroting their demands to raise millions on simple agreements for future tokens to adequately prepare their token launch(es) and initial decentralized exchange offering.The game’s launch date, you ask? Maybe it’s a “mini-game” planned for Q3, or a massive triple-A launch in mid-2023. What about the kind of utilities the token will have on day one? Well, you can stake them for more tokens, and they might even give you access to the game’s first NFT sale. Sometimes they even advertise a utility-less utility token and a governance-less governance token — justifying their existences because the big daddy exchanges agreed to list them in just a few months.This might read like an exaggeration, and I wish it were. However, these are the most troubling realities facing the current landscape of token launches in the middle of a bull — excuse me, a monkey market. They capture short-term enthusiasm without a sustainable plan for future-building. These pitches capture a moment — but not the right perspective and business model required for the future of gaming.Related: Metaverse-as-a-service will be the basis of the next internet era of Web3 Path #2: Building to lastThe GameFi token landscape is incredibly fragmented. While early liquidity is tempting, a premature token launch has serious risks. The balancing act of creating sticky tokenomics and successful game design actually offers a narrower focus for project tokens: user engagement and retention, not pure monetization.The final optimization problem? Maximize additional user retention and engagement per project token emitted, subject to some level of existing Web3 revenues and user community.You do not immediately need your own project token to monetize your application. Tokens are simply forms of exchange for the assets that your virtual world generates and sells. If your Web3 game can’t operate on an already liquid, volatile token or, worse, a well-pegged stable, then your game is in trouble. Try again!Instead, raise enough private capital to comfortably get through beta launch. In beta, work with your smart contract platform of choice to integrate its native token and your stablecoin of choice into your game. Begin to observe your core game loops and key revenue streams.Think of yourself as a data scientist! Is there user behavior you know is defensibly fun but still underperforms? Is it such a valuable loop that perhaps a subsidy can kickstart things? Is currency volatility something your users avoid? Where are your most engaged users coming from? How many are underpaid laborers in developing countries? How many are prosumers looking for the next hip social hangout? How many are whales driving auctions through the roof?Ultimately, you must design your token to incentivize users to stay in your world. For instance, just like with foreign currencies, you could offer a discount to consumption when paid for in your own project token — but you price your digital goods in USD. You could also utilize the layered-risk treasury strategy, whereby you accept USD (and equivalents), the L1 or L2 of your choice, and your project token. This ensures that you have a large, existing audience immediately equipped to engage with your world. It also helps safeguard you during crypto and macro downturns, and the excess can be used to reward investors and users without exerting sell pressure on your token — among other massive benefits.Related: How blockchain games create entire economies on top of their gameplay: ReportThe most important thing you can do as a gaming founder in Web3 is to stay focused on improving your game. Tokens cannot make your game — but they can break it.The right priorities for a sustainable GameFi futureThe unique value of gaming and metaverse applications is not the token they circulate. Project value is created by revenues which, in the long run, spawn from unique, in-game digital assets. When these NFT-based assets are owned, experienced and understood by a community, value builds and builds — otherwise stated, the community’s unwillingness to sell increases.I’m excited for the day when this model becomes the status quo — because it means we’ll be closer to the best Web3 games we’ve ever seen. Instead of the market rewarding short-term bag grabs, we’ll see superior gameplay and tokenomics wrapped into one gaming ecosystem built for the long term.Engagement, retention, then monetization. Optimize for those things, in that order. Choose the right path.This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.Alex Ye leads Republic Crypto’s early-stage research, investments, and token economics strategy — helping secure and advance cutting-edge projects for Republic Crypto’s advisory portfolio. Before Republic Crypto, Alex drove fintech and blockchain investments at ZZ Capital, crypto fund research at $7 billion venture fund Top Tier Capital Partners, and at the endowment of the University of Chicago, his alma mater.
