Iteration Three - Year's End

The last week of the year is here, and whoa, what a year that was. We still haven’t beaten the pandemic, and many of us can’t enjoy life to the fullest like we’d love to. We all make sacrifices to bring this pandemic to an end, and kudos to everyone doing their very best each day. The fight continues, and hopefully, we will soon be able to go back to normal.

For Web 3, this year has been insane. Adoption rose to new levels, the markets went crazy, only to cool down for a few days before going full speed again. The NFT space has exploded even further, and we’ve seen many innovative companies entering the field. Tech Twitter seems to have exploded with Web 3, and the space got an insane boost of content flowing out. If this development continues, 2022 will most likely become even crazier. All that educational material being created is most likely to boost adoption further and hopefully make entering the space more straightforward for newbies.

The end of the year is also a time to slow down a little, though. Time to reflect on your year and see how far you’ve come. It is also one of the last opportunities to set goals for the following year. Perhaps you want to get further into Web 3 development, launch your very own NFT collection, or start to create content. Whatever it is, take your time, make a list, and see what you can come up with.

This issue of Iteration Three will also reflect on the past a little. We will take a look at some of the biggest winners in crypto this year, learn about some exciting news regarding recent developments in regulation and Web 3 adoption, get to know some great material to get educated further, and get an introduction to Polygon the network of Ethereum sidechains.

I hope you’ll enjoy reading this newsletter as much as I had writing it. And without further ado, here it is, the second issue of Iteration Three.

You have probably already heard the name Polygon being thrown around here and there, and perhaps you wondered what Polygon is all about. Most things you hear nowadays are about low transaction fees, NFTs being so much cheaper to mint on Polygon, or MATIC reaching new heights. But it’s time we dig a little deeper and get to know Polygon, the network of sidechains, a little better, so we understand what we are dealing with.

Polygon is a layer-2 scaling solution for Ethereum. It is both a framework and a network of sidechains previously known as MATIC network.

What Polygon tries to achieve is to target Ethereum’s current shortcomings (long transaction times, high gas fees) with a network of sidechains. Those sidechains can directly interact with each other but also with Ethereum. Transactions in that sidechain network are way cheaper, take way less time to process, and are regularly synchronized to Ethereum itself.

The Polygon framework allows you to create a personalized sidechain with a set of customized properties. You get the building blocks you need to create your own chain while maintaining power over how exactly you want to set it all up. The SDK is written in Go and allows a proficient developer to quickly wire together components until you have a working node/client that you can deploy. Everything, especially on a lower level, is taken care of for you. You don’t need to deal with message passing between chains or syncing states; the SDK already has that implemented for you.

The sidechain network is where the operational magic happens. Every custom sidechain you build with the SDK is directly interlinked with the Polygon network. The base network offers all scalability functions to operate fast and keep it in sync with Ethereum.

Especially five components of the network are crucial to its operational readiness:

Polygon PoS adds an overall Proof-of-Stake consensus protocol to Polygon’s network of sidechains.

Plasma is a scaling solution to move assets between the root chain and its child chains through Plasma bridges.

ZK Rollups are an alternative scaling solution where many transactions are bundled off-chain into a single transaction. It uses zero-knowledge proofs for the final record on the Ethereum main chain.

Optimistic Rollups run on top of Ethereum to enable near-instant transactions with the help of so-called fraud-proofs.

At some point, Polygon needs to interact with Ethereum. This is realized with a set of smart contracts deployed to Ethereum. They enable the communication between Ethereum and all Polygon chains, take care of staking and transaction finality, and the overall communication between the two.

Standalone and enterprise chains are the sidechains you implement and deploy with the help of the Polygon SDK. They encourage local communities, governed by their members, developed by the community. Those communities are responsible for consensus on their own, local level, and can interact with all other sidechains and Ethereum to their liking.

Corporations might launch their own sidechain for their projects, keeping control of the direct infrastructure while gaining the opportunity to interact with many other chains. Communities can launch their chains where they develop and deploy their projects on. There are few restrictions on what you can do with your sidechain, making the solution so flexible and worthwhile.

