#16 On NFT frogs, COVID and Twitter beefs
We built a site devoted to the Rare Pepes collection, a piece of NFT history, we saw crypto affected by the virus, and we speak about scalability, Botto and gaming.
Any comments? Write us at team@carbono.com or find us on Twitter: we are @carbono_com, @raulmarcosl and @miguelatcarbono.
Pepe.wtf, a site for the old cars in NFTs
NFT is the word of the year 2021, according to Collins dictionary. You don't get much bigger than this :)
2021 has been the year for NFTs. There's probably not one single reason for this, but a perfect storm of trends maturing simultaneously. Financial bonanza in crypto, Layers 1 and 2 providing the highways, artists finding an escape from more traditional forms of expression and marketing, an ecosystem of companies streamlining access... But how long would you say it took NFTs to get to this point?
At Carbono, we started playing NFT archaeologists recently and ended up falling down a rabbit hole. We discovered a whole new world of NFT ancestors and went a little obsessed about it.
Meet the culprit.
Pepe, the frog, was a character in an indie comic book from a 2005 series called Boy's Club by Matt Furie. For some reason, 4chan ended up adopting this frog as their favorite resource for meme-making, and it became an internet sensation.
This silly-looking frog might ring a bell to you. At some point in its strange little life, the American alt-right Pepe and its image was used to deliver right-wing propaganda. But Pepe survived the misuse and moved on. So let's forget this happened and instead let THIS define Pepe: Pepe was the leitmotif of the first real NFT collection.
In 2014, some developers built Counterparty: a sort of Layer 2 built on top of the Bitcoin blockchain that allowed for some very basic initial DeFi and NFT functionalities. It allowed its users to mint and trade with unique assets, sometimes decentralized.
Counterparty feels a little bit like steampunk. For those who don't know, steampunk is that genre of science fiction where writers create worlds where technology has advanced dramatically but where science hasn't moved beyond steam-powered technology and learned about electricity.
In steampunk fiction, machines do their job, but it all looks noisy and clunky. If you browse through XChain, the most popular Counterparty block explorer, you'll probably see what I mean.
Thanks to the new features Counterparty added to Bitcoin, users could create the first authentic NFT collections. Spells of Genesis and Force of Will were the two first experiments: card games translated into crypto. But in 2016, Pepe the frog made its appearance, and it became the first NFT sensation.
Born from Telegram groups, Rare Pepes became a collection on Counterparty starting in late 2016. They began by mocking the ICO fever and honoring Satoshi Nakamoto but went on to become a collection of pop and underground culture, political satire, and plain weirdness in general.
The last accepted submission of a Pepe happened in 2018. By that time, 1774 different cards had been issued along 36 series. Some of them are 1/1 supplies (like ONLYONEPEPE) or in the millions (like GIVEKUDOS, with 100 million). There are references to art (Picasso, Kandinsky, Dalí...), politics (there are at least 6 Putin-themed cards), popular culture (PEPEKACHU currently sells for $35k), and then randomness galore.
Pepes have become the equivalent of classic cars in the NFTs space. They are feats of olden day engineering, you wouldn't want to drive them for your daily commute because the UX is painful, and they look weird by modern-day standards. But, boy, are they cool. They are a piece of crypto history. Born from indie memes, sometimes beautiful, often tasteless, many of them inspired by shady references, full of crypto's F-U ethos, and loved by a faithful and cohesive community.
We fell in love with the frog and decided to do something about it. So we built a site: pepe.wtf
Pepe.wtf is the brainchild of @pepe himself and Carbono. Our humble contribution to the exciting universe of Rare Pepes. With this platform, we have tried to gather all the primary sources of information about this fantastic collection under the same roof and digest it to provide clarity in the exploration process. Users can now find all the relevant information on any card in one place before buying one for their collection. We have built some sort of Coingecko for RarePepes.
Our goal was to provide collectors with a new, streamlined browsing experience for their favorite collection. But we also wanted to onboard new people who might want to approach this collection but were deterred by the complex user experience.
