Fake Monkeys Make Millions
This article was nearly titled, “Web3 Goes Dark” but thought it would really bring the point home by discussing the ridiculousness of what caused Ethereum to become a traffic pileup and coincidentally Solana to go down for its seventh time on May 1st.
All of it is due to fake monkeys.
It reminds me of the promises that came with Compact Discs (CDs) to the music industry when they were invented back in 1982. Before CDs, you had vinyl records that would get scratched or broken or cassette tapes that could become unwound or expensive tape decks would “eat” your tapes. CDs promised that your music could be played on repeat forever — without ever having diminished sound quality. CD technology was so cutting edge that it was alleged that scratches could no way harm the playback.
The music was yours forever.
Maybe Ethereum should take a lesson or two from Napster.
Napster was a peer to peer music sharing network that created organic innovation. It as an aggregator that created all sorts of new value, more choice, more information, more targeted marketing, advertising possibilities, cross-selling, and of course, new products. The solutions that spun out of the Napster idea are still with us today.
But at the time, this new value creation struck fear in the music industry and it made them lash out to sue the people who used Napster as well as Napster itself. When a company fights to lock down and keep control over its marketplace means it’s already on its death march. Internet aggregation businesses are mostly a winner-take-all competitions.
Real growth happens when those who are using services are also the ones that stand up the services.
The creator of the popular Bored Apes Yacht Club collection of NFTs depicting different apes with different wardrobes and facial expressions is Yuga Labs. They launched a sale on April 30th of virtual land related to its metaverse project. This sale went on to trigger one of the highest spikes in transaction fees on Ethereum.
The plots of metaverse land — Ethereum-based NFTs called Otherdeeds — had pushed up the price of ApeCoin (APE). Each plot cost a buyer around $5,800 based on ApeCoin’s price of $19 as of Saturday, plus transaction costs, or “gas fees,” in Ether.
Minting a token or making a transaction on Ethereum requires token creators or traders to pay a fee to those that order transactions on the network. Transaction fees go higher when the network becomes congested given more fees are needed to prioritize a transaction.
The metaverse land grab created an Ethereum gas war. Yuga Labs had hoped that capping the number of Otherdeeds that could be purchased per wallet in each wave of the sale would ease congestion. It did not. People paid between 1.3 ETH to 1.9 ETH ($3,500 to $5,500), on average for their transactions to go through. Some paid 5 ETH ($13,500) and higher — nearly double the cost of the land itself.
The high fees lasted several hours making Ethereum virtually unusable for any other projects. It also caused Etherscan, Ethereum’s transaction monitor, to temporarily crash.
Yuga Labs blamed Ethereum for all its issues. Then later said Yuga Labs will be integrating to Polygon. Polygon holds $4 billion worth of crypto assets and its gas fees are drastically lower compared to Ethereum’s mainchain.
Regardless, Yuga Labs still raised about $320 million. But because of poor planning, many users were left unhappy. Yuga Labs claims they will be refunding gas costs.
The Otherdeed launch fiasco caused ApeCoin (APE) to drop by -33%.
Even Solana blockchain, which is often touted to be the ‘Ethereum killer’, due to its speed and low transaction fees, buckled under pressure. A NFT minting tool Candy Machine, that allows for customized NFT marketplaces within the Solana ecosystem, was flooded with bots that crashed Solana’s consensus nodes on Sunday, 1 May.
Each validator node of the blockchain network holds the entire transaction record and constantly synches updated transactions. This means the more validators/nodes, the greater the redundancy of the blockchain network. This is what meant when blockchain is said to be decentralized and it’s main measurement of success:
- Ethereum has 6110 nodes.
- Solana has 1,724 nodes. Solana’s top five data centers are in charge of 46% of the network.
In contrast, Bitcoin has 15,656 nodes.
Again, taking a lesson from Napster’s playbook, what if a node could easily be installed and configured on anyone’s laptop or heck, their mobile device. The number of nodes would explode per network which would mean faster transactions and cheaper “gas” prices.
One would think that more centralized blockchains would be faster due to faster transaction confirmation times across fewer nodes. It’s actually greater redundancy that makes for better decentralization.
Napster went from a million users to over 50 million users in 7 months. 50 million people with the software installed and sharing all of their music library. At the time it was the fastest growing application in the history of the internet. Napster only went down when it was Federally court ordered to.
What if blockchain networks started moving towards “lite nodes” that check the proofs generated by full nodes (including miners) who do hold the full blockchain, providing a guarantee of ledger validity. Ethereum calls these Stateless Clients. Consider that you can run a lite node and maintain the network with a device as simple as a Raspberry Pi with 512 MB RAM. See example: Ergo.
“For Web3 to grow,” says blockchain innovator Shadman Hossain, “It must make complex simple. It must be allowed to proliferate quickly. Imagine offering chains that inter-network lite nodes — that do basic yes, no, zeros and ones functionality. Then linking these chains to a super node that is a little more complex and can focus on limited multiple choice functionality, that link to a super nova node that is one step removed from a regular node.”
Mr. Hossain is working on a patent pending blockchain framework that allows for Web3 and blockchain to scale, be secure, and most importantly live up to its name: stay decentralized.
After Napster, it was said that the music industry all but died. Then Steve Jobs created the iPod and Apple Music which evolved Spotify that forked into Jay-Z’s then Jack Dorsey’s Tidal bringing out “all you can eat” music services.
Consider that CDs were once considered untouchable in the music technology space. Now CDs are collecting dust, while music streaming services generate 4.6 billion USD.
Streaming means you can have 97,000,000 (97 million) songs citing the Gracenote database, on repeat instead of just 8–12 tracks.
And it all goes back to scale. Blockchain needs to be able to contend with “all you can eat” services and in the process, learn the valuable lesson:
Monkey see. Monkey do.