- How to incorporate a DAO and issue tokens to be ready to raise money from VCsby Marcel Deer on 21/05/2022 at 1:08 PM
While DAOs can’t precisely replace traditional VCs, they can potentially disrupt the crypto industry. What is a DAO?A DAO, or decentralized autonomous organization, is an online-based organization that exists and operates with no single leader or governing body. DAOs are run by code written on a blockchain like Ethereum (ETH) and are owned and operated by the people who use them.There are many different types of DAOs, but they all have one thing in common: they are decentralized, meaning that decisions about the organization’s future are decided by the collective group and not a single individual. This decentralization is what makes DAOs promising, as it theoretically removes the possibility of corruption or manipulation by a single entity. Smart contracts (and not people) execute the terms and conditions of the organization, making them incredibly efficient and resilient to change.How does a DAO work?A DAO is a collection of smart contracts that live on the Ethereum blockchain. These contracts interact with each other to form the organization. They are written in such a way that anyone in the world can use them.The code for a DAO is public, and anyone can view it to see how it works. This transparency is one of the key features of a DAO. Compared to traditional organizations, DAOs are much more efficient because there is no need for a middleman or central authority.Another key feature of a DAO is that it is autonomous, meaning that it can operate without human intervention. This is made possible by using smart contracts, which can automatically execute tasks according to the programmed rules.DAOs are self-governing and self-sustaining, meaning they can continue to exist and operate even if the original creators are no longer involved. This is another advantage of using smart contracts. They ensure the DAO continues to follow its original rules even if the people running it changes. Some of the most well-known DAO tokens and platforms are Uniswap (UNI), Aave (AAVE), Compound (COMP), Maker (MKR) and Curve DAO.Steps to raise money from VCs after incorporating a DAOWrite a white paperAfter incorporating your DAO, you will need to write a white paper. A white paper is an essential document that explains what your DAO is, what it does and how it works. It should be clear, concise and easy to understand. Your white paper will be used to convince potential investors to support your DAO, so it’s important to ensure it’s well-written and persuasive. To help you get started on writing your DAO’s white paper, check out our detailed guide here.Create a pitch deckIn addition to a white paper, you will also need to create a pitch deck. A pitch deck is a short presentation that gives an overview of your DAO and its purpose. Your pitch deck should be clear, visually appealing and easy to follow. It should also include information about your team, your progress to date and your plans for the future.Create a websiteThe next step in raising money for your DAO is to create a website. Your website should be professional and informative. It should include your white paper as well as any other relevant information about your DAO.It should also have a way for potential investors to get in touch with you. This could be through a contact form, an email address or a social media account.Reach out to VCsOnce you have created a white paper, pitch deck and website, you can start reaching out to venture capitalists, or VCs. When contacting VCs, it’s important to be clear about your objectives and what you are looking for. Some VCs may be interested in investing in your DAO if they believe in its mission. Others may be more interested in the financial return that investing in your DAO would give them. Related: Venture capital financing: A beginner’s guide to VC funding in the crypto spaceIt’s also important to remember that VCs are busy people. They receive hundreds of pitches every week, so you need to ensure that your pitch stands out.Negotiate termsOnce you have found a VC interested in investing in your DAO, you will need to negotiate the terms of the investment. This includes the amount of money the VC will invest, and the equity stake they will receive in return. It’s important to remember that you are in a strong position when negotiating with VCs. After all, they are the ones who are interested in investing in your DAO. As such, you should aim for terms favorable to you and your team. This includes getting a large equity stake and a high valuation for your DAO. Close the dealClosing the deal is an important step in raising money for your DAO. Once you have negotiated the terms of the investment, you will need to close the deal. This involves signing a contract with