#13 Decentralized art, NFTs, ETFs and Coinbase all around
Yes, the news of the week was the Bitcoin Futures ETF, but we-ve been busy launching an NFT + DeFi project. Want to check it out?
Any comments? Write us at team@carbono.com or find us on Twitter: we are @carbono_com, @raulmarcosl and @miguelatcarbono.
Meet Botto: a decentralized autonomous artist
In our last issue, we said Carbono Insights we never intended for the newsletter to be a self-promoting tool for our company. We would only make an exception to sing happy birthday to Abacus Carbono. Well, here comes the second exception in a row, and it might not be the last 😅 We will make it worth it for you, promise.
Meet Botto:
Botto is a decentralized, autonomous artist. A project conceived a year ago was born at the intersection of NFTs, algorithmic art, and governance. We have been working on it for long months now, but the last weeks have been incredibly intense. We've been living and breathing Botto, speaking about it with everybody, whether they were interested or not. So we thought we could give our newsletter subscribers a little bit of an inside peek into what it's like to launch an NFT project and maybe update you along the way in the following newsletters.
Botto lives in the overlap between NFTs, Algorithmic art, and governance.
Botto is the world's first collectively-directed art virtuoso. An artificial intelligence taught to produce outstanding creative pieces and learn from a community's tastes and desires.
The algorithm will initially* produce 50 fragments every week. Fifty pieces grouped in batches called series conceived and created simultaneously. The community then gets to express their preference through a voting process done on the website that will determine the artistic direction of the algorithm.
By the end of the week, the most voted artwork goes to auction on SuperRare. The proceeds will benefit the community of token holders.
The process then starts again, and Botto will continue building its unique craft and personality over time, hopefully leaving its imprint in the evolution of NFTs and algorithmic art.
*Initially, because, over time, the community will decide on the productive habits of Botto.
Let's go over some of the basic building blocks of Botto:
The art
Botto's initial artistic form was born from the hands of the German artist Mario Klingemann.
My preferred tools are neural networks, code and algorithms. My interests are manifold and in constant evolution, involving artificial intelligence, deep learning, generative and evolutionary art, glitch art, data classification and visualization or robotic installations. Mario Klingemann
Mario created the algorithm that both produces art and learns from the community and handed it over to fulfill its purpose of becoming a decentralized, collective artist with a life of its own. Follow this thread to see the details in his own words.
Botto, for the moment, has produced 150 artworks: 3 series of 50 fragments that have been up for voting for the last two weeks. The most voted item makes it to Botto's SuperRare page and gets sold on an auction every week.
This was the first piece auctioned.
Asymmetrical Liberation
Genesis Period. 2021 Oct #000.
Asymmetrical Liberation is a planet in the Synedrion system.
It’s a planet with a single moon, the surface covered with blue seas and green landmasses. Countless stars can be seen in the sky.
This planet is full of people who are trapped by their own self-created prisons, their fears, their self-doubts, their own inability to see the world as it is, the way it could be, the way it should be.Botto in conversation with GPT-3
The token
The BOTTO token has many reasons to exist. Tokens are the fuel that powers a community on crypto. It is the way incentives get aligned among a group of heterogeneous, anonymous people. A decentralized autonomous artist depends on cooperation to live, and BOTTO is the place where all the members of the community unite.
Users need to own $BOTTO to vote. Then users stake the tokens in the website's application exchange for voting points that they can then use to express their preferences and affect the evolution of the artwork.
Crypto staking involves "locking up" a portion of your cryptocurrency for a period of time as a way of contributing to a blockchain network. In exchange, stakers can earn rewards, typically in the form of additional coins or tokens. Business Insider
Users also participate in the proceeds of sales through the token. Every week, after the auction, the ETH received for the sale of a Botto piece is used to purchase $BOTTO and burn it to reduce supply and create buy pressure. As a result, Botto's tokens become more valuable.
Voting and owning are two powerful reasons to want to become part of the project and the main forces that will bring demand and activity.