Users interacting with Polygon usually only see Polygon as a whole blockchain, and the underlying architecture is not important for the everyday user. Any Ethereum-compatible web wallet can connect to Polygon, acquire funds (MATIC), and interact with dApps deployed somewhere within the network. OpenSea, for example, has allowed minting and trading NFTs on Polygon for a while now. You only need to switch the chain your wallet is connected to, and everything works. The UX is not different from Ethereum, which makes Polygon also an excellent solution usability-wise. Overall, the space might still have a UX problem, but it doesn’t get any worse by choosing Polygon. One could even argue that lower transaction fees and higher processing time improve the UX because who likes waiting for minutes or hours until you finally know whether your NFT mint was successful?

The next time you open Uniswap, go to OpenSea or even want to deploy a smart contract, think about Polygon for a moment. It might be a valid alternative to deploying on Ethereum, at least for now, until Ethereum 2.0 finally hits and hopefully solves many of the original issues. And even after that, Polygon offers a unique approach to scaling and community building with custom sidechains that are fully interoperable with Ethereum.

NFTs seem to land in the mainstream more and more. Shopify now joined the ranks of traditional companies adding Web 3 functionality to their platforms. In this case, the company started a beta program for US merchants using Shopify Plus, allowing them to sell NFTs, mint, or airdrop them and make claiming simple through email links.

This development is interesting because Shopify allows minting with crypto and its Shopify Payments. This closes the gap between the sometimes clumsy UX of a web wallet and the regular user who has never seen a web wallet in their entire life. Buying NFTs with your credit card might go a little against the general idea of the decentralized world where FIAT is only a necessary evil to purchase cryptos, but it certainly helps with adoption.

It will be interesting to follow the development of the platform and its opening to a broader public, including other merchants globally. Setting up a Shopify shop is already pretty simple, and if creating an NFT collection and selling it also becomes, we might see a massive increase in adoption rates. Additionally, many more non-developers might also join the space because a traditional platform like Shopify is easier to use for users without experience than even OpenSea.

It may not sound like much, but it actually is. Uniswap, one of the most important decentralized exchanges on Ethereum, recently succeeded in a vote to deploy the Uniswap protocol to Polygon, one of the most important Ethereum L2 solutions. Ethereum gas fees are still a problem, and especially hardcore users of Uniswap had to carry a significant burden. With the deployment to Polygon, Uniswap now profits from lower gas fees and faster transaction times, opening up a whole new world of opportunities.

This also signals an increased maturity of Polygon. The chain network itself sees more and more adoption each day, with more and more creators and companies settling on Polygon as a worthy alternative to Ethereum while still staying close to the major blockchain with smart contract capabilities on the market as of today.

At some point, this day simply had to come, and it seems as if 2022 would be the year the US tries to pass a Crypto Bill, attempting to finally clearly regulate cryptocurrencies. But this does not have to be something terrible. Cryptocurrencies, NFTs, and everything associated with it is currently primarily a legal grey area in many countries worldwide. Countries like China try to ban cryptos, while other countries like the USA seem skeptical but still welcome investment opportunities. Other countries might follow if such a large economy like the US begins to put clear regulations on cryptocurrencies. And everyone who ever had to file their taxes, including cryptos, knows how difficult that can be. It becomes easier to invest and do business with more precise rules to follow. An NFT sale becomes easier to tax, both for the state and the creators.

The bill, however, still needs to pass. It is still too early to say how much support the bill would actually get. But until then, there is still some time to lobby and market it and get senators to vote in its favor. The following months will probably be pretty interesting to follow because, as we all know, a lot can happen even within a week.

2021 has been a crazy year regarding crypto, and some coins definitely performed very well. Dogecoin (DOGE), Solana (SOL), Terra (LUNA), Polygon (MATIC), and Binance Coin (BNB) had four-digit gains this year and deserve to be on this list due to their market capitalizations. They also serve the community pretty well due to all the applications and utilities they offer.

