Gas Sucks

For Web3 to live up to its promise, it’s important that applications operate as much on-chain as possible (with privacy concerns hopefully addressed using ZK-Proofs) to ensure decentralization.

However, although the idea of decentralization is important, the current environment is an awful experience for users. To ensure that transactions are valid, people have to pay gas to complete any on-chain action.

Non-Ethereum chains can help alleviate this pain by reducing gas fees to pennies, but this doesn’t fully solve the issue. Humans hate loss and knowing that actions will cost money will ultimately result in users performing fewer actions.

In certain circumstances, this hesitance to complete actions can be a good thing. It acts as a sort of spam filter as bad actors will need to pay for their actions. However, this is more of a bug than a feature.

To put the situation in Web2 terms, what if you had to pay $.05 for every Google search? $1 for every YouTube video? $.0002 to like a post on Facebook? Usage of these platforms would be significantly less than what we see today.

How can we increase on-chain activity?

To increase on-chain activity, the concept of “gas prices” needs to be abstracted away. For purchases of items like NFTs, having transaction costs are reasonable, but for most internet activities variable costs upset users.

Companies fully cover gas

The first solution that comes to mind is to have companies just pay for gas for the users. This is similar to how companies currently pay for storing data for their users. This however just brings us to the same situation of web2 where the users become the products.

Gas Data Plan

A potential solution is a “Gas Data Plan”. In the same way that people pay Verizon for a certain amount of cellular data to gain access to the internet, this could also apply for gas fees all across Web3.

Users would pay one flat monthly fee to have all gas fees be covered up to a limit (similar to a data limit). People are ok with the data plans because it feels more like a fixed cost instead of a variable cost. This would result in users being much more willing to complete actions (with a limit in place to prevent extreme spending).

However, this idea also completely defeats the purpose of decentralization, as a few company(s) would have an immense amount of control over consumer behavior.

Gas Prime

Instead, we propose for this to be implemented on a platform level. We are coining this as “Gas Prime”, as similar to Amazon, a product can cover transaction fees to increase overall market activity and become more dominant.

Products that require many actions from their users can offer this plan to users in the form of a smart contract, and any gas costing operations on the product would be covered. Users on the platform would no longer have to consider the individual transaction cost for every purchase or action.

OpenSea Case Study

OpenSea has three main gas costing activities - buying, listing, and minting NFTs. For the purpose of this example, let’s say that OpenSea’s “Gas Prime” only covers buying and listing NFTs, as these are more consumer-focused actions.

We pulled all our data from Dune and Ultrasound for the past 30 days.

An average*** consumer completes ~4 transactions, spending 0.125Ξ in gas total. With OpenSea’s 2.5% transaction fee, this equates to 0.078Ξ of revenue for the company. (Average is likely not the best metric, as a few large whales make up a majority of OpenSea’s activity).

If the price to buy OpenSea Prime is .125Ξ, OpenSea would then either profit from the program per user, OR the user would then have completed more transactions than average. This would increase the overall activity of the platform, making it even more popular.

However, OpenSea would have to do this at a loss. With marginal gas price per transaction being 0.033Ξ and the marginal revenue per transaction being 0.021Ξ, OpenSea would lose 0.012Ξ per transaction, which is a fairly high CAC. It’s essential that an eventual gas limit be set so that users are incentivized not to spend as much gas as possible.

The Promise of Lower Gas Fees

For the current state of OpenSea, this type of feature wouldn’t really make sense. It is an incredibly dominant player in the NFT marketplace scene. For competing marketplaces, this could be an interesting play in order to win over users.

This play works better as gas fees drop, as the transaction costs that the marketplace would earn would greatly outweigh the cost of covering gas, making a feature like this very valuable.

Profitable Option

With the current state of Ethereum gas, for OpenSea to not lose money on an individual transaction (either break-even or profit) after a user has spent more than the price of OpenSea Prime, they could potentially only pay for gas for high-value transactions.

With the current 2.5% transaction fee, transactions would have to be worth 1.32Ξ for OpenSea to break even. This would cater towards whales, who likely are already making many transactions on the platform already, which would make gating by volume of the transaction an ill-advised strategy.

Potential Implementation

Although we haven’t fully specked out the contract for this, implementation for this type of feature should be feasible. A user would call a contract that would have specific terms of which other contracts would have their gas covered, what the gas limit is, and how much this plan will cost. Ironically this action will cost gas.

Now when a user tries to perform an action that normally costs gas, they will actually interact with the parent smart contract, which will cover gas using the amount stored by the individual to complete the action. It will feel like that actions are free but in reality, it was paid for ahead of time by them.

TLDR;

It’s important for actions to be on-chain in Web3, but paying for gas for every action you take sucks. We explored a scenario where products cover gas fees, which would lead to a better user experience and increase market activity. Currently, if OpenSea were to cover gas they would lose a ton of money, so it wouldn’t make the most amount of sense. However, if gas fees do end up dropping, implementing an aggressive customer acquisition strategy like this could be worth it to capture more market share.

This is only one possible solution to solve the pain of gas, and we are curious about other ways to solve this problem! Hit us up on Twitter @wlhunter25 and @BraunchEth, we would love to chat.

