Non-Fungible (round)Table Alert! Please join u/Luma44 and me for an NFT Roundtable with @0xmons @alexgausman and @KeramDesign about NFTs, their financialization, and the technology that powers them.
Hello r/Superstonk resident jellyfish here with you (joined by u/Luma44) to announce an AMA-style roundtable about Non-Fungible Tokens (NFTs), their financialization, and the technology that powers them is ready for viewing.
Participant's background and resources for learning:
There is a lot to unpack here, so buckle up and let's dive in!
The entire roundtable is about 2 hours in length, so we have broken it into 3 pieces so that it can be more 'bite sized':Exploring NFTsFinancialization of NFTsTechnology powering NFTs
No! We got you covered with a transcript uploaded to imgur! (sorry, way to big to fit into a post)
Transcript (hosted at imgur as way too many characters for a post)
Additional Resources for learning about the space can be found below.
Background
Working in Web3: The Handbook (Recommended by Owen)
Ethereum, blockchain, and web3 development
What is web3 and why does it matter?
Non-Fungible Tokens (NFTs):
- A way to represent anything unique as an asset.
- NFTs are giving more power to content creators than ever before.
- Powered by smart contracts on blockchains (Ethereum is our main initial point of interest).
What Exactly Is An NFT And Why Should You Care https://www.forbes.com/sites/forbestechcouncil/2021/05/13/what-exactly-is-an-nft-and-why-should-you-care/
The NFT Crypto Guide Crash Course 101 (https://medium.com/coinmonks/the-nft-crypto-guide-crash-course-101-5b30d39e0646) July 16, 2021 - Stephen Alagbe
How to get exposure to NFTs (https://newsletter.banklesshq.com/p/how-to-get-exposure-to-nfts) February 23, 2021 - William M. Peaster
Bankless HQ The Bull Case for NFTs (https://www.youtube.com/watch?app=desktop&v=qSH7vJ8ZJy8&t=770s&ab_channel=Bankless)
Ethereum:
https://ethereum.org/en/what-is-ethereum/
Decentralizing Everything (https://www.youtube.com/watch?v=WSN5BaCzsbo&feature=youtu.be) Sep 18, 2017 - Vitalik Buterin (Video)
Why Decentralization Matters (https://medium.com/s/story/why-decentralization-matters-5e3f79f7638e) Feb 18, 2018 - Chris Dixon
The Year in Ethereum 2020 (https://jjmstark.medium.com/the-year-in-ethereum-2020-98123e5f160d) Jan 20, 2021 - Josh Stark and Evan Van Ness
Ethereum is game-changing technology, literally (https://medium.com/@virgilgr/ethereum-is-game-changing-technology-literally-d67e01a01cf8) Mar 29, 2019 - Virgil Griffith
EthHub (https://docs.ethhub.io/) Comprehensive knowledge base for all things Ethereum
District0x (https://education.district0x.io/general-topics/understanding-ethereum/) An educational resource about Ethereum targeted at beginners
Ethereum.wiki (https://eth.wiki/) A community-built wiki about Ethereumโs technology
Ethereum Foundation YouTube (https://weekinethereumnews.com/) Videos and talks about Ethereum
Week in Ethereum News (https://weekinethereumnews.com/) A weekly newsletter covering key developments across the ecosystem
Whatโs new in ETH 2.0 (https://eth2.news/) A regular newsletter about Eth2 development
ethresear.ch forum (https://ethresear.ch/) Deeper technical discussions on Ethereum for Eth2 and beyond
ETHGlobal (https://ethglobal.co/) An Ethereum hackathon series
r/gamestopofficial: a subreddit where people can post about NFTs including question/answer threads, art & NFT ideas, group collaboration, etc as it relates to GameStop (no Stonk talk)
How Ethereum works high-level explanations of Ethereum and blockchain technology generally:
How does Ethereum work, anyway? (https://medium.com/@preethikasireddy/how-does-ethereum-work-anyway-22d1df506369) Sept 27, 2017 - Preethi Kasireddy
A Gentle Introduction to Ethereum (https://bitsonblocks.net/2016/10/02/gentle-introduction-ethereum/) Oct 2, 2016 - Antony Lewis
Introduction to Blockchain through Cryptoeconomics - Part 1 (https://medium.com/blockchain-at-berkeley/introduction-to-blockchain-through-cryptoeconomics-part-1-bitcoin-369f245067f9) Jan 26, 2018 - Zubin Koticha
Introduction to Blockchain through Cryptoeconomics - Part 2 (https://medium.com/mechanism-labs/introduction-to-bitcoin-through-cryptoeconomics-part-2-proof-of-work-and-nakamoto-consensus-1252f6a6c012) July 19, 2018 - Zubin Koticha
Understanding Ethereum (https://allan-gulley.medium.com/understanding-ethereum-819c2096b613?sk=c89f3aa5a4fd8b5fa0dae3042a3fa011) Apr 27, 2021 - Allan Gulley
Ethereum's original Whitepaper https://ethereum.org/en/whitepaper/
Smart contracts:
What is a Smart Contract? (https://github.com/ethereumbook/ethereumbook/blob/develop/07smart-contracts-solidity.asciidoc#what-is-a-smart-contract) Nov 12, 2018 - Andreas M. Antonopoulos, Gavin Wood
What are Smart Contracts/Decentralized Applications? (https://docs.ethhub.io/ethereum-basics/what-is-ethereum/#what-are-smart-contracts-and-decentralized-applications)
Proof-of-work and Mining:
What does it mean to mine Ethereum? (https://docs.ethhub.io/using-ethereum/mining/)
Cryptoeconomics:
Cryptoeconomics.study https://cryptoeconomics.study/ Intro to Cryptoeconomics (https://www.youtube.com/watch?v=F0FCI8GxO5I) (Video) Aug 19, 2018 - Karl Floersch
Making Sense of Cryptoeconomics (https://medium.com/l4-media/making-sense-of-cryptoeconomics-5edea77e4e8d) Nov 16 2017 - Josh Stark
Critique and skepticism
Ethereumโs roadmap isnโt ambitious enough (https://decryptmedia.com/6136/vulcanize-rick-dudley-ethereum-roadmap-makerdao-polkadot) March 27, 2019 - Interview with Rick Dudley
The Challenges of Building Ethereum Infrastructure (https://medium.com/@lopp/the-challenges-of-building-ethereum-infrastructure-87e443e47a4b) Jan 8, 2018 - Jameson Lopp
Parsimonious Answers to Difficult Questions (https://www.youtube.com/watch?v=GOkSg0BuSdw&feature=youtu.be) (Video) March 10, 2019 - Rick Dudley
Thereโs no good reason to trust blockchain technology (https://www.wired.com/story/theres-no-good-reason-to-trust-blockchain-technology/) Feb 6, 2019 - Bruce Schneier
Why is Layer 2 Needed?
