We are All Going to Die. NFTs are Dead.

But that's okay because Death will save us.

This is the second part of a long multi-chapter hyper-thread on the NFT market from 2021 to 2023

Chapter two below

Today we learn that 80% of NFT volume is done by 10% of the wallets.

🧵💀↓

Preface:

Over the next several weeks I will post different chapters as threads in a broad arc on the recent NFT crypto cycle.

This is the second chapter in the series.

The chapters are as follows:

1) Hallowed Ground - How do 666K people freeze $6.5B? (quoted)

2) Trapped in the Zombie Crypto Casino - Why do people stay?

3) Mausoleum for a Burned Ape - What was the 2021 narrative?

4) Network, Death, Rebirth - Do NFTs have a line of flight?

https://twitter.com/poof_eth/status/1668771781166120961

🧟

Chapter Two: Trapped in the Zombie Crypto Casino

On scale, addiction, quitting, and coming back (alive) again.

Note: This will assume you read Chapter One.

The market is down. Everyone has "left." Only a few remain who may lead us to the promised land of mass adoption...

This is the current narrative. It's largely false.

For all of my talk about death, these zombies are "alive" and kicking. Waiting for their moment to eat.

We will turn an eye towards the users we identified in chapter one.

Who are these people? What does the concentration of capital, assets, profit look like across them?

And most importantly... how do they behave?

Let's start with a simple segmentation. We have wallets so let's work with wallets.

We placed every ETH wallet into a bucket based on how much secondary volume they spent in 2021 and 2022.

As we saw earlier, we end up with a similar wallet breakdown...

Now, if we want to have a little fun and create some drama... Let's look at how these wallets spend.

95% of all NFT spend is done by 12% of wallets!

And 76% is done by the top 6% of wallets!

But that's not what's important...

The actual insight to takeaway is twofold:
1) The actual material impact on price, volume of "light users" -- likely what is termed the "mainstream" adopters -- is largely irrelevant.

2) The ~600K user number seems to be resilient to assess a majority of the market dynamics.

We will focus on the 610K wallets that have spent >2.0 ETH during this time period.

This is the distribution of this group across the buckets.

Note: to the best of our ability, we removed wash-trading.

Now, what does this represent in terms of buying power?

It's worth briefly mentioning the Pareto principle.

Distributions of consumers, wealth concentration and consumption have a tendency to follow a "Pareto distribution" which is often summarized as "80/20."

The top 20% of people do 80% of consumption...

Put more simply, Pareto essentially says the phenomenon of "whales" is reoccurring in a variety of statistical scenarios.

Example illustration: the top 20% of spenders in a game spend 80% of the overall dollars.

It's important as what I will share on NFTs is actually... common.

We will briefly shift to a simple table... This is a breakdown of the 610K wallets.

What we will find is intuitive, the top 21% (~150K) of wallets do 81% of volume.

And similarly the top 5% do 54%.

All of this fits the hallmarks of a typical Pareto distribution.

So we identified the relative scale and size of the largest spenders and their import...

Let's put this in context now. When we talk about adoption, when we talk about toy sales, IP deals, brand deals, Jimmy Fallon talking about Apes, and so on...

There is an assumption that ADOPTION will drive volume. Or more naively, that ADOPTION IS driving volume.

While it has the potential to drive volume (10M users spending 0.05ETH = ~$12B volume), it has had minimal direct impact on the current state of affairs.

This is important since the primary price thesis was based in a narrative of "new money" coming in from presumably "new users."

This isn't what's happening.

Existing users and "early adopters" who are deeper into the system gain conviction in spending more.

Recall in Chapter one the liquidity assessment...

Our ~650K wallets had $4B in liquid assets sitting in their wallet at the start of 2022. This is just what's sitting in a wallet.

This is the money, largely, that was deployed and redeployed again and again into the market.

Now, each Cycle does add new users... I am an example of this as someone who largely was not serious about crypto until the middle of 2021.

But the important thing to evaluate now is... How is it that the money doesn't seem to leave the casino?

If it's just PvP or just crypto rich people traading amongst themselves, won't the money eventually be taken out of the system?

Let's first look at whether or not anyone leaves the Casino.

We looked at the entire segmentation of user above and came up with a % retention rate.

What % of wallets in each group had more than one transaction on ETH in 2023?

What we found...

The more you spend, the more likely you are to stay.

For those who haven't spent much time with retention models...

This is fairly typical (can cover why in a separate post if there's interest).

What's shocking about the results is that this is simply ANY transaction during one of the deepest bear market years (2023)...

People actually stay.