I did some ideating on a feature for an NFT marketplace to guide users that are trying to buy their first NFT. This originally was written for the Coinbase NFT team, since the platform will open up the world of NFTs to many new people, but the feature can be applied to any NFT marketplace!

NFT Marketplace Landscape

OpenSea (and how to dethrone it)

In the past 30 days, OpenSea makes up 72% of all NFT trades in terms of total volume traded, and ~31% of all users across all NFT platforms on every chain (according to DappRadar). It is the go-to place for the most passionate NFT traders for everyday purchases. It is a jack-of-all-trades platform where users go to buy any NFTs.

Despite the platform's mass popularity, OpenSea has drawn heavy criticism from its core users, attributable to various issues.

1. Scaling Difficulties (Site downtime, slow collection verification, and floor price updates, etc)

2. High Transaction Costs

3. Gas + wETH + Signing is a Complicated Process

The ironic part of these complaints is that two of them are out of OpenSea's control, and one of them is a backend issue. However, it's important when building a competitor to understand that people want the NFT process to be as simple as possible.

The other important aspect of OpenSea that needs to be avoided is that it is too general. In the same way that Craiglist was unbundled into various other marketplace platforms, we will likely see the same thing happen to OpenSea, with platforms specializing in various areas of NFTs.

OpenSea also missed the Web2 memo to customize its content based on the end-user, which leads to a subpar experience.

Other Marketplaces

• Rarible focuses on the NFT collections and is more of a platform for NFT enthusiasts. Although behind on metrics, it offers a superb user experience for minting and buying tokens.

  • Pros: Great UX, easy discovery of top collections

  • Cons: Lack supply-side network effects, not personalized

• SuperRare is a marketplace focused on high-end artwork as NFTs. The average price of an NFT on SuperRare is ~$60k (51x more than OpenSea).

  • Pros: 1:1 art pieces, high valued items

  • Cons: Low discoverability of artwork

• Zora and Foundation have live auctions where users bid on NFTs.

  • Zora is more focused on the "flipping" aspect of NFTs as they display market information.

  • Foundation cares more about the art and the story about the pieces

  • Honorable mention to Mirror's NFT kickstarting feature, but their product is not focused on post-release NFTs

  NFT Curation Platforms

  • Gallery is a leading curation website where users can choose which of their NFTs to display, and organize and customize their portfolio. The project is aimed to be the Pinterest of NFTs.

  • On Cyber is similar to Gallery, but it operates as a virtual 3D art gallery. The concept is pretty cool, but 3D galleries would be hard to execute to gain mass appeal.

  • Context is a product that is building a social media feed for crypto projects. They curate a custom home feed of your followers, as well as high-profile activity for the collections you own.

  A New Challenger Approaches…

  Coinbase creating an NFT platform is a big deal. The company is one of the most trusted trading platforms, and it will introduce many new customers to the world of non-fungible tokens. Here is what I think coinbase.com (not pro) does really well that should be translated to the NFT platform.

  1. Simple UX - I am not overwhelmed by options, and I am clearly guided to my first purchase

  2. Paying in Fiat - This one is HUGE. If someone can buy an NFT with a credit card, that will be game-changing, as it lowers the barrier to entry to get involved.

  3. Encouraging Exploration - Coinbase earn is a great platform to motivate users to try out different technologies

Key User Personas

NFT Power Users

These users have been in the crypto game for a while, and have a variety of NFTs and tokens. It is important to build a product that they would enjoy, as their opinions will sway any future users, and you don't want to have a product that people grow out of.

In the future, they may appreciate a “Pro” NFT platform, with embedded rarity tools and extra statistics.

Crypto Novices

These users have heard of the blockchain before but have never interacted with it before. They have heard of CryptoPunks selling for millions of dollars and are curious about why. The discovery part of the platform will be most important to them, as they have no idea where to start. They will likely only browse on the platform at first.

NFT Novices

These users have bought ETH and BTC on Coinbase before, but don’t understand the need for a decentralized wallet. They have heard about digital ownership but don't understand the utility and community aspects of NFTs. They may want to hold on to their ETH, and would prefer to pay for NFTs in fiat.

For the rest of the case study, I will focus on this user group. As Web3 continues to be mainstream, and more amateur crypto investors are exposed to NFTs, this user segment will continue to grow. (I will refer to Zach, a mock NFT Novice).

Pain Points

There are many issues that people may experience, but when talking with my friends that are crypto-aware but haven't entered the world of NFTs, these were the major hesitations that I found (outside of not knowing where to buy them and how to set up a wallet).

Onboarding

A user's first NFT purchase is the most important, as needs to excite them about Web3, and will hold immense sentimental value. Here is what this process currently looks like:

• When Zach goes to OpenSea, he is presented with a few trending collections (that are out of his price range)

• He then goes to search a vast sea of JPGs to find a better match

  • He has heard about the concepts of "utility" and "community" but in reality, he doesn't know what that actually means, or which collections actually provide this value.

• He inevitably becomes overwhelmed, and after endlessly scrolling, he eventually finds an NFT that has an art style he enjoys.