The community
Botto was welcomed beautifully by the community. There is already a 3.000 strong, very active, Discord group full of questions (we're constantly doing our best, but there are many things that need better explanations and clarifications) and suggestions about the project's future. In addition, Botto now has more than 5.000 followers on Twitter, and the different artworks have received tens of thousands of votes -at the time of writing.
Botto will evolve as the community increases its involvement and power. So far, we are in a very early stage, and Botto needs to grow its decentralization wings. Voting mechanisms, platforms, topics, thresholds, etc. This is just the beginning.
Find out more at:
Website: https://botto.com/
Twitter: https://twitter.com/bottoproject
Instagram: https://www.instagram.com/bottoproject/
Discord: https://botto.com/img/di.svg
SuperRare: https://superrare.com/bottoproject
As we said, Botto is taking its initial baby steps. We expect the project to have a long and fruitful life, and we will make sure to share with you the details of its evolution. We've only touched the surface here, so let us know if you want some further explanation on any of the details. Botto has involved great efforts to develop in all its facets: art, user experience, tokenomics ... If you have any questions, you know where to find us.
⬡ Six Angles
We select six topics to illustrate the very different angles crypto can be approached from. We could choose dozens, but six is the atomic number of carbon… and otherwise we'd be writing for ages.
1. ETF | Bitcoin futures ETF is here
Bitcoin's latest all-time high has been correlated to the approval of a Bitcoin Futures ETF from the Securities Exchange Commission in the United States, and rightfully so. Bitcoin's on-chain metrics (data extracted from the actual blockchain that helps analysts infer the sentiment and behavior of investors) have been showing symptoms of good health for long. But the ETF has been the first relevant psychological boost in a while, after months of China scaring investors off.
An exchange traded fund (ETF) is a type of security that tracks an index, sector, commodity, or other asset, but which can be purchased or sold on a stock exchange the same way a regular stock can. Investopedia
An EFT is like putting assets inside of a box and then trading the box in a regular stock market. ETFs usually offer a more convenient user experience to investors who want exposure to the asset but can't handle the hassle of dealing with wallets, custody, etc. ETFs take crypto to their turf, and this means opening the gates for new money.
A Bitcoin ETF has been on the table for ages (8 years since the first proposal), and it will still be for a while because what the SEC has approved recently was the first Bitcoin Futures ETF. What investors can see inside the box is not the actual asset but futures contracts. Gary Gensler, SEC chair, already expressed his preference towards futures ETF because the regulatory and supervisory framework is more restrictive, and investors are supposed to be better protected than in the case of a spot ETF.
The downside is that futures ETFs, especially in the case of Bitcoin, are slightly less profitable by design. A spot-based ETF would open the floodgates of traditional retail investors.
But the moral upside is what will remain. ETFs are a bold step from crypto into traditional finance. One more reason to believe this is only going up in the long run.
2 NFTs | Coinbase to open an NFT market
Most developments in the NFT space today only make sense to insiders. Illustrations of all kinds of animals in various styles, with sales that seem to be unrelated to aesthetic quality, technical integrations that sound like gibberish, and inside jokes (recently, there's been a lot of tungsten…don't ask). But NFTs need to break that wall to succeed outside of crypto. We are a little closer today.
Sotheby's has announced the launch of a marketplace for non-fungible, tokenized art. Sotheby's Metaverse. We are talking about a company that is 277 years old and that, together with Christie's, rules the art market. Sotheby's validating this outlier technology gives NFT official legitimacy as an art vehicle.
Plus, if we look inside the walls, the big guns in crypto are also taking the stage. Coinbase is launching Coinbase NFTs at some point in what remains of 2021 (following the steps of other giant, FTX). Coinbase NFT will be a place to mint, buy and sell NFTs. And just like they did with exchanging currencies, they will probably open the door to massive adoption.
That certainly seems in play. Consider how only ~300k wallets have interacted with OpenSea (the reigning NFT platform) to date, while over 3 million people and counting have already signed up for the Coinbase NFT waitlist! Bankless
We don't know where Bankless got the 3 million people number from; other news outlets speak about 1.5M, which is not bad either.
3. Geopolitics | Mining in the USA
The Geopolitics of Bitcoin mining is changing.