- Some use-cases, like blockchain games, make no sense with current transaction times.
- It can be unnecessarily expensive to use blockchain applications.
- Any updates to scalability should not be at the expense of decentralization or security โ layer 2 builds on top of Ethereum.
Rollups:
Rollups are solutions that perform transaction execution outside the main Ethereum chain (layer 1) but post transaction data on layer 1. As transaction data is on layer 1, rollups are secured by layer 1. Inheriting the security properties of layer 1 while performing execution outside of layer 1 is a defining characteristic of rollups.
Three simplified properties of rollups are:
- transaction execution outside layer 1
- data or proof of transactions is on layer 1
- a rollup smart contract in layer 1 that can enforce correct transaction execution on layer 2 by using the transaction data on layer 1
Rollups require "operators" to stake a bond in the rollup contract. This incentivizes operators to verify and execute transactions correctly.
Useful for:
- reducing fees for users
- open participation
- fast transaction throughput
There are two types of rollups with different security models:
- Optimistic rollups: assumes transactions are valid by default and only runs computation, via a fraud proof, in the event of a challenge
- Zero-knowledge rollups: runs computation off-chain and submits a validity proof to the chain
Optimistic rollups:
Optimistic rollups sit in parallel to the main Ethereum chain on layer 2. They can offer improvements in scalability because they don't do any computation by default. Instead, after a transaction, they propose the new state to Mainnet or "notarise" the transaction.
With Optimistic rollups, transactions are written to the main Ethereum chain as call data, optimizing them further by reducing the gas cost.
As computation is the slow, expensive part of using Ethereum, Optimistic rollups can offer up to 10-100x improvements in scalability dependent on the transaction. This number will increase even more with the introduction of shard chains as more data will be available if a transaction is disputed.
Disputing transactions
Optimistic rollups don't compute the transaction, so there needs to be a mechanism to ensure transactions are legitimate and not fraudulent. This is where fraud proofs come in. If someone notices a fraudulent transaction, the rollup will execute a fraud-proof and run the transaction's computation, using the available state data. This means you may have longer wait times for transaction confirmation than a ZK-rollup because the transaction could get challenged.
Pros:
Anything you can do on Ethereum layer 1, you can do with Optimistic rollups as it's EVM and Solidity compatible.
All transaction data is stored on the layer 1 chain, meaning it's secure and decentralized.
Cons:
Long wait times for on-chain transactions due to potential fraud challenges.
An operator can influence transaction ordering
https://youtu.be/7pWxCklcNsU (VIDEO on Optimistic Rollups)
Zero-knowledge rollups
Zero-knowledge rollups (ZK-rollups) bundle (or "roll-up") hundreds of transfers off-chain and generate a cryptographic proof, known as a SNARK (succinct non-interactive argument of knowledge). This is known as a validity proof and is posted on layer 1.
The ZK-rollup smart contract maintains the state of all transfers on layer 2, and this state can only be updated with a validity proof. This means that ZK-rollups only need the validity proof instead of all transaction data. With a ZK-rollup, validating a block is quicker and cheaper because less data is included.
With a ZK-rollup, there are no delays when moving funds from layer 2 to layer 1 because a validity proof accepted by the ZK-rollup contract has already verified the funds.
Being on layer 2, ZK-rollups can be optimized to reduce transaction size further. For instance, an account is represented by an index rather than an address, which reduces a transaction from 32 bytes to just 4 bytes. Transactions are also written to Ethereum as call data, reducing gas.
Pros:
Faster finality time since the state is instantly verified once the proofs are sent to the main chain.
Not vulnerable to the economic attacks that Optimistic rollups can be vulnerable to.
Secure and decentralized, since the data that is needed to recover the state is stored on the layer 1 chain.
Cons:
Some don't have EVM support.
Validity proofs are intense to compute โ not worth it for applications with little on-chain activity.
An operator can influence transaction ordering
