Hello Defiers! Today we’ll take a break for yield farming to talk about another booming corner of the open economy: tokenized assets.
Foundation’s new product drop and why an artist is going crypto, in her own words
Ethereum miners have been quietly raising the block gas limit and what that means for transaction prices
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Art Can Save Crypto From Itself
Ever since the Bitcoin chain started producing block after block in 2009, crypto has attracted mainly the following groups of people: libertarian-leaning types looking for an independent monetary system, programers wanting to build unstoppable applications, academics interested in the cryptography or game theory of the whole thing, and speculators drawn by the gut wrenching ups and downs in price.
This is a very limited bunch.
What if blockchain development has come to a stage where it can attract a whole new slice of society? Creators can now start pollinating the crypto economy with their art and products.
Builders are creating slick marketplaces for creators and their fans, facilitating the listing and exchange of their work. One of these marketplaces is Foundation, which launched in May with clothing label Neue Goods that has generated almost $20k in trading volume.
Demand for goods listed on similar market place has been heating up. A cassette tape sold on Zora by Grammy-award winning artist known as RAC, via digital tokens called $TAPE, soared to as high as $500 from. Prices for $FAME t-shirts on MetaFactory and $SOCKS on Uniswap have also been on a rollercoaster ride.
Today, a new collection is dropping on Foundation. Signe Pierce, who gained notoriety with her award-winning short film American Reflexxx, will be selling a collection of still life images from her “Jangular Lilies” series.
Jangular Lilies. Image source: Foundation
In an interview, she told The Defiant why an artist with not much previous interets with crypto is now tokenizing her work.
Why Crypto, in an Artist’s Words
The spark went off back in 2012 in the unlikely place of Tumblr. Signe had graduated art school the previous year and was hearing the word “postmodern” all the time; the idea that it’s all been done before, and there is no such thing as originality, which was depressing to her. Until she had an epiphany looking at art work from all over the world on her phone.
I realized, how can you tell me that it’s all been done and that nothing is original. That was the day I said, I am a digital artist. I am going to be using the technologies of my time to push art forward because that’s what art should do.
And then 2018 is when I went to a kind of a dinner party type thing, where I got a crash course in what blockchain is, how it can maybe restructure the valuation of art in the digital era, which is something that I had really been struggling with.
Signe Pierce. Image source: bauhaus100
My work was taking off on Tumblr and I remember feeling frustrated about how the work was so seen and popular, but there was no value attached to it.
And so getting clued in to the idea that there’s a lot of people thinking about the future of art, currencies and new values being developed and attached to the digital scope. A lot of lightbulbs went off.
When Foundation reached out, I had been waiting for something like this. I’ve been waiting for an opportunity to really get into crypto and think about how this could be an evolutionary way of valuing art in the next era because we need that.
Two Key Developments
Creators now have a reason to use these networks thanks to two key developments: 1. Non-Fungible Tokens (NFTs), 2. Automated Market-Makers (AMMs).
NFTs —unlike ETH and BTC, which represent interchangeable coins— are meant to represent things, and therefore, are unique and not interchangeable. This allows creators to link their art or merchandise to specific tokens, which opens up a whole set of benefits: the ability to prove authenticity, which ensures scarcity, a means to verify ownership, and an easier way to trade their products.
AMMs enable the exchange of assets via pools of liquidity and prices set by a predetermined formula. That means traders are always be able to buy and sell assets, without having to wait for a match in an order book. This has been key for the very long tail of crypto tokens with less liquidity than ETH and BTC, and this will include from obscure ERC20s, to art work represented in NFTs.
In Foundation’s AMM design the artist sets a starting price, a maximum price, and the total supply. Unlike with exchanges like Uniswap where there’s no maximum price sot hat there can always be liquidity, Foundation’s market is designed for artists to be able to sell all of their products. The artist can also adjust the pricing curve, potentially setting for a steeper increase as products become scarce.
Signe is the first outside creator Foundation takes and she is ready to experiment.
What do we have to lose? It’s an opportunity to try something new. It’s an opportunity to engage people. There’s always new solutions to be worked out. My end game is to think about new opportunities to generate capital so that it can be funneled back into lighting up the world.
High Block Gas Limits Doesn’t Mean Lower Prices
By Rachel-Rose O’Leary
As yield farming takes DeFi by storm, ethereum miners are testing a new way to increase transaction throughput: raising the block gas limit.
