"On-Demand" NFTs as a Solution for Layer-1 Networks (Are L2 Solutions Overrated?)

One big problem with the NFT space right now (especially on Ethereum-based networks) the high gas fees -- minting an individual NFT at this point in time (Nov 21’) can cost you up to 0.03-0.04 ETH ($100-200), depending on the time of the day. For projects that require consistent output (blogging, news, radio, video streams, TV shows) this model is not very ideal since the recurring costs can be very inhibiting for many content makers out there.

From a creator’s standpoint, the practice of putting content out on a regular basis is a practice that’s often misunderstood, even by platform creators themselves. To be a successful influencer, consistency is key -- but the artist themselves rarely expects everything they produce to be a hit -- they’re looking to capture the occasional “hits” that happen every once in a while when the timing of things just so happens to line up in the right way.

There is no need for every post to be minted as an NFT, in other words. So all the minting platforms need to do is to create the option for individual posts to be minted, but only after the bid to buy it emerges from the outside. Until then, the content can sit comfortably off-chain, without the need to worry about gas fees or upkeep costs. This hybrid model is one way to leverage the strengths of both decentralized and centralized systems at the same time.

Many Layer-2 projects are aiming to create the “zero fee” model where the goal is to get gas fees down to essentially 0. This is a very appealing idea on the surface -- how could anyone be against creating a system that has no fees? The danger here is that while cheap is good, this may be already too close to the freemium model of Web2 that already exists, and may end up recreating the same problems of it all over again. When all content becomes special, nothing is special.

I think there is a serious case to be made that a Layer-1 system that is properly curated may actually be superior to a Layer-2 system that optimizes purely for cost, rather than function. If something works, people are more than willing to pay for it -- as shown in the Ethereum Network’s success despite complaints of high gas fees. But Web2’s freemium model has conditioned us to believe that everything on the internet should be free -- that addiction and habit may be a difficult thing to let go.

So far there is no evidence to show that the artist communities are flocking to any particular platform right now to establish their long-term careers -- the NFT ecosystem is still largely a novelty industry for celebrities and already established artists to dabble in to make an extra few bucks. From a business standpoint, the problem with most minting platforms right now is that it doesn’t consider the buyers of artworks to be their customers -- they’re making money off of the backs of the transaction fees from the artists themselves, in most cases. That’s a Web2 model, not Web3.

If existing NFT platforms want any chance of survival, most of them will probably have to pivot away from their “artist-as-customer” models very quickly since they’re simply recreating the wheel and are just waiting to get crushed by the incumbents that can do what they do…better. They’ve perfected the art of the exploitation of the creative class, after all -- and they have the advantage of not having the blockchain exposing all of their misdeeds out in the open. The only way crypto platforms can survive and thrive is to change the game altogether, from the bottom up.

This post isn’t meant to be a criticism of the crypto or NFT communities since I do know that there are lot of serious people out there working on these things in good faith. But I do think it’s necessary for us to acknowledge that we’re not quite there yet, and maybe some reflection on what the industry is shaping into may be in order right about now. We have the opportunity to do things the right way this time -- we should take it, really.

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