As any Web3 gamer worth their salt would know, it's all about the finishing move to bring about the end game. Ethereum's end game is to create a decentralized and open-source platform through which Web3 users can regain control of their digital identities and virtual lives from Web2 platforms. As the main network of the blockchain ecosystem, Ethereum is walking the talk by providing a blockchain-based infrastructure that enables developers to build innovative decentralized applications (dApps) and services that enable peer-to-peer (P2P) interactions. These interactions help promote financial inclusion and fosters gatekeeper-less innovations under the banner of Web3. 

Long story short, Ethereum is set to be a foundational layer for Web3. Through the use of blockchain, Ethereum is building the technological infrastructure and governance model for a decentralized and autonomous digital ecosystem in the new era of the Internet.

## Unlocking Web3 with Ethereum

The key benefit from the dawn of Web3 is user autonomy through the boosting of the personal privacy and data security of users. The reduced reliance on centralized intermediaries means Web3 users would have greater control over their personal data as well as digital identities and assets. In addition, Web3 users would be less exposed to the risks of censorship and data breaches. Beyond the element of control, the user autonomy of Web3 covers the aspects of user participation as well. 

Through Web3's decentralized governance mechanisms, users can participate in decision-making processes, allowing them to have a say in the development and direction of the platforms they are using. On top of that, the interoperability of Web3 platforms warrants user accessibility by enabling users to freely move their personal data and digital assets across different platforms without being locked into proprietary systems. This stands in stark contrast to the silo approach of Web2 platforms with their walled gardens that restrict cross-platform interoperability.

While the ideals of Web3 are well and good, the crux of the challenge lies in bringing these ideals to life. Taking up this bull of a challenge by the horns is Ethereum through its autonomous smart contracts, community governance framework, and interoperable network applications.

![image2.jpg](https://prod-cms-assets.avocadodao.io/image2_45d6c8234d.jpg)
Ethereum Web3 Features (Source: Avocado DAO)

- **Smart Contracts**

Through the use of autonomous smart contracts, Ethereum enables web users to verify their data and authenticate their digital identities using Soulbound Tokens (SBTs). Additionally, they can autonomously transfer their digital assets using Ethereum wallets. This brings to life the user autonomy ideal of Web3.

- **Community-Driven Governance**

Using a decentralized autonomous organization (DAO) that operates through a collective governance framework, members of the Ethereum community get to have their say in the development direction of the network. This is done by submitting and voting on Ethereum Improvement Proposals (EIPs). This brings to life the user participation ideal of Web3.

- **Network Interoperability**

Ethereum is designed to facilitate seamless interactions and communications between blockchain networks. This element of interoperability enables the establishment of an interconnected ecosystem of dApps and other decentralized services using the Ethereum Virtual Machine (EVM) to unlock new possibilities. This brings to life the user accessibility ideal of Web3.

With this, Ethereum is bringing to life the ideals of Web3 by unlocking the future of the Internet with the decentralized power of blockchain.

## Quantum-Proofing Web3 with Ethereum

If Web3 is to be key to unlocking the future of the Internet, it would need to be secured against future security risks. With its decentralized feature, Web3 is powered by cryptographic algorithms underlying instruments such as cryptocurrencies and non-fungible tokens (NFTs) that support the decentralized finance (DeFi) and user-generated content (UGC) domains of Web3. Although it is mathematically impossible to break cryptographic algorithms, this could change with quantum computing developments. These developments could result in quantum computing being so powerful someday that they could crack the cryptographic keys used to protect personal information on blockchain networks.

For the mitigation of this risk, Ethereum is working on quantum-proofing its network using quantum-safe cryptographic techniques. This involves replacing the cryptographic algorithms currently being used by the network with quantum-resistant algorithms. These algorithms are designed to secure the Ethereum network against attacks from quantum computers. By doing so, Ethereum's network would remain secure, notwithstanding possible future advancements in quantum computing technology. As Ethereum is the infrastructure backbone of Web3, the quantum-proofing of its network plays a critical role in the future security and long-term sustainability of Web3.

In general, the packages of developmental updates in the Ethereum roadmap are as below.

![image1.jpg](https://prod-cms-assets.avocadodao.io/image1_f8eb3857e1.jpg)
Ethereum Roadmap Upgrade Packages (Souce: Avocado DAO)

- **The Merge (15 September 2022)**

Switching from Proof-of-Work (PoW) to Proof-of-Stake (Pos).

- **The Surge (Slated for sometime in 2023)**

Improving network scalability through rollups and data sharding.

- **The Scourge (Date TBC)**

Lowering censorship resistance, decentralization, and protocol risks.

- **The Verge (Date TBC)**

Simplifying the blocks verification process.

- **The Purge (Date TBC)**

Reducing the computational costs of running nodes and simplifying the protocol.

- **The Splurge (Date TBC)**

Upgrades that fall outside the scope of the above categories.

With its slew of upcoming upgrades, Ethereum would be paving the way for the mainstreaming of a quantum-resistant Web3.

## Conclusion

For all the ideals of Web3 as the next generation of the Internet, the central tenet is that of user empowerment. Through Web3, the elements of personal identity management and data control, digital assets ownership, and decision-making would be reposed in the users themselves. From an ideological perspective, the user-centric approach of Web3 aligns with our modern democratic aspirations. 

