The Baking Sheet - Issue #69

October 15, 2021

The Hangzhou proposal features several major improvements to the protocol -- let's vote!

Welcome to this week’s issue of The Baking Sheet!

As we continue to witness the growing surge in Tezos-based NFT’s, DeFi, and continuous protocol upgrades we’re sometimes left with a few questions. The more predominant being, what does this all mean? 

In this week’s newsletter, let’s try to answer that question.

Tezos Ecosystem Insights: Web3

The best analysis I’ve seen (albeit pithy) on web3 came from Arthur Breitman about a week or so ago. The question was trending on Twitter and Arthur shared a few thoughts here. 

For those of you who don’t feel like opening the link to the tweet, here’s what he said. 

Web1: content distributed to users

Web2: content produced by users and distributed to users

Web3: content produced by users and distributed to users on user controlled platforms

What exactly is web 3 or the “metaverse” for that matter? 

I think the answer to this deserves some preliminary analysis with crypto cycles. 

Crypto is a very nascent space, with just shy of over a decade under its short history.

With that short history comes a relatively small market capitalization as comparative to commodities, precious metals, etc. After 10 or so years the entire market capitalization of crypto isn’t even over 3 trillion USD.

Given that market capitalization, it rises fast and can swing just as fast downwards. Hence the volatility, which comes in waves every 4 years.

These waves are usually created following a Bitcoin halving event where Bitcoin miners block rewards for mining get cut, making Bitcoin more scarce. Eventually there will come a time where no more Bitcoin could be mined, but that’s a conversation for a much different time. 

What’s become more than apparent to me is these crypto cycles are not as random as we might think. They extend beyond these halving events. Now, what do I mean by that?

Bitcoin redefined an existing problem and has been fairly successful in doing so. It changed the way we viewed money and value, for that matter.

Fast forward to 2017, the previous bull run. Initial coin offerings (ICO’s) were raising $20-50M every other day for some solution to whatever. This resulted in moving beyond Bitcoin and exploring vastly the capabilities of platforms like Ethereum and smart contracts. It also redefined traditional funding models (i.e. investment groups, VC funds, etc).

Fast forward even more to late 2019 and present. Decentralized Finance (DeFi) was introduced and provided the same legacy financial world instruments – lending, borrowing, etc. But, decentralized and amongst pseudo anonymous people on the internet.

I didn’t think something that would surely repeat the previous pattern of redefining an existing centralized problem, but it did. There’s over $200B in total value locked (TVL) across all DeFi platforms as of today.

Let’s enter the metaverse and JPEG land. 

Web3, metaverse, NFT’s… you hear these phrases several times a day at this point. What does it all mean though?

There’s no granular or “perfect” definition for this. To be quite candid, it’s mainly a lot of internet dwellers over exposed to JPEG’s trying to pitch you a grandeur vision of why you should buy their bags. 

Jokes aside (mostly), behind the NFT speculation craze we’re seeing today is actually the groundwork for something much bigger.

I’ll give you an example.

Say you’re one of the many who decided to buy an NFT at some point, a lizard for examples purpose. Maybe this lizard is now pretty valuable and your social media channels are now full of people with lizard pictures as their profile pic. They also keep screaming the floor is too low.

A few things happened here.

Firstly, instead of glamorizing your newly acquired lizard NFT, you’ve become intertwined into a newly formed community of people who also have these lizards. We can draw parallels to sporting teams. What once was no reason for someone to approach or converse with you, due to the shared common interest (your lizard NFT), you’ve now opened up doors that previously would have been closed socially.

Arthur Hayes does an amazing job at detailing this concept further here.

Now, these NFT’s are tokens, by their very name (Non-Fungible Tokens). Web3 itself is the internet owned by the builders and users, orchestrated by tokens.

This orchestration can lie in the underlying management of the platforms in which these NFT’s are based, such as Tezos. What we are essentially seeing is tapping further away from big tech and revitalizing the very origin of what the internet was supposed to be.

The internet was most certainly not meant to be used to track, profile you, and collect data from you as we’ve witnessed from the likes of Facebook, Instagram, and others. Their entire business model relies on this.