Let's look at NFT transactions now in a red line.

Similar story, but, a lower number.

Before we move on, let's consider the aggregate numbers:
62% made >1 ETH transactions
42% made >1 NFT transactions

But now if we look at just the top 21% who do 81% of the volume:
79% >1 ETH transactions
62% >1 NFT transactions

Higher by roughly ~20 pts.

The "true" numbers are likely higher based on our earlier assessment of wallets too...

So we learned that the more you spend, the more you are stuck in the Casino...

Or put another way... the more liquidity you bring, the more you are unable to quit.

More money, more addiction

While not perfect, this gives a sense of just how good that top line is against other benchmarks...

Most systems have inherent churn, Netflix and Hulu have true subscription models making retention easier than something like F2P mobile gaming

Top 20% of NFT wallets > Netflix

I was originally going to have a long discussion on gambling behaviors. And how NFT shares much in common with online poker and slot machines.

Fundamentally though, NFTs and Crypto in general are far more totalizing than that...

Various examples:

1) Most of the mints from 2021 were poorly thought through or, worse, scams... yet 50% of that was still explicitly spent BACK into NFTs. Likely much more will show up in crypto broadly.

...

https://twitter.com/poof_eth/status/1668771905862778880

2) Consider how major figures in crypto twitter are largely unable to leave. The (imperfect) Nansen list of top profit traders will yield a number of names that are still highly engaged.

3) In your own personal experience... you're stuck aren't you?

To understand Gambling behaviors I highly recommend two pieces...
Natasha Dow Schüll’s book "Addiction by Design" on Slots and her article "The Gaming of Chance" on Online Poker

Review here: https://www.natashadowschull.org/wp-content/uploads/2018/06/book1review-SSS-Hsu.pdf
and https://www.natashadowschull.org/wp-content/uploads/2018/05/bookchap-modes-of-uncertainty-chance-online-poker-software.pdf

The most important insight in my view from the above is the following...

Getting into a state of semi-conscious flow is more important than "winning" and the terms of "winning" can be arbitrarily changed.

There's further work here for someone to do on how ETH as a denomination largely functions in the same way as "gems" in online gaming which is a typical mechanism to add "sunk cost" to a game and psychologically underrepresent their value.

But I digress...

So: The majority of spenders on NFTs are still in play a year later.

Once they're in, it's hard to get them out of the casino...

What about those who are not "active?"

Zombies are the wallets that are not active today, but may be reactivated at any time.

Because the crypto system has a high barrier of entry...

Once you have a wallet, you have gained this cursed knowledge forever.

Enabling you to re-engage at any time.

There are two types of Zombies relevant for us:
1) Zombies with a new distraction...

Those who, in our earlier example, stopped trading NFTs but continue actively engaging in crypto and ETH.

Consider the large liquidity available at the start of 2022. Whether active or inactive in NFTs, that $4B was ready to be spent.

Ultimately much of it ended up in NFTs, but it also likely was spent in shitcoins, DEXes, gambling and so on.

2) The Zombies who have temporarily disengaged in ETH... but are likely ready to come back for the next bull (or new narrative)

The high barrier to entry (setting up a wallet, buying ETH, etc) means that at any time these individuals can jump back on.

To conclude this chapter... let's highlight what's most important:

There are roughly 150K wallets that drive 80% of the NFT market volume

80% of these individuals are still playing Ethereum ~2 years later in the midst of a bear

The more you spend, the more you stay.

You'll noticed we have only talked about spend and not profit.

And we didn't even talk about a single project!

Aren't we missing something?

Well that's on purpose... profit, projects chosen, and other factors had less correlation to stickiness than overall volume.

It's not about winning or losing, the more you engage, the more you want to stay in the casino.

In Chapter 3, we will start looking at where money went...

What projects won, what narratives were created, who profited in trading...

How does a "narrative" work and accumulate?

Sources / resources:

Tons of custom work thanks to rmas that is available here on his profile for anyone, get a free flipside crypto account to use it
https://flipsidecrypto.xyz/rmas/

Worth perusing out all of Schull's work on gambling and addiction here
https://www.natashadowschull.org/

You can read the unrolled version of this thread here: https://typefully.com/poof_eth/RKS2ByM

Chapter 2: Trapped in the Zombie Crypto Casino

We are All Going to Die. NFTs are Dead.

But that's okay because Death will save us.

This is the start of a long multi-chapter hyper-thread on the NFT market from 2021 to 2023

Chapter one begins below

Come learn about the $6.5B spent on NFT mints

🧵💀↓

Preface:

Over the next several days I'll post different chapters as threads in a broad arc on the recent NFT crypto cycle.