Through its suite of blockchain-powered tools ranging from smart contracts, SBTs, and DAOs, to dApps, Ethereum would be heralding the dawn of a more democratic and user-centric Internet by being the quantum factor in the Web3 equation.

This course brings to an end our Ethereum Learn-and-Earn (L&E) course. We would be bringing you more of such courses in time to come, do stay tuned.



Bringing to Life The Ether of Ethereum with The Shanghai Upgrade (4) (1) (1).jpg

Ethereum L&E Course #4: Ethereum as the Quantum Factor in the Web3 Equation

## (1) About the Battle Demo

**[Apeiron](https://core.avocadodao.io/games/apeiron/)** is an NFT-based God Game inspired by Populous as well as Black and White. On 27 January 2023, the long-awaited moment for Apeiron's fans finally arrived when the game's developer, Foonie Magus, launched the full public release of the game's battle demo ("demo"). The demo was open to a few lucky gamers comprising Planet/Star NFT holders who underwent a snapshot on 17 January 2023, holders of Lunisolar Battlepasses which can be minted using Luni and Solar fragments as well as official partners of the game. It provided players with a taste of what the dark dungeons of Apeiron have to offer, including the chance to take on the bosses of the three available Dungeon Depths.

![image9.png](https://prod-cms-assets.avocadodao.io/image9_b466e8070b.png)
Demo Start Page (Source: Avocado DAO) 



## (2) The Lore of the Dungeons


Right from the get-go, the game’s unique art style and sound effects design were on full display. The demo starts with a cinematic experience that sets out the game's lore. The background story of the demo is about how the Doods forged the Skydream Crown gift to be offered to the Gale of the Tempest, the Sixth God of the Truestorm, in the hope of a better future. Alas, after some berserking from the Apostle Doods, it turns out that their dreams for a brighter tomorrow were of a nightmarish reality. Thankfully, the wind rises and takes the Doods and the player into the darkness. It's time to banish the bosses in the Dungeon Depths and bring the light of day to the land of Apeiron.

![image4 (3).png](https://prod-cms-assets.avocadodao.io/image4_3_c8855cf531.png)
Apostle Doods Going Berserk (Source: Avocado DAO)

## (3) Prepping Up for the Dungeons

Once we’re done with story time, it’s setup time. Regarding Avatar selection, there’s not much of a choice in the demo, as the only Avatar available is the Tempest Wisdom Avatar. In the demo, the Tempest Wisdom Avatar starts with two attack cards, namely the Zip-Zap Orbs Card which generates three magic orbs inside the range of your Avatar, and the Storm Spear Card which provides a dash ability for your Avatar to close the gap with your enemy or can be used as a quick get-away tool. As you level up, you will be able to unlock additional cards and gain stats that boost your Avatar's movement speed and fighting skills.


![image6.png](https://prod-cms-assets.avocadodao.io/image6_f48c8e82cb.png)
Tempest Wisdom Avatar (Source: Avocado DAO)

## (4) Going After the Dungeon Bosses
Once we’re done with setup time, it's action time which kicks off with selecting your Dungeon Depth, of which there are three in the demo. Again, it's not much of a choice as you must start with the first Dungeon Depth, which for some reason the boss is conspicuously absent from. After clearing the multiple levels of rooms in the first Dungeon Depth, you could move on to the second Dungeon Depth, and after that the third one. The second and third Dungeon Depths both have a dungeon boss at the end, with the boss of the third Dungeon Depth being the most challenging. Defeating the boss of the third Dungeon Depth requires careful planning and skills. If you falter at any stage of any Dungeon Depth, you would have to restart from the first room of the Dungeon Depth in which you were vanquished.


![image (1) (1).png](https://prod-cms-assets.avocadodao.io/image_1_1_8558eeb219.png)
_Taking Down the Dungeon Depth Boss (Source: Avocado DAO)_

## (5) Key Takeaways from the Demo

### (a) Upsides

- AAA-worthy visual graphics and sound effects for an all-around immersive gameplay experience.

![image2 (1) (1).png](https://prod-cms-assets.avocadodao.io/image2_1_1_622dc7d10e.png)
AAA Graphics (Source: Avocado DAO)

- Agile control interface of Avatar when using WASD movement keys and spacebar for quick dodges and retreats.

![image10 (1) (1) (1).png](https://prod-cms-assets.avocadodao.io/image10_1_1_1_4b8a386d89.png)
Control Keys Indication at Bottom Left (Source: Avocado DAO)

-  The combination of fast-paced battles, variety in card choices, and skill points allocation will test the player's critical thinking skills and strategic planning abilities.

![image1 (2).png](https://prod-cms-assets.avocadodao.io/image1_2_2e0c978a2f.png)
Skill Tree (Source: Avocado DAO)

### (b) Downsides


- Gameplay flow can be improved by reducing the delay between the casting of  skills and when the skills come into effect.

![image8.png](https://prod-cms-assets.avocadodao.io/image8_8a859aed99.png)
Casting of Skills (Source: Avocado DAO)

- Battlefield clarity can be improved by adding more camera angles to the sole available camera angle in the demo to give players a better view of who’s attacking who on the battlefield.


![image3.png](https://prod-cms-assets.avocadodao.io/image3_6928a54518.png)
Sole Available Camera Angle (Source: Avocado DAO)

- Waiting time for the restoration process of Avatars and Doods in the Campfire Room is a bit slow though it's a step up from the previous demo phase.