Imagine a future where your cryptographic wallet address represents your identity. That wallet address reveals some details about you, through a profile you may have created for it or what have you. Take it a step further and imagine it's your personnel number or identification for your job.

It’s not going to be a so-distant future where we begin to see these things come to life. I see DAO’s playing a critical role here as well in aligning incentives as we begin to push away from typical corporate structures. Just look at the rapid trend of remote based work in the past year or two, it’s not going away.

How everything binds together might require some more time to see, and thought for that matter.

However, one thing we can know for certain is that Tezos is making significant strides in making this vision a reality. It will be fascinating to witness the next few years as we traverse into web 3.

This Week in the Tezos Ecosystem

We’re proud to announce that fredcy is the second recipient of a grant from our newly established small grants program! The small grants program is an experimental regional effort focused on…

We’re proud to announce that Primate is the third recipient of a grant from our newly established small grants program! The small grants program is an experimental regional effort focused on…

The Lugh represents a real breakthrough for crypto-currencies by the syncretism it operates between the multiple advantages of crypto-currencies and the stability of one of the world’s most-traded…

This month we made some changes to categories so please make sure to read this article. This is the third iteration of the program and we will continue to make changes based on community feedback…

The Tezos ecosystem has been growing fast lately. Last month, we witnessed the contract calls hit nearly 6M for the ending of the month.

Since early this year, we have witnessed Tezos’s DeFi sector grow into existence. We have seen projects come and go, each one supplying a building block for the next.

Staking is arguably the most optimal way to profit from cryptocurrency. The potential profits are higher than in the case of hodling, and the risks of losses are low compared to active trading. We even found an even more conservative option: staking with stablecoins on Wrap Protocol.

This Week in Tezos Development

Like in any large-scale system, a proper cache system can greatly increase Tezos' efficiency and execution speed. But, even better, the new cache in protocol Hangzhou is fully integrated with the protocol, allowing gas discounts whenever the cache is used. This will drive gas costs down, especially for popularly-used contracts.

It is very important for a ceramic artist observing a kiln firing their art pieces to know how things are progressing. For a Tezos baker it is not very different — they need to know how their baking…

A safety-critical program is only as trustworthy as the libraries it relies on, so we at Nomadic Labs pay close attention to our tools and dependencies — i.e. to our toolchain.

Blockchain development on Tezos basics in five lessons. Learn how the smart contracts work, start writing in Pascal LIGO language and create your own NFT.

Now Streaming

Trending on Tezos Agora

TL;DR Initial open source release of zkChannels and zeekoe node available for Tezos on testnet!

Looking at period 56, we can see that old proposals for Granada and Edo are still floating around in the ether.

Tezos NFT Project: Neonz

Neonz is the first project of the Sutuverse - Sutu's own Metaverse! Sutu is exploring ways where owning Neonz will unlock future content in AR and VR. Both AR and VR experiences are already in development. More info on this coming soon!

Also in the works we have Prosthetic Reality V2, the world’s first NFT AR Art Book (coming in November 2021). This project showcases artistic talent across the blockchain community through the lens of Augmented Reality, bridging the gap between printed art, animation and the blockchain. You can count on seeing Neonz in the book along with other amazing NFT Art.

In April 2021, Sutu began creating a series called ‘Hand Drawn Neons’ and minting them to HeN. The collection includes over 60 original artworks and over 6000 frames of hand drawn animation. Through this project Sutu evolved a series of aesthetics and animation techniques which he has leveraged to create Neonz, his first generative project.

Sutu is a pioneer of digital art and culture. Over the years he has created interactive digital comics including Nawlz, Modern Polaxis and Prosthetic Reality - the world's first Augmented Reality art book. He has also created 7 VR films that have shown at festivals such as Sundance, Tribeca and SXSW. He has worked on major IPs such as Ready Player One and Doctor Strange and created virtual concerts for the likes of The Weeknd, John Legend, Jean-Michel Jarre and Dillon Francis.

Sutu is the Co-Founder of EyeJack - an Art and Technology company.