Let’s be honest. Dogecoin started as a Memecoin, but especially thanks to Elon Musk, who pushed the coin a few times and dampened its growth equally as often, it will end this year with massive gains. As it seems right now, DOGE might indeed get some more utility in the future. The foundation has a pretty fantastic roadmap, and holders of the coin can look forward to probably a few more notable improvements to the chain and its ecosystem.

DOGE started its year at $0.0045, managed to climb up to $0.68 in May, and currently stands at $0.19. That’s a 4,222% increase in price.

Solana is the “enterprise-grade” blockchain that many people and adopters see as a solution to Ethereum’s growing problem with transaction fees due to high prices for gas. This year hasn’t been bad for SOL at all. Although the blockchain has been under attack multiple times for sacrificing decentralization (just check how many of its nodes/validators are hosted on AWS, most likely by the same entity) for transaction speed, adoption rose to new heights.

SOL started the year at $1.30, was worth $258.93 at its year’s high, and ends the year at around $198.79. Some quick math shows that that’s an insane growth of 15,291%.

Many of you probably have never heard of Terra before. Terra is a blockchain that is aimed explicitly at financial applications. Before August, it was even largely unknown to many more experienced settlers of the Web 3 space, but as the chain managed to see some widespread adoption of new partners, that led to a massive surge of its price.

The coin started with $0.55 at the beginning of the year and currently stands at $98.77. This makes an increase of 17,958%.

Polygon had an insane year. The Layer 2 solution for Ethereum was able to take off, primarily due to high gas fees on Ethereum and rising industry adoption. It is still pretty close to Ethereum, actually directly tied to it, and thus an excellent alternative to Ethereum itself, especially for companies that don’t want to retrain their staff. The whole development stack works on Polygon, as well as it does on Ethereum, and this was one of the reasons usage levels rose to new heights. Uniswap was the last major DEX to also be deployed to Polygon, and now the chain contains the full DeFi ecosystem of Ethereum.

MATIC started the year at $0.018 and is currently at $2.79. That’s an increase of 15,500%.

BNB is the native currency of the Binance (Smart) Chain, operated by Binance (one of the largest centralized marketplaces for crypto). The chain itself is pretty centralized but a direct fork of Ethereum and thus compatible with anything Ethereum offers. Overall, the same development experience and a good alternative thanks to short transaction times. As Binance sees more and more adoption, including the company launching its NFT marketplace earlier this year, BNB directly profited from these developments.

BNB started the year at $33.5, peaked at $675,68, and currently stands at $546.65. That’s an overall increase of 1,631%.

I wrote this article some time ago, but it is still as valid as ever. If you want to get into the space, this is my recommendation of a roadmap for you to follow, at least for a while. It starts at the very basics (the dreaded theory) and then offers comprehensive and valuable guides to follow to dig deeper and deeper. It focuses on Ethereum development, but the fundamentals apply to any blockchain.

This is an article I wrote not too long ago for FeedHive. It focuses more on a meta-view of NFTs and how creators can use them to their advantage. Especially if you are technically not that versed (yet), it might be a good entry for you to understand what NFTs are all about and how others currently use NFTs to create communities, markets, and else.

freeCodeCamp is an institution nowadays, and it has grown from its humble beginnings to one of the essential learning platforms for web developers and more. Their YouTube channel is one of the best to learn concepts and languages in the world of software development. No wonder that they also have a pretty great course on their channel, covering Blockchain, Solidity, and Smart Contracts for over 16 hours. If you want it all, you should definitely try this one out.

As the year slowly comes to an end, this issue of Iteration Three does so, as well. I hope you found something interesting here for you, and if you have any feedback or ideas, don’t hesitate to send them over to me.

For me, there are only a few things left to say. Enjoy the time between the holidays. If you are on vacation, enjoy it to its fullest. If you use the time to improve your skills, kudos to you, you are doing fantastic! All the others, whatever you do, thanks for reading this issue. And especially: Please stay safe!

The next issue of Iteration Three will hit your inboxes in the new year, once again packed with valuable information for you. Until then, go buidl some dApps!

Yours sincerely,

Oliver