![image5.png](https://prod-cms-assets.avocadodao.io/image5_353c255481.png)
Restoring at the Campfire Room (Source: Avocado DAO)

### (c) AvoTips

- Place your Avatar at the back to minimize damage from enemies, and place your Guardian or Warrior at the front to take the brunt of the damage and also to protect the back line.

- Use the correct skills by drawing or buffing based on the flow of the battle as well as the type and status of your Doods to optimize their abilities.

- Plan the allocation of your skill points in the skill tree to help you gain more strength and advantage on the battlefield. Feel free to experiment, as resetting your skill points is free and can be done as often as possible.

- Watch out for the AOE attacks marked by red markers on the ground in the boss battle. Make fast getaways by improving your movement speed on the skill tree and timely use of movement spells like Storm Spear.

- Be bold to grind and level up your Avatar and Apostles Doods a bit to handle the increasing difficulty level. There's no shame in restarting a Dungeon Depth to farm up the early rooms for Experience Points (XPs).

- Stock up on Potions every time you reach the shop in a Dungeon Depth.

- Make sure you have at least 1 Priest Apostle on your team and save some Potions for the boss fight. Trust me, you will need it.

## (6) How to Participate in the Public Demo
To be eligible to participate in the public demo, you need to mint a Lunisolar Battlepass at the Apeiron Marketplace using Solar and Lunar fragments which can be purchased from OpenSea. 

Thanks to the partnership between Avocado DAO and Apeiron, Avocadian scholars can participate in the demo for free by obtaining a battlepass which comes with an hour of game time. You can get your battlepass from Avocado DAO by participating in our Apeiron webinar on 28 January 2023. More webinars are set to be announced, so check the announcements on our **[Discord](https://discord.com/invite/avocadoguild)**.

Each battlepass gives you an hour of game time. You can extend your game time by completing our **[Apeiron: Dungeon Depth Clearances Quest](https://quests.avocadodao.io/quests/?set=8)**, which requires you to clear the first, second, and third Dungeon Depths in the game.

## (7) How to Get Apeiron NFTs
To get your hands on some Apeiron NFTs, you can participate in the Speedrun contest by clearing the game, i.e., by taking down the boss of the third Dungeon Depth as fast as possible. Although the prizes to be won are yet to be decided by the Apeiron team, Avocado DAO will consider the performance scores on the Speedrun leaderboard to determine the rarity of the NFTs which will be rented out to Avocadian scholars when our scholarship program is launched in May 2023.

## (8) Conclusion

If the demo is anything to go by, fans of God games are in store for an out-of-this-world gaming experience as we look forward to the full release of Aperion. Content-wise, the full version of the game is set to feature additional Avatars from different planet types, more Dungeon Depths, and additional bosses to take on. Gameplay-wise, the full version of the game would offer a smoother and more enjoyable experience as the developers work on fixing any bugs or glitches manifested in the demo runs. Competition-wise, the full version of the game would have more competitive leaderboards as more players join the bandwagon of Gods in Apeiron. As we await the launch of the full version of Apeiron, we’ll have to leave things in the godly hands of the developer of the game.




Header-banner-questing-platform-2 (1) (1).jpg

A Deep Dive into the Depths of the Dungeons of  Apeiron’s Battle Demo

## Starting from Zero in Illuvium Zero

As the saying goes, “_zero is where everything starts_”, and so your journey in Illuvium starts off with Illuvium Zero, the base building game of the Illuvium ecosystem. Illuvium Zero is the foundation of Illuvium’s Interoperable Blockchain Game (IBG) system. The concept of IBG is such that assets can be used across the different games in the Illuvium ecosystem. For example, resources farmed from Illuvium Zero can be used to craft Blueprints and other items in other Illuvium games such as Overworld and Arena. 

According to Illuvium’s developers, the Public Alpha testing for Illuvium Zero would be split into two seasons. The first phase of the testing (Season 0) opened on 6 January 2023 and is expected to last for six to eight weeks. This will be followed by Season 1 and then, subsequently, the Public Beta Phase.

[yt=https://www.youtube.com/watch?v=wwd0uJp2cYc]

## Building Your Base in Ground Zero

### Getting Started in Illuvium Zero

Building on the lore of the game, Illuvium Zero players find themselves ejected from the main ship after it had crashed. Their objective is to build an industrial complex that serves as a base for their operations. As Illuvium Zero is playable on both mobile and PC, players can build their base in the game using either of these platforms. Regardless of their choice of preferred platform, the first step to start playing Illuvium Zero is to obtain a Land NFT.

The full-release version of Illuvium Zero will be free-to-play with Tier 0 Land given freely to new players. However, to access core gameplay experiences like earning Fuel, players must purchase Land NFTs. There are five Tiers of Land NFTs in Illuvium Zero that can be purchased using Ether (ETH) from either [Illuvidex](https://illuvidex.illuvium.io/) or the [Immutable X marketplace](https://market.immutable.com/). Higher Tier Lands have better element harvesting potentials and fuel production capabilities than lower Tier Lands. These advantages also mean High Tier Lands are rarer and more valuable. Tier 5 Land is the rarest and has the unique function of hosting esports matches and player-versus-player (PvP) tournaments.

Once players have selected their preferred Tier and the specific parcel of Land to be purchased, they would need deposit some ETH into their wallet. The ETH deposit process requires players to link their Metamask wallet with the Immutable X marketplace through the steps below.