This started as my own research and expanded into a multi-faceted exploration of NFTs focused on: flows of capital, death, WAGDIE, behavior, and potential

The chapters are as follows:

1) Hallowed Ground - How do 666K people freeze $6.5B?

2) Trapped in the Zombie Crypto Casino - Why do people stay?

3) Mausoleum for a Burned Ape - What was the 2021 narrative?

4) Network, Death, Rebirth - Do NFTs have a line of flight?

⚰️

Chapter One: Hallowed Ground

Get ready, this one is mostly data and charts.

Let's get grounded on some key facts.

$6.5B was spent on minting ETH NFTs between 2021 to 2023.

$1.5B was collected via royalties and marketplace fees.

Here's a visual of the breakdown.

That's a huge number...

How many users participated in NFTs during this time then?

"Users" as a metric in crypto is typically fraught.

We know it's easy to spin up new wallets, and metrics can be inflated.

The real question, however, is a simple one: Is it like a million people? Five million? Half a million?

We can get close to that.

We use a simple segmentation to first see how many individual wallets exist that bought or sold (traded) NFTs 3 or more times from 2021 to 2023.

The output of that work is a single number: 2.1M wallets

Now we have a cap, there are AT MOST 2.1M users.

How do I know those ~2M wallets are really users though?

We can look at Ethereum's monthly average wallets and compare to how many non-zero wallets there are.

Over the last 2.5 years, the cumulative number of non-zero wallets doubled while "true users" is likely about flat.

If we apply that logic to the NFT wallets...

We should likely cut our 2M NFT wallets number in half to get to a rough sense of "users".

So now we have a maximum of 1M NFT users over the last 2.5 years.

Before we move forward, why do we care about how many users there are?

We care because having a rough understanding of how many PEOPLE are in the space will help us reason about what is actually occurring.

Last question, what is a user? What if someone quits? Who is active?

There are two numbers that are important:

1) Total unique users reached
2) Weekly active usage

Let's take a look at weekly active usage of NFTs.

Unfortunately, our best "usage" is have bought or sold NFTs in last week...

For most of 2022, there were about 250K weekly wallets.

While there is more nuance, I think 250K is a good general "bottom end" of the user number.

Alright, so where do we land?

There are between 250K to 1.0M unique users who participated in ETH NFTs.

For short hand going forward, we will cut it somewhere in the middle and say there are ~650K users (or 666K for aesthetics).

650K souls trapped in the Crypto Casino of NFTs (to be discussed more deeply in the later chapters).

Now let's pressure test our spend number and see if it makes sense.

$6.5B on mint fees across 650K users

For a total of ~$10,000 per person.

For every user, $10K on mint fees per user.

Seems like a ton right? Well maybe.

Let's go deep on this.

How do we think about liquidity entering a market? And who GETS the money in the end?

Where did the $6.5B of mint fees "go?"

And how do we think about the slow illiquid nature of NFTs?

Remember our problem...

$10K per person seems like a lot for individuals to spend on minting NFTs.

And we know the $6.5B number is a fact. So how do we deal with it?

Let's define WHERE money has the opportunity to leave the market.

1) Minting: theoretically spent on "operating costs" / taken out of market
2) Royalties: same as above
3) Marketplace fees: theoretically spent on operating costs of the marketplace
4) Gas fees
5) Traders who exit

We will take a deeper look at number 5 later. We will also skip gas fees as it's not interesting for our needs.

So let's dig into 1-3.

Since all of these are based on market conditions, let's start by looking at the timeline of volume for the NFT market...

Dollar value of NFT volume on ETH L1 was $44B over the last 2.5 years:

2021: $17B
2022: $23B
2023: $4B (to date)

So, first check... if $6.5B was spent on mint fees alone, does it make sense that the volume could be 6-7x that?

Maybe! Let's look at a few other things...

So I go back to our pie chart...

$6.5B in mint fees
$1.5B in royalties and marketplace fees

$8B that was definitely spent.

But what if some of the $6.5B in mints are spent back into the market? Really, does that make sense?

Well... Nansen did great work on tracking what happened to NFT mint proceeds both in 2021 and 2022.

What we see is actually surprising...

And it's a sign of behavioral patterns we will revisit later.

Here's where the money went in 2021 (through August)

In H1 2021, 18% of the money definitively went back into NFTs.

Okay that's something, but take a look at this...

In H2 2022, a full 50% of mint fees were put back into the NFT market DIRECTLY.

Let's pause here for a minute.