What does all this say about the general crypto space?
Rare Pepes are a crucial part of the general NFT space. A primordial manifestation of the digital version of the human impulse toward collecting. You're probably astounded by the looks of the cards and their price but bear in mind that we are talking about culture here and a community celebrating it. If (or when) NFTs become art's new home, Pepes will be its cave paintings.
⬡ 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. Price-action | Crypto caught COVID
After some weeks of determined climbing, especially following the news of the approval of the first Bitcoin futures ETF in the US, crypto prices, as represented by the two main assets, BTC and ETH, have gone through some downturns. The last one had to do with a liquidation phenomenon coming from the futures market. But right before that, it was the pessimism coming from the offline financial markets after the reports of a new strain of Covid showing up in Africa. A symptom of how the bond between crypto and traditional finance is strengthening.
In what will be familiar to those who witnessed the events of March 2020, Bitcoin thus abandoned its asymmetrical investment traits to fall in line with both equities and the US dollar. Cointelegraph
On the one hand, this proves that crypto is increasingly intertwined with traditional finance. On the other, many buyers decided to buy the dip. Following the price decrease, Bitcoin marked the day with the most significant single on-chain transaction volume in Bitcoin's history on November 25th. Plus, on-chain metrics show that the demand from long-term investors, AKA's HODLERs, is strengthening.
Not to mention that the power of crypto should be less and less measured by the price action of BTC and ETH and take more into account the activity from industries like DeFi, NFTs, or DAOs.
2. Metaverse | A 1 trillion opportunity
The metaverse: the interconnected, experiential, 3D virtual worlds where people located anywhere can socialize in real-time to form a persistent, user-owned internet economy spanning the digital and physical worlds.
The above is Grayscale's definition of the concept. Probably accurate, but a little convoluted, if you ask me. I'm finding that "virtual worlds" is often enough to explain what most people think of when they say metaverse. However, I usually follow it by explaining that, in many senses, the metaverse is already here insofar as we already play, socialize and, more and more, conduct our finances in the digital realms. Bulky glasses are optional.
Grayscale recently published a report claiming that the metaverse may represent an over $1 trillion annual revenue market opportunity, with $400B of it coming from gaming. Grayscale bases their prediction on current tangible trends, like the ongoing flow of venture capital into metaverse related ventures, including the $10B committed by Meta, the company formerly known as Facebook. Also, in just the past weeks, virtual real estate sales have broken records with purchases of a $2.43M plot in Decentraland and $2,48 in Axie Infinity.
3. Geopolitics | El Salvador
Nayib Bukele presents the strongest candidacy for Bitcoin maximalist of the decade, with the announcement of the project for building Bitcoin city. Bitcoin city is an urban area planned to be built from scratch at the bottom of the Conchagua volcano.
It will use volcanic geothermal energy to mint Bitcoin
It will be funded by Bitcoin-backed bonds that the government is planning to launch in early 2022 and expected to generate $1B in returns.
It will have no taxes besides Value Added Tax (VAT)
Skeptics have it easy. Bukele's presentation looked more like the inauguration of a theme park than a proper city-sized project. He provided few details apart from a handful of juicy headlines. There are reasonable doubts regarding El Salvador's, one of the area's poorest countries, ability to pull such a monumental project off.
Best of luck, in any case, to the Salvadoreans.
4. Scalability | ETH beef
If Michael Jackson came back to life and had to do yet another video clip about gang fights, they would look less like this...
...and more like this
Last week we witnessed a Twitter beef between crypto gangs. It all started with a tweet from Su Zhu, co-founder of Three Arrows Capital, one of the leading funds investing in crypto.
"Ethereum has abandoned its users" was too much to take for many people out there. There are dozens of replies; this Bankless newsletter issue gathered the most interesting ones. Below is just a sample.
But besides the beef (who doesn't like a little bit of Twitter drama), the underlying issues are interesting to consider.