**Step 1** 

Firstly you need to link your wallet to the [Immutable X Marketplace](https://market.immutable.com/). For our example, we used the Metamask wallet to connect with Immutable X. Once you have connected your wallet, you will be prompted to set up an Immutable X key. The process does not require the recording of any seed phrases. Signing the transaction will complete the setup of the Immutable X key.

![image2 (5).png](https://prod-cms-assets.avocadodao.io/image2_5_7a910ca802.png)
_Immutable X Key Setup Interface (Source: Avocado DAO)_

**Step 2**

The next step is to deposit some ETH into the Immutable X wallet. Click on your wallet on the top navigation bar of the marketplace and then select '_Deposit_'. Enter the amount of ETH you want to deposit to the Immutable X wallet. This amount should equal the cost of the land you would like to purchase.

![image8 (1) (1).png](https://prod-cms-assets.avocadodao.io/image8_1_1_8f40f6dbea.png)
_ETH Deposit Interface (Source: Avocado DAO)_

**Step 3**

Once the ETH deposit process is complete, proceed to purchase the selected Land parcel by clicking "Buy Now".

![image10.png](https://prod-cms-assets.avocadodao.io/image10_81ba97e654.png)
_Land Purchase Confirmation Notification (Source: Avocado DAO)_

**Step 4**

Congratulations, you are now a proud owner of your very own Illuvium Land! Proceed to go to the official [Illuvium Zero Website](https://play.illuvium.io/zero) and link your wallet to your illuvium account.

![image4.png](https://prod-cms-assets.avocadodao.io/image4_b062561126.png)
_Wallet Link Confirmation Notification (Source: Avocado DAO)_

After linking your wallet to your Illuvium account, the download option will be available, and players can choose the Windows or Mac option if they are downloading to their PC. For the mobile options, you must select Android.

Upon loading the game client, select which Land you want to start the game with. Most players can choose the Free-To-Play (F2P) Land or the Land you just purchased from following the steps above. 

![Screenshot 2023-02-22 005954.png](https://prod-cms-assets.avocadodao.io/Screenshot_2023_02_22_005954_0fa3cc9d51.png)
_Land Selection Interface (Source: Avocado DAO)_

This course will focus on the Land NFTs from Tier 1 to Tier 5. Please note that, you cannot generate fuel earnings during Seasons 0 and 1 of Illuvium Zero Alpha Testing. The Land NFTs will only generate earnings when the game's earning economy is released after the two seasons of Public Alpha testing phases are complete. 

## How to Play Illuvium Zero

### Harvesting Elements and Fuel from Land

![Screenshot 2023-02-22 011451.png](https://prod-cms-assets.avocadodao.io/Screenshot_2023_02_22_011451_7a29e59883.png)
_Nexus and Engineering Workshop in the Tier 2 Land of Plot 95981 in the Halcyon Sea (Source: Avocado DAO)_

Now you have your very own Illuvium Land, the first two structures you should build are the Nexus and Engineering Workshop. With these structures built, your next goal should be to harvest your very first resources from your Land. There are three types of Fuel and three types of Elements that you can harvest.

![image3 (1).png](https://prod-cms-assets.avocadodao.io/image3_1_0d9088f6b8.png)
_Specifications of Fuels and Elements (IlluvialMaster.com)_

#### Elements

Elements are used to construct advanced structures and other activities such as research and Energy production. For example, you can use structures such as Singularity Scanner to scan for Illuvial biodata. The scanned biodata can then be used in the Material Labs for further research to generate Blueprints. The Blueprints are where the interoperability benefits of Web 3 games shine through. You can use the blueprints generated from your Land to create ranger suit skins, drone configurations, and weapons for other Illuvium game modes like Illuvium Arena. 

![image4.png](https://prod-cms-assets.avocadodao.io/image4_c3f9ed520a.png)
_Blueprints Generation and NFT Skins Display Structures (IlluvialMaster.com)_

You should note that Blueprints generated in Season 0 cannot be carried forward to future seasons. Blueprints generated in Season 1 can be carried forward and used in future phases in Illuvium. What will be carried forward to the future is the knowledge you gain from Season 0. A few examples are insights on what to build and where to best farm for resources. 

In order to get these benefits, you must construct specific structures to harvest the Elements. 
- Harvesting of Hydrogen requires a Hydrogen Pump
- Harvesting of Carbon requires a Sediment Excavator. 
- Harvesting of Silicon requires a Mine. 

![image5.png](https://prod-cms-assets.avocadodao.io/image5_3f78b16dbe.png)
_Elements Harvesting Structures (IlluvialMaster.com)_

#### Fuel

Fuel is another core component of the interoperable benefit of the Illuvium Ecosystem. You can use Fuel extracted from Illuvium Zero to power your adventures in Illuvium Overworld. For example, you can use Hyperion harvested from your Land to assist in capturing Illuvials. Want to upgrade weapons and armor in your Overworld adventure? Then you want to make sure to harvest some Solon Fuel. The last fuel type Crypton, is used to travel to different regions in Illuvium Overworld.

You can also trade Fuel for ETH on the IlluviDEX. However, before Fuel can be used or traded, it must first be harvested. In this regard, harvesting Crypton, Hyperion, and Solon would require the construction of a Crypto Gate, Hyperion Extractor, and Solon Dredge respectively. 

