A smarter contract
The year 2021 is early prime-time in Web3 (and its development), and as with everything new and with great prospect, there is bound to be a rush to participate and participate quickly, mostly for the profit incentive — the kind that comes with doing things first. Oh, what a rush! Welcome to the World Wild West, Season 3.
If you are familiar with markets, innovations and possibilities, you must have come to know about the different manifestations of this sort of rush. Very notably, between 1848 to 1855, America experienced something called the Gold Rush, where a very lucky man named Marshall (James W. Marshall) found Gold in the state of California. His discovery brought about 300,000 people flocking into the state of California, looking for the same precious metal he had found. They could see nothing else. They were all just ambitious minds, blinded by the prospect of generational wealth and a better-quick-quick life. At the beginning of this rush, there were hardly any laws regarding this new discovery, and little protection for people that stumbled on this life changing metal, hence, anything went. It was one of the earliest and most impactful episodes of the Wild West.
Fast forward a few more years into the future; it is the year 1995 and we have a new rush, very similar to the last one. This rush followed the success of new breakthroughs in technology, as pioneered by years of hard work in Military and Space Development. It was the Internet; a new way to communicate with anyone, anywhere in the world, store and transfer data in the most magical way possible. Everyone saw an opportunity to have something built, and smart businessmen saw the opportunity to invest in anything with the internet-tech label attached to it. It was a mess, and it was nicknamed the Dot-Com Bubble. Many brokers were incentivised to push anything that had anything to do with the internet, while venture capitalists and retail investors saw the need to buy into the hype of may of these Chaff companies.
A Chaff company is a one filled with good numbers and a very elevated position in the stock market, but without any useful substance to its name. It doesn’t last long, up high, mainly because it is a bad investment.
Well, as you guessed, the second great bubble ended as fast as the first. By the year 2000, the bubble had reached its peak, falling from a 400% rise to a humbling 78%. It was a very attractive bubble, oddly depressing when it came to burst, putting an end to Season 2.
What can we learn from a bubble?
As humans, well, absolutely nothing. But as watchful humans, we can learn everything we have always known as kids:
That every bubble grows to burst. This is the first law of bubbles as proposed by humans like myself.
Web3 is not a bubble
Web3 is not a bubble … just yet, until we choose to ride it into the shape of one, just like a ball of Snow grows more spherical as it goes downhill. It is just getting started, so we cannot and we should not. This is the rise of something with a lot of potential.
So what is Web3? you may ask.
What is Web3?
Web3 is the 3rd iteration of the internet as we know it, or in a more grim perspective, Season 3 of our beautiful bubble — wild west — movie.
It is the improved version of the original dreamchild of Tim Berners-Lee which he called the Semantic Web. While previous iterations of the web — Web 1 and 2 — had their positives and negatives, Web 3 builds on the positive aspects of both, creating a new system of the web that is heavily powered by trustless, decentralised and permissionless systems like we now have in the blockchain. In addition to that, this new kind of web will be heavily dependent on Artificial Intelligence and Machine Learning, to improve (and run) its very far reaching system. In addition to this, it will be mostly open source.
This in itself is a brain tease. If the last paragraph was too much for you to digest, here are a few keypoints:
- Semantic
- Artificial Intelligence aided
- Ubiquitous (far reaching)
- Decentralised and Permissionless
- Spatial (see Metaverse and VR)
The above five (5) points sum up the entire Web3 topic.
Smart Contracts
A significant aspect of Web3 is its ability to be operated with Decentralised Apps (dApps) that are automated through smart contracts, which are signed through user/operator wallets. If you want to know more about smart contracts, read further here.
Within the trail of smart contracts in the blockchain, we have a simple technology, NFTs, which are a special type of contract in the blockchain that are already transforming profit sharing in the creative industry. To learn more about Non-Fungible Tokens, a good place to start would be this article.
Now that we know what NFTs are, let us learn about how they could pose a problem in this new web we are trying to carve out of Berners-Lee’s semantic image. Let us take a look at the Adidas case.
The Adidas Case
Adidas, a reputable sportswear brand followed the lead of many other established companies, and in December 2021 launched their first NFT collection in collaboration with the GMoney NFT, PunksComic and Bored APE Yatch Club.
They started traditionally with an early access mint, followed by a public mint the next day. They had a team go through the planning of both launches (to open minting), plugging all loopholes and rightly following the tracks of their collaborators. Nothing could go wrong, but something did.
Two mints per head
Two mints per person (or wallet as is the identifier in web3), was the set model for the launch. What this meant was that, one wallet address could only buy a maximum of two NFTs from the project. So, even if your fingers were fast enough to handle two wallets — to make double purchases, you stood a chance to miss, by aiming at both.
This was a very smart approach to make sure one user does not steal up large numbers of the NFTs to themselves. Adidas wanted to reach her fans, and she was determined to do it with 30,000 special NFTs.
Disaster Artist
A forward thinking investor known as NotChefBob.eth, resolved to not be limited to the local cap of 2 NFTs per head. This investor created a smarter contract to enable him grab as many as 330 NFTs out of the 30,000 total, paying 93.3 ETH in transaction costs (including gas fees), thereby gaming the system. A link to the ether scan of the smart contract is here.
The Adidas collection sold out in seconds.
Hear the words of former AWS Blockchain engineer, Montana Wong in his Twitter Thread, speaking about the move:
What it [the smarter contract] does is generate 165 sub smart contracts that would each individually mint 2 NFTs from the Adidas’ smart contract, and transfer them to the owner’s … Since each sub smart contract has a unique address, the creator was able to avoid the 2 item limit imposed by the sale. After sending the NFTs to the creator’s main address, the child smart contract would self destruct.
What this means is that this investor should now be in massive profits, as the floor price of these Adidas NFTs immediately shot up after launch and has been on a steady rise since then.
Automation, danger or tool?
Since an equally significant feature of Web3 is automation via Artificial Intelligence, and we are in a new Gold Rush, how much more danger are we in, with this new iteration of the web?
How can we work against the features that are meant to work in the benefit of Web3, but seem to work against it? Like Artificial Intelligence, Centralised Decentralisation and Venture Capitalists that may pull all strings to make sure the Gold falls to their pockets?
Let’s discuss.