50% of the mint funds from projects were used to buy MORE NFTs.

Some of that is likely bad behaviors (buying your own NFT etc).

However we should really digest this:

Over only 6 months of time 50% of project funds got DEGEN'd into the market.

So back to our quest to see how much money was really there to be spent...

I'm going to take a leap and assume that this 50% will hold for all project funds and over most of the peak of the NFT boom from the middle of 2021 to end of 2022.

Remember projects took in a total of $7.3B in mint fees and royalties:
2021: $2.1B
2022: $4.4B
2023: $0.8B

If 50% is "spent back" into the market... and then marketplaces take $0.7B...

Then the true liquidity "leaving" is roughly $4.4B.

So our 650K people spent a ton of ETH trading back and forth, but at the end of the day $4.4B showed up and was purchased... without just being "recycled."

Is that real? Did these people show up with this money and put it into the NFT vending machine?

Well let's just look at their wallets... probably should have done this first!

The wallets that satisfied our criteria had over $3.9B in LIQUID assets IN their wallet in Jan 2022.

This is ONLY looking at USDC/T and ETH.

So, what have we established?

There are likely 650K users who have participated in ETH NFTs.
There was $6.5B spent on mints and $1.5B on secondary fees.
Of that, projects dumped 50%(!) back into buying more NFTs.

Taking out the "reinvested" dollars, the average user spent $7K

How did so many people spend so much on NFTs?

Where did they get all of this money?

Wasn't there a ton of adoption with new money coming in?

How many people are left?

Poof, I thought you said NFTs are dead?

You'll have to tune in for the next chapter... sometime this week.

Sources / resources:
https://flipsidecrypto.xyz/rmas/nft-market-stats-RAfgcM
https://flipsidecrypto.xyz/rmas/ethereum-nft-market-liquidity-assessment-UwJyL6
https://dune.com/browse/dashboards
https://studio.glassnode.com/metrics
https://www.nansen.ai/research/nft-sales-where-did-the-eth-go

You can read the unrolled version of this thread here: https://typefully.com/poof_eth/KVPfQ2V

We are All Going to Die. NFTs are Dead. But that's okay because Death will save us.

After much contemplation, we have made the difficult decision of halting new development of EtherOrcs...

🧵

First, some context...

When we started EtherOrcs, we were dedicated to doing things differently in the NFT space. We chose to experiment and create unique ideas, always with a free mint and no monetization.

Despite having a shoestring budget and taking in less than 400 ETH in royalties, we are proud of what our team and community have achieved.

We created the "on-chain" game category and created unmatched systems. Unlike many others, we produced an actual playable game (novel!).

Through this time, we have built using the scarce resources that we had, investing all funds back into development and moving at a pace that is beyond most other teams in the space.

I cannot be thankful enough to the incredible team who has shocked me with their talent, tenacity, and passion...

This is all on a tiny budget and (in some cases) minimal pay over the last 6 months...

@TheOtherSpy @VinnyDev1 @b33feth @jakers404 have been an unbelievable team and are some of the single most talented folks in Web3 today. It's exceptionally hard to find a team that is so dedicated to the ethos of a project and pushes forward while others take easier paths.

Over the last 6 months, the founding team has spent a majority of our time finding and planning an alternative high level path for EtherOrcs to continue sustainably...

We take insider information and overall ethics very seriously so have been purposefully quiet about this so it did not trigger any market reaction.

What we found in evaluating "funding" paths is that a project like ours is difficult for investors and adventure captialists to understand. We are more in-line with "indie" game development.

We shy away from the hype and over-commitment, which ultimately isn't the narrative that is expected.

We attempt to refine, innovate and push forward existing products rather than promise new ones around the corner.

There is no critique here of that process, we were simply not a mutual fit in these instances.

And we owe massive thanks to many who helped us navigate these conversations and considered us. Thank you.

What I would take away from this is that there is still a "third" path for NFTs that is unrealized... an indie path that's focused on development, building, and more without chasing hype or creating rampant speculation.

This "third path" is something many of us are passionate about thinking through in the future for the good of the space.

I expect myself and others will write more on this with thoughts on our learnings and potential opportunities for this approach to become more supported.

So is that truly all that could be done?

While other options exist, such as selling a NEW MINT, they are not aligned with our ethics and not sustainable even with a small core team.

A different approach would be "transitioning" the project to another working team. We have experienced this before in the space and find that typically it does not work. Our project is complex and there are only a handful of teams that could meaningfully take it over.


Unfortunately, as it usually happens, those teams are already maxed out in terms of capacity. While the door is always open to this being a potential, we are completely against building false expectations externally or with the community that some "transition" will save the day.