![image6.png](https://prod-cms-assets.avocadodao.io/image6_1c68237a00.png)
_Fuel Production Structures (IlluvialMaster.com)_

## Things to Look Forward to in Illuvium Zero

### Land Rental

Illuvium has plans to introduce a Land rental mechanism that would allow Landowners to lease out their Land to players based on a time-based fee or profit-sharing arrangement. The Land rental option is unavailable in Season 0 of Illuvium Zero, and no further details are available as of February 2023.

### Land Combination

Illuvium has plans to introduce a mechanism that would allow adjacent plots of Land, which are 2x2 or 3x3 square in size, to be combined to form megacities. The Land constituting these megacities would be able to share landmark bonuses and resources such as buildings and structures. Megacities are unavailable under Season 0 of Illuvium Zero, and as of February 2023, Illuvium has yet to announce any specific timeline for its implementation.

Now that you have learned the ropes for harvesting resources in Illuvium Zero, its time to start your adventure in the world of Illuvium through our next course, [**Explore the Great Big World of Illuvium with Illuvium World**](https://core.avocadodao.io/blog/illuvium-course-2-explore-the-great-big-world-of-illuvium-with-illuvium-overworld/).

Illuvium Course (6) (1).jpg

Illuvium Course 1: Build your ground zero base with Illuvium Zero

## Embarking on An Adventure in Illuvium Overworld 

It's adventure time in Illuvium World with Illuvium Overworld, an open-world exploration role-playing game (RPG) where you embark on an adventure in the seven regions of Illuvium. At the time of writing, only one region is available, namely the Crimson Waste region. 

![image3.png](https://prod-cms-assets.avocadodao.io/image3_bcd11eba60.png)
_Map of Crimson Waste (Source: Illuvium.Fandom.com)_

Illuvium Overworld is still in its Private Beta testing phase, which opened on 12 December 2022. We have ample time to explore the Illuvium world as this phase will run for as long as required. More adventure is in store as additional regions are set to be available moving forward. Not only that, the fun factor would be going into overdrive as more game modes become available in due course. 

As of February 2023, the only available game mode under Illuvium Overworld’s Private Beta testing phase is the player-versus-environment (PvE) Survival Autobattler. In this game mode, you will explore the Crimson Waste region and battle AI-controlled Illuvials in an auto-battler game mode similar to what you will experience in Illuvium Arena. The experience from the small but packed Beta test was strong enough for Illuvium to garner the best RPG game of 2022 award at the GAM3 Award.

![image4 (2).png](https://prod-cms-assets.avocadodao.io/image4_2_5dd1193813.png)
Illuvium’s GAM3 award for best RPG game of 2022 (Source: Polkastarter.gg)

## How to Play Illuvium Overworld

[yt=https://www.youtube.com/watch?v=otIb_lbmN6A]

The main goal of Illuvium Overworld is to explore the environment using your movement abilities and scan the environment to acquire resources and find Illuvials to capture. Armed with your Nethersight visors and companion drone, you can scan the local environment to Harvest Plants, mine Resources Deposits, and capture Illuvials.

- ### Mining Resources Deposits

You can mine Resources Deposits for Ores, Gems, and Shards. Ores can be used to make weapons and armor. As for Gems, they are augments that come in five elemental types, Air, Earth, Fire, Water, and Nature. Gems can be used to infuse Illuvials with the relevant elemental synergies and give you an edge in the Arena.

If you want to fire up your Illuvial, you can use a fire-based Gem that is akin to the Fire Stone in Pokémon. In the Pokémon world, a Fire Stone can be used for the evolution of fire-based Pokémons such as from Charmander to Charmeleon. Similarly, Fire Gems can be used to upgrade Illuvials by imbuing them with fire elements. In order to use Gems, you will first need to fight Illuvials in the Illuvial wakes and capture them using cured shards.

- ### Capturing Illuvials

Capturing an Illuvial first requires you to successfully shoot an Illuvial Wake. If your shot was on point, a portal would appear to take you into the auto-battler mode, where you will fight the Illuvial and a number of its friends. Defeating the Illuvials allows you to capture the defeated Illuvials using cured Shards, similar to Poké Balls that you may be familiar with.

![list (1).jpg](https://prod-cms-assets.avocadodao.io/list_1_07a259b952.jpg)
_Examples of Illuvials (Source: IlluvialMaster.com)_

You can mine raw Shards from mineral deposits and then cure the Shards at the Zero Point Forge. The conversion process for cured Shards requires Fuel in the form of Hyperion which can be harvested in Illuvium Zero or purchased from the IlluviDEX. Cured Shards come in different tiers, with higher tiers having higher capturing power, thereby affording a higher chance of successfully capturing Illuvials.

![image6.png](https://prod-cms-assets.avocadodao.io/image6_08c636fb2d.png)
_Mining of raw Shards (Source: Illuvium.io)_

- ### Reaping Harvestable Plants

You can reap Harvestable Plants for guaranteed consumables. In the full version of the game, there will also be a chance to acquire Essence.

![clovium (1).png](https://prod-cms-assets.avocadodao.io/clovium_1_df19a160b5.png)
_Harvestable Plants (Source: Illuvium.wiki)_

### Moving Around in Illuvium Overworld

Like most RPGs, Illuvium Overworld uses traditional third-person movement controls. The movements are further enhanced with Jetpack and Gravity Boots. 

