Don't Feel Guilty About NFTs - TokenSmart NFT Humpday Report #23
Don't Feel Guilty About NFTs - TokenSmart NFT Humpday Report #23
Welcome to the 23rd issue of the NFT Humpday Report, a weekly column covering and providing embedded analysis on the NFT economy’s biggest topics du jour. Brought to you by WIP meetup collaborators and nft42 community hub TokenSmart.
The NFT ecosystem is currently debating the ecological impact of NFTs amid this new blockchain-powered media arriving in the mainstream limelight for the first time and thus with articles like Memo Atken’s “The Unreasonable Ecological Cost of #CryptoArt” gaining more attention lately.
Rightfully so, being mindful about energy is critical in these times. Yet the gist of these articles, that minting Ethereum NFTs directly leads to vast levels of energy consumption, is technically inaccurate.
This point was illustrated aptly in a new post titled “No, Cryptoartists Aren’t Harming the Plant” by cryptoart marketplace SuperRare, whose team noted therein:
“You can think of Ethereum kind of like a train engine throttled to the same speed all day, kept running by miners securing the network in exchange for ETH. In this analogy, transactions submitted to the network would be seats on the train. Due to the design of Ethereum, the train will keep running at the same speed and with the same energy consumption whether or not there are any seats filled.
In other words, if everyone took a break from using Ethereum apps and no transactions were sent for a whole day, the carbon emissions of the network would essentially stay the same.
[...] Thus, claims that more computationally-intensive transactions such as minting NFTs cause more energy consumption in the Ethereum network are untrue. Higher gas transactions cost the sender more money, but are not correlated with higher energy consumption.”
So what should we do as NFTers, knowing that Ethereum is generally energy inefficient anyways? Ethereum 2.0, or “Eth2,” which is orders of magnitude more environmentally-friendly than Ethereum proper in its current form, should reach full maturity within 18-24 months. We can opt for new promising avenues of efficiency in the meantime.
Source: modified via ethereum.org/en/eth2
What do I mean? As the recently published “Guide to ecofriendly cryptoart (NFTs)” notes, innovations like layer-two (L2) scaling solutions, sidechains, and lazy minting can make NFT transactions vastly more energy-efficient in the here and now.
Indeed, we’re already seeing the advent of all three of these arenas in 2021. L2 NFT exchange Immutable X will be here in weeks. NFT game Axie Infinity’s Ronin sidechain was recently launched. And NFT marketplaces like OpenSea are integrating lazy minting. Things may be early in these regards, but this is just scratching the surface and Ethereum scaling developments are coming in rapidly across the board now.
When you combine these various innovations with L3 solutions like Polygon and Connext’s Vector, which can make Eth1, Eth2, and ecosystems of L2s and sidechains easily interoperable, you’re looking at Ethereum-linked activities being drastically more efficient and environmentally-friendly, and then Eth2 Phase 2 will put the final nail in the problem’s coffin.
All this said, here are our options why we’re still on the cusp here of totally mitigating Ethereum’s environmental impact (and SuperRare expressed similar ideas in their aforementioned post):
Supporting Eth2 development efforts with a wartime effort mentality, so that Eth1 mining can be phased out faster (e.g. Gitcoin donations to Eth2 client teams)
Migrating your support and minting activities to alternative, fully active PoS blockchains
There’s nothing wrong with the last option, though on Utilitarian grounds I argue backing Ethereum’s L2 solutions (etc.) and rolling out Eth2 will have far larger and more lasting positive impacts on people and the environment than migrating to alternatives. Here’s why.
A Defense of Ethereum and NFTs
There is nothing in the world today that has the ability to disrupt more physical industries across the world stage now and in the years ahead than Ethereum, a new super useful public goods infrastructure.
Beyond its many benefits, this coming Ethereum-driven de-physicalization may potentially have a range of social costs, though its environmental benefits will be clear: less need for many types of brick-and-mortar industries, less need for commutes, and thus less environmental impacts globally.