So that's how we got here...

Before we go to what's next, I want to reiterate how meaningful EtherOrcs has been to us and myself as an experience...


We have truly enjoyed the community and journey with EtherOrcs and it was not a decision taken lightly. Despite the long hours and minimal pay, we are deeply grateful for the opportunity to work with such great people and on such a challenging fun and exciting project...

From here...

We are opening up our art and contracts as CC0 and hope others can build using our components. We'll continue maintenance and operation of the servers and core infrastructure as long as we can as well.

Our assets remain fully on chain so there is still a significant opportunity for the community to build on the base assets and find new ways of engaging with the project.

We will have a number of discussions with the community directly on this, but also want to temper expectations externally that there are no immediate new development plans confirmed.

For external parties... we will put together some context and public guides on how different contracts within our ecosystem work that may be valuable to others in the coming weeks

In particular, things like our unique crafting contract are very compelling for others to use.

It's bittersweet to think about all of the great, challenging, fun times we have had working on the project...

I am so proud of our team, and I will be continuing to think about what can be generalized from our experience for the betterment of the NFT space long term.

EtherOrcs has been an incredible journey, and we want to thank the team and community for their support. It has been an honor to work, build, innovate and just hang out with everyone.

Thank you ALL!

ZUG ZUG!

EtherOrcs Update -- End of a Journey

stealth midnight release...

NFT slander 4: chill slander to relax / study to

all of NFT twitter must watch this. 

other parts below...

part 1:
https://twitter.com/poof_eth/status/1562248364451938304

part 2:
https://twitter.com/poof_eth/status/1563211102166872071

part 3:
https://twitter.com/poof_eth/status/1568336311563550720

NFT Slander Collection Parts 1 to 4

while crypto adoption is further ahead, NFT adoption is still "Early"

we literally have ~500K somewhat active users. we are in the innovator bucket.

this is why "awareness" is meaningless right now.

you need to create things that innovators or early adopters want. 

tl;dr your BAYC t-shirt does nothing for adoption.

reddit NFTs probably will do more for adoption than anything that exists in the market today. lol

The reality of NFT "adoption"

Two Surveys of 250 people each with the same questions -- executed on Sept-3-2022.

One is framed as an "NFT"

The other is framed as a "digital asset"

First question (aided awareness):  Higher than expected... 73% of people feel somewhat to extremely familiar

More below🧵 ↓ 

Now, perception...

You can see a huge difference between calling them digital assets and NFTs.

30% negative perception of NFTs vs 14% negative perception of "digital assets."

Note that both were defined identically to the survey takers in the summary lead-in.

Now let's see what happens if we compare those who reported aided awareness of NFTs against all responses...

Good news:
Most of the "Neutral" folks actually become positive.
The Negative people remain the same.

This means awareness / education is generally helpful to perception

From here on we will stick to people who say they are "aware" of NFTs or digital assets...

Next we ask about their beliefs about NFTs / digital assets.

Fundamentally -- NFTs are seen as a fad (nearly 50%), but Digital assets are not.

Both are perceived as expensive, however.

One note before we go forward. 

Expensive will ALWAYS be a top box response as a barrier to adoption if you put it there on any premium good.

I think we can take this response seriously for NFTs, however, given the giant price tag most people associate with it.

This is probably the most interesting part... Asking what would make them interested in buying, assuming it's not as complex or alienating...

As you would expect price comes first. We know this is a barrier.

What's interesting is that ART of an ARTIST they like is next.

Why is this interesting?

Because the majority of the volume in the current NFT market caters to the least meaningful barriers:
-- Access to an online community
-- PFP flex
-- Metaverse
-- Video games

The videogame point may be thrown out though as this is not a gamer sample.

For fun... here are random verbatims to "If an NFT could be ANYTHING you want, what would it do?":

-pay my bills
-make me money
-pay off my cards
-Die off its bullshit
-Solve something real instead of made up crap

This is quick and dirty. I'll go do some other cuts on the dataset.

So what's the tl;dr?

1) We should call NFTs digital assets (duh).
2) Art drives the most interest among gen pop for NFTs (hmm).
3) Price is a barrier (obvious).
4) No one cares about the metaverse (in my view).

NFT Consumer Research

NFT market is down in total. A lot.

Except for Pudgies and Punks. 🐧 

I spent some time working through a better way for us to collectively understand price movement in NFTs.

More data below and explanation of methodology and interpretation
🧵 ↓ 

First of all, floor is a weird metric.