The Jetpack lets you travel long distances in a short amount of time. To travel to hard-to-reach places, the Gravity Boots create a gravity well underneath you, boosting you to new heights. Both movement abilities require Kinetic energy, which depletes as the abilities are used. Kinetic energy will start to recharge when you make contact with the ground. 

Other travel methods include teleport structures known as Obelisks, which instantly teleport you from one location to another. During the Private Beta testing phase, you will receive Fuel in the form of Cryptons (5,000 units per day), which you can spend to use Obelisks to teleport to different Stages in the Crimson Waste region. There are a total of four Stages in the Crimson Waste region, namely S0, S1, S2, and S3. Teleporting back to Stage 0 of the Crimson Waste region of the Sanctum Messa is free of charge.

The Sanctum Messa is the place where you can recharge your energy that gets depleted when you undertake activities such as harvesting plants, mining resources as well as capturing Illuvials. Additionally, the Sanctum Messa also hosts facilities that allow you to craft new armaments, allowing you to make upgrades to your items or carry out the fusion process for Illuvials. These processes would require Fuel in the form of Solon, which can be harvested using Illuvium Zero or purchased from the IlluviDEX. 

![image2 (3).png](https://prod-cms-assets.avocadodao.io/image2_3_225617da25.png)
_An Obelisk (Source: Illuvium.io)_

## Accessing the Private Beta

Illuvium Overworld is playable on both Windows and Mac devices. The first step is to go to the official [Illuvium website](https://illuvium.io/) and sign up for an account before registering for beta access. According to the developers, some of the factors which they would take into account for their Beta tester selection process include but are not limited to “_completeness of registration information and system specifications_”. Those who are selected to be Beta testers will receive an invitation email. Once you have been accepted to the Private Beta, you download the game and start your adventure to catch them all! 

![image5 (1).png](https://prod-cms-assets.avocadodao.io/image5_1_3b245d515d.png)
_Downloading Illuvium Overworld (Source: Illuvium.io)_

The Private Beta gives you a taste of what’s to come in Illuvium. Fuels acquired from Illuvium Zero powers your experiences in Illuvium Overworld, and this interoperable experience is ultimately realized in Illuvium Arena. In this third game mode, you will be able to show off your captured Illuvials and take on any challenger that comes your way. The exhilarating combat experienced in Illuvium Arena will be discussed in our next course, [**Be the Gladiator of the Illuvium Arena**](https://core.avocadodao.io/blog/illuvium-course-3-be-the-gladiator-of-the-illuvium-arena/).

Illuvium Course (5) (1).jpg

Illuvium Course 2: Explore the great big world of Illuvium with Illuvium Overworld

## (1) Introduction

Video gaming entails the element of liberation from the restraining boundaries of realities to make a temporal escape into an alternate dimension where players can make their own choices which would determine their fate. Similarly, at the conceptual heart of the genesis of cryptocurrency is the idea of financial democratization which is rooted in the decentralized feature of blockchain. In the eighteenth century, the Father of Economics, Adam Smith "proposed the idea of decentralized governance through the devolution of decision-making powers in his book “The Theory of Moral Sentiments”. Smith believed that decision-making is best left to the individuals themselves as they have a better understanding of their own welfare than centralized administrators. 

Fast forward to the twenty-first century, Smith's vision is now a plausible reality with the advent of blockchain as a decentralized form of distributed ledger technology (DLT) which is secured using cryptographic hashing. In the financial industry, Adam Smith's vision of a decentralized future has come to life through decentralized finance (DeFi) which allows people to break free from the control of traditional finance institutions. The liberalization of the financial domain has opened the door to a host of newfound possibilities for wealth generation and income building. Standing testament to this is the conceptual birth of GameFi which allowed gamers to do what was previously merely a utopian dream, to tap into the premise of digital ownership through a content creator economy while doing what they love i.e. playing video games. In many ways, the GameFi revolution was driven in no small part by Axie Infinity. 

## (2) Axie Infinity: A Timeline

### (a) 2018: The Birth of a Startup
Launched in March 2018 by Vietnam-based Sky Mavis, Axie Infinity with its in-game market which is supported by a micro economy of its own was referred by some as being akin to a "hyper-financialized version of Pokemon." Regardless of the doubters and naysayers, Axie Infinity was certainly a game-changer that broke new ground by venturing into uncharted territory through the novel use of the gamification mechanism. 

As fate would have it, the world was struck by the Covid-19 pandemic just about a year and half after the launch of Axie Infinity. The ensuing lockdown which restricted large parts of the global population to the confines of their homes coupled with the resultant job losses from the ensuing economic downturn catalyzed the rise of Axie Infinity, particularly in developing countries notably the Philippines. As of June 2022, the Philippines remained the top country for Axie Infinity players followed by Venezuela in second place with the United States as a surprise package in third.

![image13 (1).jpg](https://prod-cms-assets.avocadodao.io/image13_1_d69be48a43.jpg)
_Top Countries of Axie Infinity Players (Source: Avocado DAO)_

### (b) 2020 -2021: Business Growth and Product Maturity
During the onset of the pandemic in January 2020, Axie Infinity's monthly average active players count stood at around 10,500+.. In the span of just 12 months, this figure had skyrocketed to about 612,800+ in December 2020 which represented an annual increase of a whopping 5,836%. The high water mark was in the third quarter i.e. Q3 2020 during which the game’s active players count recorded an astronomical Quarter-on-Quarter (QoQ) growth rate of 932%. 