the VC, as well as receiving the agreed upon amount of money. It’s a good idea to have a lawyer review the contract before you sign it. Use the fundsOnce you have closed the deal and received the investment, you will need to use the money wisely. This means spending it in a way that will help your DAO achieve its objectives. Some of the things you could use the money for include hiring employees, marketing your DAO and developing new features.It’s also important to remember that you will need to report back to the VCs on how you are using the money. For this reason, ensure that your expenses and progress are all properly tracked.Pay back the VCsEventually, you will need to pay back the VCs. This could be through a sale of your company, an initial public offering (IPO) or another exit strategy. Paying back the VCs is an important step in the life cycle of a DAO. It is also a good way to show them you are committed to your business and have faith in its future.Related: What is an IPO? A beginner’s guide on how crypto firms can go publicCan DAOs replace VCs?Are DAOs a viable replacement for venture capitalists? The answer is that it depends. VCs typically invest in early-stage companies and help them grow through the provision of capital, mentorship and connections.DAOs can provide some of these same services, but they’re not well suited to invest in early-stage companies. This is because DAOs are decentralized and cannot make quick and decisive decisions.VCs, on the other hand, are centralized and can make quick decisions that help early-stage companies grow. So, while DAOs can provide some of the same services as VCs, they’re not a perfect replacement. A VC is probably a better choice if you’re looking for an organization to invest in early-stage companies.A hybrid future of DAOs and traditional VCsDAOs are a new and innovative way of organizing people and resources. While they can’t exactly replace traditional VCs, they can potentially disrupt the industry.We’ll likely see a future where DAOs and traditional VCs work together to support the growth of early-stage companies. For example, a DAO could provide the capital and resources while a VC provides the mentorship and connections.Such a hybrid model would allow early-stage companies to get the best of both worlds: the capital and resources they need to grow, and the mentorship and connections they need to succeed.VC DAOs already exist, proving that such a model is possible. One example is The LAO, a venture capital DAO. It focuses on early-stage blockchain projects based on Ethereum (ETH) and has funded over 30 projects so far. How it works is that governance remains a function of the blockchain while an external service provider takes care of the administrative and legal procedures.Another good example is MetaCartel Ventures, a private VC DAO and a spin-off of the Ethereum ecosystem grant fund, MetaCartel. The VC DAO arm is managed by a board of “mages,” who conduct functions like presenting investment proposals, due diligence and voting on proposals. They mainly fund early-stage decentralized applications and protocols at the moment.
- Web3, NFTs, Metaverse: The tools for a truly decentralized futureby Arijit Sarkar on 21/05/2022 at 12:38 PM
If the crypto community can successfully decentralize the internet, “it’s a future really worth getting excited about,” said NFT3 founder Dylan Dewdney. Attendees to the BlockDown Croatia 2022 festival were witness to Cointelegraph’s discussions around sociopolitics of the Web3 ecosystem, non-fungible tokens (NFT) and the Metaverse. It turns out that ongoing innovations across the crypto ecosystem are well-positioned to dictate the future of media and entertainment.While crypto continues to blur the lines between the virtual and physical worlds, Cointelegraph’s editor-in-chief, Kristina Cornèr, agreed that “It’s been a crazy year” when talking about the rising impact of crypto innovations within media companies during the BlockDown festival.Cornèr highlighted use cases within the NFT space that gives independent artists and journalists a platform to raise funds and counter real-world challenges such as climate change. In a separate discussion with Dylan Dewdney, the founder of NFT3, a unified identity network, Cornèr raised questions related to the merging of virtual and physical worlds in the Metaverse.According to Dewdney, real-world problems have a good chance of seeping into the Metaverse despite the merger of the two worlds. However, he suggested developing a psuodenomous system wherein users are verified but can choose not to disclose their identities to other members of the Metaverse. As the world slowly shifts into its new home, the Metaverse, Dewdney believes that “the real world will become better.” However, it will require the people to inculcate some of