Gas fees are a de facto entry barrier into everything Ethereum related. They are stopping non-wealthy users from engaging in areas such as DeFi or NFTs, turning the ecosystem into an exclusive club. Vitalik knows this. He is quoted saying, "we will either manage to scale Ethereum or die trying.” But another thing that has characterized Ethereum is its long-term approach to innovation. These are not early Facebook's "move fast and break things" days. The Buterin bunch is uncompromising when it comes to shipping improvements. They will only do so when they are well tested and fit the highest standards of decentralization and security.
5. NFTs | The $BOTTO token
Botto is about to turn two months old. For those who haven't been following, Botto is the decentralized art project Carbono, along with the Eleven Yellow team, has been involved in for more than a year, and that officially launched on October 8th.
This is how we introduced Botto to Carbono insights readers, and this is the 1-month recap we did. Botto has been on tour recently, with team members, like Mario Klingemann, our own Raúl Marcos, and more visiting Madrid and Miami. You can therefore find some good explanations in the press about Botto (this is one of my favorite explainer articles so far).
Long story short, Botto is a project with two main faces: it is an algorithmic, generative artist, that produces 350 fine art pieces weekly. But it also is a community of thousands of people, gathered around the $BOTTO token, who participate in governance mechanisms over the artist.
Today, we'd like to briefly overview the $BOTTO token, how we distributed it initially, and why.
The existence of the token was a necessary condition for Botto to happen. They create an incentive structure around a project that requires human implication. to put it bluntly, Botto the AI needs human labor for curation and training purposes. The community also does a job of awareness-raising, visibility, and education. That labor needs to be rewarded, and without crypto, this would have been next to impossible. At the launch, 100M units of the Botto token were created. Botto is an ERC-20 token built on Ethereum. Token holders were given voting rights and would participate in the proceeds of auctions. But how was Botto distributed, and why?
The team defined a distribution meant to serve several purposes:
Team. The team was allocated 20M BOTTO, with a vesting period recently extended to two years. This means the team cannot sell their tokens as proof of engagement and implication. We want Botto to thrive in the long term and not be a source for quick revenue, and this is the way to hard code this commitment.
Airdrop. First of all, the project needed visibility. So 20M tokens were airdropped to people who had interacted or owned some relevant related NFT projects, such as ArtBlocks or Bored Apes Yacht Club. This was meant to provide awareness across tight-knit communities that would inform their members about the initiative.
Liquidity mining program. Once you've launched a token, you want people to be able to purchase it. DeFi is the way to do this for a project with no access to centralized exchanges. We created a liquidity pool in Uniswap, ETH-BOTTO, where token owners from all categories (team, treasury, airdropped users) could lock their BOTTO for others to come and buy. Those who participated in the pool were eligible for the liquidity mining program rewards, which had 20M Bottos allocated. (The project recently modified its incentive structure and has partnered with OlympusDAO, but that's a pretty long and complex story)
Treasury keeps 30% of the $BOTTO issued. That money will be used for everyday purposes such as marketing and will become the community's budget once the project is fully decentralized.
We hope this peek into Botto helps you get closer to the workings of a project. Botto has DAO, DeFi, and NFT ingredients, and working on it is a mind-blowing adventure we are eager to share.
6. Gaming | Guilds
Play-to-earn. If you haven't heard of it, let Grimes break it down for you.
Play-to-earn is more than a teenager's dream or a streamer's privilege. It is becoming a reality, as crypto allows gaming projects to redistribute the wealth they generate across the community. In play-to-earn gaming platforms, players earn tokens for their participation, therefore turning them into fiat to use at a grocery store. If you want to understand it quickly, albeit superficially, you can think of play-to-earn as a company like Fortnite distributing its marketing budget across the players, who in exchange are incentivized to build an extended community.
Guilds are a type of business born from this concept—players organized in company fashion to professionalize playing in play-to-earn platforms. Andreessen Horowitz invested $4.6M in Yield Guild Games in August, and now another two guilds have some announcements to make: Avocado Guild has announced an $18M round, and Loot Squad announced a $5M raise too.
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