![image11.jpg](https://prod-cms-assets.avocadodao.io/image11_80c5639d2e.jpg)
_Quarterly Growth of Axie Infinity's Monthly Active Players from 2020 to 2021 (Source: Avocado DAO)_

The upwards trend in Axie Infinity’s active players count continued in 2021 when it recorded an average QoQ growth rate of 33.9%. Whilst there may be a host of underlying factors for the rapid rise in Axie Infinity’s active players count, the primary one could be the earn factor as represented by the price of Axie Infinity Shards ($AXS) and Smooth Love Potion ($SLP) which function respectively as the game’s governance and utility token. 

![image15 (1).jpg](https://prod-cms-assets.avocadodao.io/image15_1_25cbcfadde.jpg)
_$AXS' and $SLP's Trading Price and Axie Infinity's Active Players Count in 2021 Correlation Analysis (Source: Avocado DAO)_

### (c) 2022 and Beyond: Sink into Decline or Swim Towards Recovery

In 2022, data indicates that the positive correlation between the price of $AXS and Axie’s Infinity’s active players count has strengthened significantly. Additionally, there is a distinct positive correlation between the price of $AXS and $SLP from February 2022 onwards which indicates the enhanced coupling between $AXS and $SLP. The relationship between the price of the game's tokens and the number of active players indicate a distinctive positive correlation between the price of the game’s tokens and its active players count. This leads to the logical inference that the earn element is becoming an increasingly significant factor in the market appeal of the game. 

![image3.jpg](https://prod-cms-assets.avocadodao.io/image3_8edb029c42.jpg)
_$AXS' and $SLP's Trading Price and Axie Infinity's Active Players Count in 2022 Correlation Analysis (Source: Avocado DAO)_

From a business perspective, the reduction in Axie Infinity’s active players count due to the fall in the trading price of $AXS and $SLP has materially impacted the revenue of the game. As can be noted from the graph below, the positive correlation between Axie Infinity’s monthly active players count and the game’s monthly revenue had grown increasingly stronger as 2022 went by.

![image7 (1).jpg](https://prod-cms-assets.avocadodao.io/image7_1_ad677a6509.jpg)
_Axie Infinity’s Active Players Count and Sky Mavis’ Revenue Correlation Analysis for 2022 (Source: Avocado DAO)_

#### (i) First Quarter of 2022 (Q1 2022)
In the course of Q1 2022, the price of $AXS and $SLP dropped by 32.3% and 26.9% respectively. Nonetheless, the active players count of Axie Infinity bucked the trend as it increased by 7.2% despite the drop in the price of $AXS and $SLP. 

![image6.jpg](https://prod-cms-assets.avocadodao.io/image6_6d0907a5d4.jpg)
_Intra-Quarterly Changes in the Metrics of Axie Infinity (Q1 2022) (Source: Avocado DAO)_

A notable incident which happened in Q1 2022 is the USD540 million hack of the Ronin network, an Ethereum sidechain built for Axie Infinity. As a socially responsible corporate organisation, Sky Mavis raised USD150 million from Binance and other investors which was then  combined with the funds in its Axie balance sheet to reimburse the affected users. 

![image5.png](https://prod-cms-assets.avocadodao.io/image5_4cf24ee5bb.png)
_Ronin Network Hack as the Second Largest Crypto Theft: Source: Ellptic.co)_

#### (ii) Second Quarter of 2022 (Q2 2022)
Following the Ronin Network hack in March 2022, Sky Mavis has had to delay the introduction of Axie Infinity: Origins. The alpha version of Origins was eventually launched in April 2022. This launch was significant because it replaced the original version of Axie Infinity after the final season (Season 21) ended on June 24, 2022.. From an economic perspective, the main difference between Axie Infinity Classic and Origins is the element of entry costs. 

Unlike Classic where players have to spend money to buy their first Axies to start playing the game, new players of Origins will receive 3 free Axies to kickstart their adventure in the Axie Infinity metaverse. This effectively lowers the barriers to entry for new players which theoretically should boost the game’s rate of user acquisition. From a gameplay perspective, Origins was designed with the aim of boosting the game’s level of user engagement through improvements to gameplay elements. In this regard, Sky Mavis has incorporated some major updates through Origins in the form of a better user interface and visually sharper graphics.

![image10.png](https://prod-cms-assets.avocadodao.io/image10_b90c74a4e4.png)
_Origin’s Gameplay Interface (Source: NFTGamingX.com)_

As for its gameplay mechanics, Origins is similar to Classic except for a few changes as follows:-

- **Sequential Turns**

In contrast with Classic where the players’ order of turns to choose their cards during battles are determined based on the speed stats of their Axies, the sequential turns of Origins are determined based on Rock, Paper, Scissors (RPS). However the RPS mechanism would only come into play in Origins if both players choose to go first. If one player chose to go first, and the other chose to go second, this would be the order of the sequential turn. Alternatively, if both players choose "No Preference," then the order of the sequential turns would be determined randomly.

- **Non-Accumulation of Cards and Energy**

In contrast with Classic where unused cards and energy are accumulated by default during battle, this is not the case for Origins meaning that there would be no incentives for players to skip their turns during battles.

- **Single Value Cards**

In contrast with Classic where cards consist of attack and defense values, cards in Origins will only have one value either for attack or defence, thereby changing the dynamics when it comes to battle strategies.