• This NFT likely provides little utility, and could potentially be a part of a low-quality collection (a rug pull)

This is a terrible first impression of a potentially exciting new world and will scare users away.

Discovery

After they make their first purchase, it is equally as difficult for Zach to discover collections that have recently been released.

For customers on a budget, the best investments are early in a collection's lifespan, especially minting (instead of buying post-market). Discovering upcoming drops is hard, and takes access to gated Twitter, Discord, and Telegram communities.

Users want to be able to browse the marketplace platform and see what their friends and people with similar preferences to them are buying, instead of speculating on what might be valuable.

Curation

Buying your first NFT is a big deal. People want to be to showcase their latest purchase for a variety of reasons. NFTs can be a form of art, but they are also so much more than that. Each item can mean something different to their owner, and users want to be able to not only showcase their favorite items but also explain why these NFTs matter to them.

Feature: Find Your Niche Onboarding

After a user sets up their account details and personalizes their profile, there should be an optional step for users to learn about the space and set their preferences.

I created an example survey as an MVP, but the final product should likely be more educational, and something that users voluntarily chose to go through. This can either be located during the onboarding flow or somewhere on the homepage.

Example Typeform

https://wlhunter00.typeform.com/to/ex3HgUZd

1. Understand Price Tolerance + Experience

The first step is to understand the user's price tolerance and how experienced in NFTs they are.

Ideally, if the user also has a Coinbase account, we can pull information from our platform to see how much ETH they have, as well as their spending habits. However, we should also ask how much they are looking to spend to adjust our recommendations.

2. Help Them Find Their Niche

Next, we want to expose the user to the different possibilities of NFTs. The reason that people are so excited about this space goes deeper than making a quick buck, and it's important to expose what's out there.

1. Art - Many NFTs are created as digital art pieces (Artblocks)

2. Community - A key part of collections are the people that also own NFTs, who you can interact with and get to know (BAYC)

3. Utility - Certain NFTs come with special perks, such as revenue sharing, voting privileges, and membership into clubs (Mad Realities)

4. Type of Media - Not all NFTs are images! You can buy music, videos, and all types of files (Royal)

5. Gaming - Some NFTs can be used in video games as items, skins, or characters (Axie Infinity)

6. Bleeding Edge - There are collections that push the status quo by introducing innovative ideas not seen in other collections (Loot)

7. Quick Flipping - Some people are very interested in flipping NFTs, buying them at low evaluations, and selling high (Lucky Sloths)

3. Collection Comparison

Finally, present the user with various NFTs and have them select which speaks to them more. These questions can involve art, community, utility, or really anything, but it can be a natural way to understand what they are looking to buy.

Suggest a Potential First Purchase

Based on their inputs, the final screen in the flow should recommend 10-15 NFT collections that the user may want to purchase. This will be optional but could provide the motivation for the user to take the leap. At a glance, users can compare and learn more about various collections that are personally chosen based on the survey.

To encourage exploration, they could partner with Coinbase Earn, and reward users for making their first purchase in the form of ETH, ERC-20 tokens, or a unique purchase NFT (similar to Buildspace).

Quick Plug

I’m super excited about the NFT space, and can’t wait to see the rest of the world discover this world. If you have any thoughts about how to guide new users into Web3, feel free to reach to me on Twitter!

Although I know you can set a custom gas limit on Etherscan, I am always a little tentative to do this because I don’t want the transaction to fail.

That’s where my gas notifier bot comes in. You set a maximum level that you are comfortable handling a transaction at in Discord, and you will receive a DM once gas dips below that price.

This way, you can find a cool project, set a gas alert, and run the transaction once you get the DM!

How to Use It

Adding the Bot

Use the link below to add the bot to a server (you need admin privileges to do this). The bot requires specific permissions to work, which it will request through the link.

https://discord.com/api/oauth2/authorize?client_id=913226328080265286&permissions=2147552320&scope=bot%20applications.commands

Discord Server

Join the dedicated Gas Alert server! You can learn more about the bot, request new features and help, set alerts, and use any of the commands! Feel free to join the server to use the bot.

https://discord.gg/3zrsKhHnhN

Direct Messaging

The bot will message you once the alert is triggered (gas dips below your alert threshold). You can also direct message the bot over Discord to utilize the full functionality.

Commands

The bot is built off of slash commands, which means that their commands can be triggered by a “/’. These can be activated in a server that the bot is in or over DMs.

List of Commands

• /setalert gas level (set an alert for a specific gas level to receive a DM)

• /removealert gas level (remove an alert that you sent)

• /listalerts (see what alerts that you have already set)

• /gas (see what the current gas price is)

How It Works (behind the Scenes)

Every time a person registers an alert, their username (user object) is inserted in the corresponding gas alert object on MongoDB.

Every 20 seconds, the bot pulls the recommended priority, normal, and slow gas levels from the Etherscan Gas API. It then takes the normal gas level and searches every alert that is less than or equal to that GWEI, then the person will receive a DM from the bot and their name will be removed from the gas alert object. The bot will then update its activity with the current gas price.

Quick Plug

https://twitter.com/wlhunter25