For example, Ethereum is the main progenitor of stablecoins. IMF staff acknowledged as early as 2019 that “banks may lose their place as intermediaries if they lose deposits to stablecoin providers.” They weren’t wrong. They were early. And this is but one of Ethereum’s promising verticals.
Factor in Ethereum’s blooming DeFi, DAO, and NFT sectors, and it’s clear a huge variety of environmentally harmful real-world activities can be vastly disrupted by Ethereum, an unprecedented and maturing public goods infrastructure that is considerably better positioned than all of its PoS competitors for lasting and widespread success.
To bootstrap itself and defend against economic attacks in its early years, Ethereum relied on energy-intensive proof-of-work (PoW) consensus, a la Bitcoin, which was the most secure possibility at the time.
For years, migrating Ethereum to proof-of-stake (PoS) consensus explicitly for its exponentially reduced energy requirements has been a key part of the project’s “Eth2” roadmap. Bootstrapping was needed to get Ethereum toward its true potential.
In a 2019 paper, Ethereum creator Vitalik Buterin and co-authors noted on the PoS shift:
“One of the main alternatives to PoW is virtual mining or Proof-of-Stake (PoS). In PoS, the right to propose a block is earned by locking – or depositing – tokens on the blockchain, which has no inherent energy cost.”
The key phrases here are “virtual mining” and “no inherent energy cost.”
This means unlike Bitcoin, which will continue to run on vast energy-intensive mining farms around the world, Eth2 will be secured virtually on peoples’ computers.
Accordingly, the unparalleled potential that Eth2 and a robust multi-chain scaling ecosystem have to efficiently revolutionize and de-physicalize many environmentally-harmful activities makes scaling Ethereum, in a Utilitarian sense, the best way forward for people and the planet.
Moreover, only so many people would migrate to alternative PoS chains, because all the activity and momentum of the Ethereum ecosystem is unparalleled right now and will continue to be so for the foreseeable future.
This is why I say scaling Ethereum with an all of the above, wartime-effort approach is the most impactful way forward. Ethereum isn’t going anywhere and most of its users aren’t either because of its gravity and maturation, but we can mitigate its impact the faster we can make Eth2 and L2 / L3 solutions active and used. The possibilities for doing so are here already. And I think with community willpower and collective efforts, we can absolutely make these things a reality faster. It’s Manhattan Project time for Ethereum.
So we’re on the cusp of the necessary changes in all regards. And it’s all in the interest of giving the world’s people an efficient and super useful public goods infrastructure that offers new and better ways forward. We’ve done our bests and as quickly as we could to make it happen.
At the end of the day, it’s about the miners. This isn’t something we should be overly flagellating ourselves for as NFTers.
Indeed, miners would be outputting the same amount of emissions whether we mint NFTs right now or not.
The plan for Ethereum has always been to shift to PoS, which impressively increases the network’s security while overwhelmingly decreasing its energy profile. We can back these Eth2 teams with more money and more open-source contributions, and we can get PoS faster. And we’re on the verge of an L2 and sidechain boom — I’m talking weeks, not months. We have the chance to change the world, and we’re going to.
So I think projects that have no serious plans to leave PoW, like Bitcoin, should be castigated to go way greener with PoS or miners should commit to having net-zero emissions with carbon offsets. And I think that Ethereum’s NFT projects and users being proactive and open about their scaling and offset plans can only be good.
But these stakeholders have also built on Ethereum, an open bet on Ethereum’s plans and a bet on the unique revolutions happening around this network and on a project whose ecosystem has done the right things to make it have the most lasting positive impacts on the world, including the environment.
In other words? Serious disintermediation + serious efficiency is the best way forward. That’s Ethereum. That’s NFTs. NFTs don’t make me feel guilty — they make me optimistic we’ve now got better ways and the right paths to move ahead together for ourselves and for the planet.
Thanks for reading the 23rd NFT Humpday Report! Check back this time next week for more excellent NFT ecosystem coverage! Cheers🌠