Since Thursday last week, the network’s top mining pools have been quietly signalling to increase the limit from 10,000 to 12,500 per block- the highest block gas limit the network has ever operated.
It’s a move which could increase the transaction throughput of the network, helping it handle new bouts of transaction activity –– but that won’t necessarily mean transacting on Ethereum is getting any cheaper
Just like any network participants, miners can’t change ethereum’s code directly – at least, not without first going through ethereum’s code acceptance process, called ethereum improvement proposals (EIPs). Still, they have the power to adjust the block gas limit by raising or lowering it by 0.1 % of the previous block.
At the time of writing, the vote from miners to raise the block gas limit appeared to be unanimous.
Data from Etherscan shows top mining pools, Ethermine, Spark Pool and F2Pool, which together account for roughly 57.2% of the network, all working together to increase the overall block gas limit.
Speaking on Twitter, Bitfly, the mining company behind Ethermine, emphasized that the move could benefit ethereum users.
“In theory, this means that the Ethereum network now has the capabilities to handle ~44 transactions per second, instead of ~35,” the company wrote, calling it “another huge milestone for the community.”
Stepping back, the block gas limit refers to the maximum amount of gas, or transaction fees, that can be included in a single block. In theory, that means that miners can process more transactions per block without impacting the gas prices that ethereum users are paying.
And that’s notable because, at the time of writing, daily transaction counts are on the rise. On Tuesday, transaction volume climbed to the highest so far this year, a 140% increase since January.
But while changing the block gas limit might make the network process transactions faster, it’s unlikely to lower gas costs – something that has been an increasing burden to DeFi users.
And that’s because raising the block gas limit changes the amount of gas that can be accepted into a block, without changing the gas limit for transactions. This leads to an overall increase in gas usage while gas costs remain stable.
Speaking on Twitter, Ethereum developers warned that an increase in the block gas limit could even lead to higher gas prices overall.
Citing recent gas costs of 56 gwei per transaction, or $0.281, ethereum core developer Peter Szilagyi said “People will use whatever gas is available and fill it with whatever junk… If scaling relies on adding more gas to the fire, I have bad news.”
Last week, Szilagyi also warned against increasing the block gas limit, stating that it could make the network more vulnerable to denial-of-service (DOS) attacks.
That’s because the block gas limit acts as a cap to the amount of computation the ethereum network can handle. By increasing the limit, you also open the door to more computationally intensive attacks.
Because of this, Szilagyi wrote that “Ethereum miners don’t give a fuck about the long term health of the network nor about DOS attacks.”
“Unfortunately there’s short term profit and long term investment. Almost none of the original miners are still in the ecosystem, but the original devs still have to pick up the crap after everyone,” he continued.
And raising the block gas limit comes with other risks as well.
For example, raising the limit could increase the number of uncle blocks – duplicate blocks that are mined in exchange for rewards but are rejected from the actual blockchain.
Because uncle’s are equally hard to mine but have lower rewards, having more uncles may lower miner’s paychecks. However, this might balance out by the increase in profits that miners are gaining from transaction fees.
But a higher block gas limit could lead to other problems as well.
A higher limit means information is being added to the Ethereum blockchain at a faster rate. Overtime, this will make it more expensive to store a copy of the Ethereum network, increasing the centralization of the network.
“It’s as if they want ETH1.x to become unusable asap,” Ethereum developer Lefteris Karapetsas, responding to the block gas limit increase, said.
It’s not the first time that ethereum miners have voted to increase the block gas limit. Commonly viewed by miners as an easy way to increase transaction capacity, the block gas limit has been changed five times in Ethereum’s history.
During the 2017 ICO craze, miners voted to increase the limit from 4,000 to 6,500 per block. Most recently, miners voted to increase from 8,000 to 10,000 in September 2018. Gas prices remained stable or higher each time, which may not bode well for those expecting these changes would bring cheaper farming.
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About the editor: I’m Camila Russo, a financial journalist writing a book on Ethereum with Harper Collins. (Pre-order The Infinite Machine here). I was previously at Bloomberg News in New York, Madrid and Buenos Aires covering markets. I’ve extensively covered crypto and finance, and now I’m diving into DeFi, the intersection of the two.