So we do two things that seem to be best:

✔️ We treat the listings slightly above floor as the actual floor -- this avoids counting a fat finger

✔️ We look at the floor as a flat average of the hourly price over the last three days

The trends within a project for a floor price is interesting, but we need a comparison.

So we've created volume segments to compare projects by.

On the right, you'll see in this example... 0N1 Force is down, but bizarrely, is faring better on trend vs other projects in segment.

Now does this mean you should go buy 0N1 Force? No. If we start seeing people read it this way... I'll take it off

Remember, if a project has taken its medicine and tanked 3-8 weeks ago... that will potentially make it look better on this comp.

Okay, now for the best view...

Here it is: The Total Market view by Segment. 😮

We take the average trend within a segment and put it together on a single page.

So what's it say?

We are still in decline, but we aren't declining as much as we were... So maybe... We are getting close to bottom?

Feedback / thoughts always welcome... What frequency should I dump this? Daily feels like a bad read... maybe every 2-3 days.

Thanks to the brilliant @rmas_11 for help making this turn key and doing the heavy lift.

You can read the unrolled version of this thread here: https://typefully.com/poof_eth/ZNxJEq4

NFT Market Floor Price Tracking Approach

Houston, we have a problem in NFT market liquidity.

Mints, royalties/fees, and gas fees have taken a total of -1.4M ETH out of the NFT market in 2022 YTD.

The total liquid ETH in all L1 NFT trading wallets is currently 1.0M.

This is primarily caused by project greed.

🧵 ↓

Before I move forward: This does not mean that projects should not charge for what they are offering. Nor does it mean that "free mints" are inherently better.

But, if we allow excessive liquidity extraction again, we will end up hampering our ability to grow.

What triggered this investigation for me was the following... last 90 days vs prior period:

Eth price is down (19%)
NFT users are down (17%)

Why is NFT eth volume down (67%)?

NFT volume is down more than usage or participation because spendable liquidity has is relatively low.

We looked at 1.6M wallets that have traded ETH NFTs in 2022 and looked at their current available liquid balance.

It's only 1.0M in ETH/WETH or 1.9M ETH incl. stables.

We've found that ETH balance (excl. stables) is most correlated to near term NFT spends... fairly intuitive.

In a down market, the on-hand spendable ETH becomes dominant in driving volumes... With (1.4M) extracted YTD, this puts the market in a bind.

So how did we figure out how much ETH was taken out of the market by various factors?

We looked at the following (YTD):

1.11M ETH spent in NFT Mint fees

0.47M ETH spent in proj. royalties

0.24M ETH spent in market fees

0.44M ETH spent in gas fees

A great piece of work by Nansen helped us understand what portion of project fees actually enter back into the NFT market (see their August article on NFT mint fees)... 

~50% of project mint fees / royalties go back into the NFT market directly.

So using that information...

We found that the total net impact on liquidity of the market is -1.47M ETH YTD.

Broken down as shown in this pie chart.

Now, you could have an argument that somehow this is a positive for the space, but the relative scale of extraction is unhealthy.

It is literally larger than the available liquidity.

This is made more apparent when looking at the project list that is topping the charts...

Here are the top 10 projects in mint fees YTD.

We can all laugh at Pixelmon, but the list is a startling in terms of who and where this money is going

It also indicates a long tail of projects minting in the 5K-2K ETH worth of funds.

Also Otherdeed drove ~60K eth of gas...

Net net... what's the point?

1) We are always going to degen, but let's not pretend that these big value extractions are good for the ecosystem. They aren't.

2) Free mints are not "better," but they are certainly not worse than paid mints in sheer negative impact to the market.

3) We need to track liquidity as an additional metric. There is constant new wallet growth still in the space that clouds these things, but we need to build out significantly more analytics and segmentation in the space.

Know there's a lot more to do here, but hopefully this becomes a digsite for more analysis.

Now for thanks

Special thanks to @S4mmyEth for brainstorming this with me as well as @rmas_11 who helped on the data. 

Also shout out @nansen_ai for the great analysis on NFT mint fees.

You can read the unrolled version of this thread here: https://typefully.com/poof_eth/SsXkgDH

NFT Market Liquidity Assessment

Alright class... poof's intro to art theory & web3 continues.

Second lesson: Authorial Intent

We are going a different route today. I will share a few texts of varying difficulty... And then I will mostly cover my own perspectives on authorial intent.