The Cambridge Centre for Alternative Finance has become, as of lately, the authority geographical data around Bitcoin mining. They recently published their last Bitcoin Electricity Consumption Index with data reaching until the end of August 2021. There was one more ban announcement from Chinese authorities -the one from late September- but the effects of the Chinese crackdown on mining were already visible. Although "already visible" might be a bit of an understatement.
According to the data, China had fallen to 0% of the global hashrate. Hashrate is the amount of computational power invested in validating the Bitcoin blockchain. In its golden days, China was the host of over 75% of the hashrate and was bagging the rewards and consuming energy proportionally. That 0% is probably not accurate, but if some mining operations are going on in China, one can imagine they will be covert enough so as not to appear on Cambridge's data.
The geographical distribution of mining looks like this now:
USA: 35.4%
Kazakhstan: 18.1%
Russia: 11%
Quick takes: Bitcoin is much less centralized with China outside of the picture. And what will regulation in the US look like now that they are the hosts to a tremendously lucrative industry within crypto?
4 Gaming | Epic and Steam take positions
In 2020, the gaming industry generated $155 billion in revenue. By 2025, analysts predict the industry will create more than $260 billion in revenue. Investopedia
And guess where some of the most exciting innovations in the gaming industry are happening?
Axie Infinity showed the way: this game, where potato-shaped sort-of-pokemon fight, is already blowing people's minds, breaking records in terms of participation and revenue, and writing the instruction book for Play-to-Earn platforms. P2E is a historical development of gaming that is very likely to disrupt the way gamers approach their entertainment.
Now it's the industry's turn to react.
Two gaming giants are already placing their pieces on the chessboard.
Steam is the leading video game distribution platform. If the natural inclination of society towards video games was not enough, the Covid pandemic gave them a boost.
Steam recently updated its policy page to include a ban on blockchain-based games. The company hasn't disclosed the reasons, but it appears like the policy is an extension of a general prohibition of items that can be traded outside of Steam for real monetary value.
On the other hand, Epic Games expressed a very mild positive predisposition to blockchain-based games. Epic Games are the creators of cultural tour de force Fortnite and a company with an estimated $5.1B in gross revenues. Their endorsement is everything but firm, but if we get binary, Steam said no, Epic said yes.
5 Scalability | The Blockchain Trilemma
We've already covered scalability issues in the past: Ethereum and Bitcoin can only do a minimal amount of transactions per second. Bitcoin averages 5 tps, and Ethereum hardly doubles that number, while VISA claims to process 1,700.
Scalability has spurred innovation, giving engineers a problem to solve, and Layer 1 alternatives and Layer 2 solutions came to the rescue (an intro to Layer 1 and Layer 2, here). But when it comes to solving the scalability problem, we must never forget the blockchain trilemma.
Coined by Vitalik Buterin, the blockchain trilemma refers to the balance between the three essential ingredients of a blockchain: scalability, security, and decentralization. An improvement in one of the corners of the triangle usually involves losing power in the other pillars.
This concept is more a mental model than an actual theorem. Still, it is generally an excellent way to look under the hood of the different solutions, because more often than not, speed, security, and centralization are hard to balance.
6 Facebook | The metaverse company launches a wallet
Facebook seems to be undergoing a slow and bumpy revolution if revolutions can be slow. The company has a history of flirting with blockchain technologies but finds it hard to take significant steps. Years ago, it launched its cryptocurrency, Libra, in the hopes of disrupting the payments industry worldwide. The initiative met strong criticism from the public administration at a moment when Facebook was in its worst reputational shape (the Cambridge Analytica times). Eventually, Libra changed its name to Diem, and got delayed indefinitely.
What happened instead was that Facebook launched Novi, a wallet that is going through its pilot experience in Guatemala and the US, where users can already download it and exchange Paxos' stablecoin. Facebook, Paxos, and Coinbase (the company in charge of custody) seem like a good trio to share a pilot.
This could be a more serious sign of change coming from Facebook, at least while the announcement of a brand new, more metavers-y name breaks the news.
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