The Loot Project
Social Network 🤝 Blockchain 🤝 Art 🤝 NFT 🤝 Game 🤝 Web 3.0
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Unless you live under a rock, you probably have heard of non-fungible tokens (NFTs). In case you haven’t, in one line, a digital asset like an image, audio, domain names or anything with ones and zeros that are minted (“registered”) on blockchain that can verify its authenticity is an NFT. Imagine a blockchain called The Louvre and an NFT called the Mona Lisa, any copy of the Mona Lisa that is not a part of The Louvre is not valuable.
NFTs exploded in March this year and some have been selling for jaw-dropping numbers like the CyptoPunks JPEGs collection that exceeds $1 billion in lifetime sales. If you think a billion dollars for a set of images are crazy, introducing the Loot Project, where you can buy words.
The Loot Project
The Origin
Dom Hofmann, known for co-creating Vine, the social network that championed short-form video on mobile. Just after 5 months of its founding, Vine was acquired by Twitter for $30 million in October 2012. Dom worked at Twitter till 2014 and Vine was ultimately shut down by Twitter in 2016. During his time there and after, Dom was critical of the way Twitter handled his company. After leaving Twitter, he founded Peach, another social networking app that remains popular with its niche user base. More recently, he co-founded Byte, another short-form video-based social network to compete with TikTok. Like many other TikTok competitors, Byte failed to gain much traction and was sold to another TikTok competitor, Clash.
Simultaneously, Dom had kept up with the crypto world and learnt how to code on the Ethereum blockchain. In March 2021, right around the time of the NFT boom, Dom launched his new project: Blitmap. Dom describes Blitmap as a “community-created fantasy universe”. Dom worked with 16 artists to create one hundred 32 x 32-pixel images with attributes borrowed by science fiction and fantasy worlds. Using permutations of these original 100 images, 1600 new “sibling” images were created. The idea was to let a community build a fantasy world together. An easier way to understand this is to imagine if J.K. Rowling created the characters and the fans ultimately created the Harry Potter universe. Blitmap now serves as a foundation for the Loot Project.
The Launch
Casey Newton reports that Dom wrote a program that generates a list of random items; items like weapons, armour pieces and other accessories.
One idea he had was to let people create (or “mint,” in blockchain-speak) NFTs based on his random-item generator for free — essentially just to see what would happen.
Dom grouped a bunch of the items into “bags” and then let anyone mint the bag without taking any fee (the minter still had to pay the gas fee required by the Etherium network). He tweeted the link to OpenSea and Ethescan and did not provide any real description of the project or what its purpose was. He wanted to see what would happen.
All the 7,777 bags that were up for minting, were done so within minutes. According to Coindesk, within 5 days, the Loot assets were resold for $46 million and had a market cap of over $180 million. Today1, the Loot bags are trading between $51,000 and $27,000,000; keep in mind these were free just two weeks back.
The Evolution
People, right off the bat, started analysing the items in the bags and ranking them based on their rarity. People also started splitting the bags and offering individual items for sale using smart contracts. A community of people that got one of the rare items, “divine robes” which is present in 396 bags, created their store to sell it (floor price: $46,000) to others who can level up their loot.
Seeing the developments and the absurdly high prices worried Hofmann. He launched Synthetic Loot - a replica of the original bags with the same items which can be claimed by anyone for free with an Ethereum wallet. The synthetics can not be traded, they serve just one purpose - allow a wide range of people to participate in the Loot ecosystems while still being able to differentiate between the original loot holders from the synthetic loot holders.
Not all here is about the money though, some people started developing artwork of the items in the bags by hand and even algorithmically. Others are building realms and games using the characters and items derived directly from the bags. Dom speculates that people with the bags can even participate in multiple games using the same items.
But, let’s be clear, there are no games, yet. It’s all speculative.
The Future
At first, Loot seems to be an immediate success with a community of hardcore believers behind it. Even the founder of Ethereum, Vitalik Buterin is a fan. Historically, all intellectual property ever created was held by a single entity. Disney created Mickey Mouse and it had control over how it looked, what he did, who his friends were, what his story was etc. Loot Project and its copycats are trying to flip the precedent on its head.
So far, the interest in NFTs as a whole has been speculative. The participants are looking to make a quick profit by flipping what they buy. To the ones observing from the sidelines, this appears like a bubble and something that will not be able to sustain itself.
You could argue that projects like Loot are a revolution. Every revolution starts with a small group of people that believe in a cause. Loot already did that and quickly. Now it’s time to get a bunch of regular and non-tech savvy people to believe in this. I don’t believe that would be a big problem if other projects start building on it as speculated.
While he remains active on the project’s Discord channel, Dom Hofmann doesn’t intend to work on this project full-time. It is not like he could anyway - because of the decentralised nature of the project, no one person can steer it the entire thing. He however is currently working on releasing Blitmap. He is also working on another crypto project, Supdrive, a fantasy gaming console that runs on a blockchain.
What else is happening
The legal battle between Apple and Fortnite creator Epic Games concluded this week, with the judge ruling in favour of Apple and Epic must pay Apple $3.5 million because Epic breached its contract with Apple when used a 3rd party payment solution. But the real loser here is Apple because the judge also rules that Apple must allow 3rd party payment providers for in-app purchases. This could destroy Apple’s $18 billion annual revenue from App Store fees. Link.
Facebook is still copying Snapchat. Facebook and RayBans launched “smart glasses” (5 years after the debut of Snap Spectacles) that have in built cameras to record your POV. People were quick to point out the privacy concern. When asked by a journalist what happens when you cover the tiny LED on the glasses, Facebook said that it is a breach of their terms of service (LOL). Link.
US Securities and Exchange Commission believes that the upcoming lending feature launched by Coinbase is a security. When Coinbase asked for clarity, SEC refused to answer and instead are now threatening to sue. The CEO of Coinbase argues that it is person attack since many other crypto companies offer similar lending features and have not face any legal action. Link.
Twitter’s product launch fiesta continues with Communities: “Starting today, we’re testing Communities, a way to easily find and connect with people who want to talk about the same things you do.” Link.
A new reality show that will see six participants compete to fund an activist cause of their choice. Their success would be measured by online engagements, social metrics and host’s inputs. We really do live in dark times. Link.
Carveouts
This week’s carveout is the podcast episode on TSMC by Acquired FM. Co-hosts Ben Gilbert and David Rosenthal cover the entire history of the company, its founder and semiconductors in general. After you finish the entire two and half hour long episode, you can check out their three hour long episode on Ethereum and its founding.
Trivia
This week’s is right below. Hints are available to those who ask. Be sure to reply with your answer if you get it.
Shout out to Urvi B for getting the answers first. She was followed by Nihal C and Vritti B. The answer? Netscape.
Shout out to Casey Newton whose article on the Loot Project which was a major source for this week’s newsletter. You can find the complete list of sources used here.
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Shobhit
12th Sept 2021, 1506 IST