Thread below 🧵 ↓

Section 1: Readings / Texts

"The Death of the Author" - Barthes: https://writing.upenn.edu/~taransky/Barthes.pdf
"What is an Author?" - Foucault: http://web-facstaff.sas.upenn.edu/~cavitch/pdf-library/Foucault_Author.pdf
Overview of Authorship theory in 20th C.: https://hal.archives-ouvertes.fr/hal-01846362/document

As a prelude: whether you agree with the premises I'm going to state or the writers I have sourced above... 

It is EXTREMELY helpful to have a theoretical framework to use to navigate intent. A lot of debates on art inadvertently devolve into conversations of intent.

Section 2: Poof's thoughts on Authorial (and artistic) Intent + some context on theories

So, what determines the "meaning" of a piece of art? Or of a novel? Is it you? Is it the cultural context? Is it the author?

There is a school of thought that the author determines the meaning of a piece of work. 

For example, what did Kafka mean on page 6 of The Trial? Let's ask him. 

Can't ask him? Well let's go look through his journals, letters, and interviews.

...

What about if he didn't provide any historical documents? Let's read about his birth, his childhood, his location, and find out more about him.

That's what prioritizing the author looks like in interpretative work.

I don't find this a particularly fruitful approach.

...

And neither does Barthes / Foucault or my standard crew of post-modern theorists.

Why? Isn't the "author" the definitive source of meaning of their texts?

Two reasons:
1) You are always "saying" more than you intend.
2) It does not reflect the importance of context.

Despite the convoluted and misguided aspects of psychoanalysis, one thing it was correct about is that there is no perfect communication of your own personal wants, needs, and desires. 

You don't always know them. And you are always communicating more than you intend.

I believe this is also true for desires, beliefs, etc that exist OUTSIDE of the individual.

For example, if I understand the film The Texas Chainsaw Massacre (the original) to merely be about cannibals living in rural areas. 

Then I close off the ability to interpret what else it means. 

Because Tobe Hooper INTENDED it to just be about a bunch of cannibals I can no longer look at it in a variety of other lens...


Example:
A story about class where the working class loses their income as a slaughterhouse and is forced to literally AND metaphorically resort to cannibalism. As well as an expression of fear among wealthy educated youth to the abandoned working class.


Or perhaps...

A story about rural vs urban shifts in America in the 1970s where the traditional family structure itself loses its bearing and enacts violence on a urban, non-nuclear group youths.

For homework check out the Final Girl by Carol Clover as a relevant horror movie example of this: http://users.clas.ufl.edu/burt/paranoid70scinema/HerBodyHimself.pdf

So... Does this mean ALL OF THIS is true? That the TRUE meaning of Texas Chainsaw Massacre is about class?

No of course not. The value of this approach is that it turns interpretation from a passive act to a CREATIVE act.

Interpretation + Art = New Thing

And there's immense value in that. That's what I mean when I say context... 

There is a HISTORICAL context which often can be interesting in which to understand the piece. 

There's authorial CONTEXT (what did Tobe Hooper think).
...

But there's also MODERN context. We are always re-modernizing our understanding of things. 

Today I might have a certain perspective of the context of when a film was made or what it was speaking to... And that is fundamentally formed and guided by my current context.


Likewise tomorrow I might have a completely different cultural and contextual framework to operate within.

And often, it's just fun to think about how different things can be understood or interpreted... doesn't always have to be so serious.

And what's critical to this... is it doesn't mean there is NO meaning.

A naive reading of many of these theorists of the 20th century will lead you to believe there is NO truth.

What they are really saying is that you can't escape your current context when interpreting work.

Even in Science, we are rarely talking ONLY about the pure facts and equations when speaking about Physics for example...

We are often taking an interpretative step even in Science proper. And this isn't always secondary -- often it can be primary in finding new thinking.

The most notable example being Einstein's Special Relativity which was EXTREMELY mathematically simple compared to E&M theories of light at the time.

Einstein utilized an interpretative framework of traditional causality as a starting point which led to a very different outcome.

(btw traditional causality ended up being actually likely wrong at the microscopic level, but that's for a different thread, ty quantum mechanics)

So why is all of this important and what does it mean for how you should look at art...

Section 3: What's the takeaway?

The point is authorial intent is a singular tool. You should use the whole toolbox rather than just that one tool. Foucault alludes to this here.

There is so much more richness if you understand interpretation as being inherently productive...

And this does not mean there is NO truth.

You can "interpret" a picture with blue and say it's green, but fundamentally we all know that's not true. Or if you're going to make this case, you better really bring some crazy facts and theoretical concepts...

Now one additional thing...

This DOES NOT mean that when we judge a work of art or think about HOW certain individuals benefit from a piece of work... that WHO makes something is not relevant.