the ethos of crypto — especially in relation to equitability and personal responsibility: “I think its time for the world to evolve and we are starting to lay the technical foundations for a lot of that. You have to be careful about how this plays out and really take individual responsibility about spreading that message.”Showcasing an in-house attempt to create the biggest truly community-owned Web3 festival, Cornèr too revealed the relaunch of BlockShow — Cointelegraph’s flagship event — as a decentralized autonomous organization (DAO) that allows attendees to own a stake in the show and participate in organizing events. According to BlockShow CEO Addy Crezee, the goal at BlockShow DAO is “to bring more people to Web3 and help people feel the benefits of the ownership economy.”Getting further into discussing the sociopolitics involved with living in the Metaverse, Dewdney told Cornèr:“We’re still going to have all the same problems because we’re still the same old boring humans who do the same old petty things, and also great things.”If the crypto community can successfully decentralize the internet, “it’s a future really worth getting excited about” — at an individual as well as other social levels. With NFT3, Dewdney aims to provide a decentralized identity service for the Metaverse ecosystem. The service can associate various information with a pseudonymous but real-life identity. On an end note, Dewdney believed that the crypto ecosystem needs to evolve beyond the financial use case into the “human use case” of blockchain.Related: $3B flows to metaverse and Web3 gaming this month as a16z tips in $600MVenture capital firm Andreessen Horowitz (a16z) recently launched a $600 million Games Fund One dedicated to gaming startups with a focus on Web3. The fund aims to support game studios, consumer applications and gaming infrastructure providers. As Cointelegraph previously reported, Metaverse projects are too attracting investments from gaming industry titans. In April, Epic Games, creator of the popular Fortnite title, raised $2 billion to create a metaverse with funding from Sony and Lego.
- Bitcoin ends week ‘on the edge’ as S&P 500 officially enters bear marketby William Suberg on 21/05/2022 at 11:08 AM
Down 20% from its latest peak, the S&P 500 now meets the definition of bear market territory in a warning sign for risk assets everywhere. Bitcoin (BTC) struggled to recover its latest losses on May 21 after Wall Street trading provided zero respite.BTC/USD 1-hour candle chart (Bitstamp). Source: TradingViewBTC price reflects drab stocks performanceData from Cointelegraph Markets Pro and TradingView showed BTC/USD trading at dipping below $28,700 into the weekend, subsequently adding around $500.Down 4.7% from the previous day’s $30,700 highs, the pair looked firmly rangebound at the time of writing after United States stocks indices saw a volatile final trading day of the week.The S&P 500, managed to reverse after initially falling at the open, nonetheless confirmed bear market tendencies, trading at 20% below its highs from last year.The S&P 500 has officially entered a bear market pic.twitter.com/N1lrcBdziT— Fintwit (@fintwit_news) May 20, 2022 “Another wacky day in the stock market. Dow Jones -500 early in the day, then recovers it all and closes +8,” popular Twitter account Blockchain Backers commented about broader U.S. market performance. “Bitcoin still just teetering on the edge.”As Cointelegraph reported, various sources had called for Bitcoin to fall once again in a manner similar to last week’s capitulation event.Continuing the conservative macro outlook, fellow Twitter commentator PlanC argued that external shifts could still bring Bitcoin down significantly from current levels.”If the Crypto market was in a bubble I would say 25k to 27.5k is the Bitcoin bottom, but there is a decent probability that macro factors drag us down to 22-24k. Significant black swan, 15-20k becomes a possibility,” part of a tweet on the day read.Beyond stocks, the U.S. dollar index (DXY) was consolidating after a strong retracement from twenty-year highs.U.S. dollar index (DXY) 1-hour candle chart. Source: TradingViewMay competes with 2021 for worst on recordWith ten days left until the end of the month, BTC/USD risked May 2022 being the worst in terms of returns in its history.Related: Bitcoin must defend these price levels to avoid ‘much deeper’ fall: AnalysisData from on-chain analytics resource Coinglass showed month-to-date returns currently totaling -22% for Bitcoin, the largest retreat of any year except 2021’s -35%.2022, the collective figures confirmed, was also the worst performing first five months of the year for Bitcoin since 2018.BTC/USD monthly returns chart (screenshot). Source: CoinglassThe views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.