For example, if you're a racist, we should definitely still hold you accountable to that and also consider it in the reception of your work.

This is both part of and something outside of pure "interpretation" because this is also about who you give a platform to or not.

Separately, there is a great interpretative tradition that helps us understand where there are often un-intentional (or in other cases intentional) problematic ties between art and history...

For example, Edward Said's framework in Orientalism which showed how the exoticization of the East by the West became a tool to justify colonization in many clear instances.

Whether you agree with it or not, it's helpful to see how aesthetics can actually reinforce politics...

Section 4: Closing and Discussion

That's my take on authorial intent and some good meaty texts for you to sink your teeth into.

How does this apply to NFTs and Web3? Well, I think Web3 often actually embraces a non-authorial approach...

Projects often take on meaning without knowing ANYTHING about founders. And often the lines between the "work" (NFT?), the "community," and "founders" are all blurred.

Take for instance, Pudgy Penguins where Cole is no longer involved. Or a community project like MFers.

The very construct of authorship has already been disrupted by Web3 in spite of the token itself being a bearer of authenticity. And this, to me, is just another fun part of being in the space.

Hope y'all enjoyed this... put recommendations for next topic / lesson below! ↓ 

Poof's Intro to art theory & web3: Lesson 2 - Authorial Intent

Alright, by request, I'm going to do small intros to art theory.

First lesson: "The Work of Art in the Age of Mechanical Reproduction" by Benjamin

Written in 1935, this work contends with authenticity of art (and more) in the context of new technology.

Thread below 🧵 ↓ 

Section 1: Try reading the original text and/or engage with supporting content below...

The Original: https://web.mit.edu/allanmc/www/benjamin.pdf
Video Summarization: https://www.youtube.com/watch?v=0pDE4VX_9Kk
Wikipedia: https://en.wikipedia.org/wiki/The_Work_of_Art_in_the_Age_of_Mechanical_Reproduction
Broader theoretical context for overachievers: https://plato.stanford.edu/entries/art-ontology-history/

Section 2: What does it say, broadly...

This is a foundational text in art theory, and has specific relevance in the Web3 context. 

For Benjamin, he was contending with art coming into contact with the broad populace both due to technology (photography) and institutions.

The simple example is the Mona Lisa. The Mona Lisa was once the only Mona Lisa... You had to travel to a specific location in space and time to see it.

And in all likelihood that would not be accessible to you to begin with (see its owner: King Francis)...

Now there are postcards, towels, JPEGs, and so on of the Mona Lisa. Great, democratized! Everyone can enjoy it...

But if I offer you the original Mona Lisa or my Mona Lisa towel which one do you want? Obviously the original.

Why is that? Uhh... "aura."

Benjamin's finding is that despite the intuition that reproduction lessens the value of the original. The original maintains its value / authenticity quite well.

The aura is how Benjamin describes the specificity of the original "thing," but the exact aspects of it are vague...

This is where things can get heady... but I think what Benjamin does nicely is talk about how, in a historical context, we got to this point.

This is where he assesses art historically as having a "cult value." A specific experience to go see a thing that is borderline religious

Take for instance, the Mona Lisa example, if you had the privilege of seeing it in King Francis' collection, it was a very singular, private experience.

Similar to seeing a statue in a Greek Temple or visiting a Holy Relic in a Church.

Now compare that experience to going to an "exhibition" where the public can freely see a piece of art. Or to the experience of seeing the Mona Lisa on a postcard, privately in your own home.

That unique "cult" value no longer exists under reproduction -- that is lost.

This is where the "aura" now becomes a keeper of value of the original thing. 

Now there are a number of different ways to understand how this "aura" of the Original comes to be.

Is it culturally reinforced? Institutionally? Or is it a faulty concept? etc

At a later time, we will see later thinkers wonder if the Original can exist without the Reproduction. 

Or push further to say that the Original no longer exists at all because you always already think of the reproduction.

e.g. You can only be real in the context of the fake...

Section 3: Why is this interesting in the context of Web3?

This one is pretty obvious... We are in the opposite moment. Where we have only known hyper-reproduction... JPEGs, internet, etc make all things accessible at all times.

In response, NFT's are actually the exact opposite scenario to what Benjamin wrote about. They are a way of making something that was inherently many into an "original." A singular identified object.

Now whether this is about restoring an "aura" or not: that's for us to discuss.

Section 4: Close / Discussion

Can figure out how we want to run this section... but post your discussions / thoughts / anything else here

Hopefully this is helpful... and know -- my summary and the summaries of others will always miss some nuance in the text...

✌️ 