- **New Power Ups**

Origins brings with it two new power ups in the form of Runes and Charms which when equipped would allow players to gain buffs in a manner not unlike held items in Pokemon. In addition, Runes and Charm also serve as the underlying instruments for the in-game burn mechanism for $SLP to counter the inflationary effects of the token. It should be noted however, that the burning of $SLPs would be purely on a goodwill basis as there would be no reward for this.

- **New Stats**

In line with Origins’ aim of being a fast-paced card battler game, it entailed a reduction in the number of relevant stats such as that of speed whereby these stats are instead collectively replaced with Hit Points (HP).

Alas, the hype surrounding the launch of Origins, albeit merely the Alpha version in March 2022 and the Beta version in May 2022, was of limited effects in stemming the drop in Axie Infinity’s active players count. The count ended up recording an intra-quarterly drop of 64.3% in Q2 2022. Nonetheless, with the price of $AXS and $SLP having dropped by 77.9% and 81.8% during the same period, the fall in the Axie Infinity’s active players count could have been worse if not for the launch of Origins.

![image8.jpg](https://prod-cms-assets.avocadodao.io/image8_bd434407fe.jpg)
_Intra-Quarterly Changes in the Metrics of Axie Infinity (Q2 2022) (Source: Avocado DAO)_

#### (iii) Third Quarter of 2022 (Q3 2022)
With Axie Infinity’s active players count having fallen by more than 60% in Q2 2022, Sky Mavis decided to help Axie Infinity’s players find a place in the sun for their Axies by launching a breeding event for the Lunacian Summer in July 2022. The event which ran for 50 days allowed players to breed Axies with specific, albeit distinct body parts to obtain rare special-edition Summer body skins. As Sky Mavis start to feel the heat from Axie Infinity's dwindling active players count, it decided to harness the game's builder's program by undertaking one of the first launches of the program's 12 projects i.e. Defenders of Lunacian Land (DoLL) on 29 July 2022. In terms of its gameplay, DoLL is similar to that of Vampire Survivors where players have to level up by using skills gained from surviving multiple waves of attack from enemies. 

![image1.png](https://prod-cms-assets.avocadodao.io/image1_2e3593fd0c.png)
_DoLL’s Gameplay Interface (Source: Twitter.com/@AuloxNFT)_

Fallen enemies would drop crystals which when collected help players to gain experience points that enable the levelling up of skills. Combining simple gameplay with exciting action, DoLL is designed with the aim of promoting competition. The game has a leaderboard which allows highly placed players to be rewarded through monetary earnings that are dispensed via the Ronin blockchain. Tapping into the community spirit of Axie Infinity by launching DoLL which is designed by the Axie community itself may have helped stem the slide of the game’s active players count. Nonetheless, with this count further dropping by about 23% during Q3 2022 which is almost double the intra-quarterly drop of 10.8% and 12.1% in the price of $AXS and $SLP respectively, the element of community spirit did not prove to be overly handy for Sky Mavis.

![image14.jpg](https://prod-cms-assets.avocadodao.io/image14_22d7e6411f.jpg)
_Intra-Quarterly Changes in the Metrics of Axie Infinity (Q3 2022) (Source: Avocado DAO)_

#### (iv) Fourth Quarter of 2022 (Q4 2022)
In the first three quarters of 2022, Axie Infinity’s active players count had fallen by about three quarters (73.4%). As the saying goes, “desperate time calls for desperate measures,” and so Sky Mavis decides to tap into what is arguably the most precious resource of any place i.e. land, or more precisely land in the Axie metaverse. This led to the launch in October 2022 of Axie Infinity: Raylights as the first land-based game for the Axie ecosystem.

The gameplay of Raylights involves players sowing minerals in their land to grow plants. There are 10 types of minerals though players would only have access to 3 when they initially start playing with the rest to be unlocked as the players progress along the game. The element of surprise is provided by the fact that combining different minerals could result in the growth of different plants. After assigning an Axie to be in-charge of attending to the plant, players would have to wait for the growth timer to tick by. Once the timer rings, players can find their plant in the inventory which can then be placed onto a land plot. 

![image12.png](https://prod-cms-assets.avocadodao.io/image12_a5c0dcdeb2.png)
_Raylights’ Gameplay Interface (Source: YouTube.com/@AxieInfinity)_

In many ways, Raylights through its concept of land cultivation served as a precursor to the launch of Axie Infinity: Homeland, whose early alpha build went live for Axie landowners in December 2022. The aim of the launch of the Alpha build is to allow players to explore the game's features and to provide feedback for its development. According to Sky Mavis’ roadmap for the development of Homeland, we are currently only at the first phase. The upcoming phases would entail the introduction of among other things, Avatar Axies and NFT Axies in the second phase, Land Tokens in the third phase as well as the inclusion of gameplay elements in the fourth and final phase for those who are Axie Infinity players but who are not Axie landowners.

![image2.png](https://prod-cms-assets.avocadodao.io/image2_0be7b4577e.png)
_Sky Mavis’ Development Roadmap for Homeland (Source:Axie.Substack.com)_

Homeland which is currently only available to Axie landowners involves these landowners guiding their Axies to optimize the production and harvesting of resources from their land. As Homeland is still in its early stage of development, there are few details available as at the time of writing. Nonetheless, according to Sky Mavis, the interconnected gaming loops of Homeland entail the mastery by players of the following tasks:-

- "Gather and store natural resources with expert precision. 

- Optimize the task assignments and workflows of your worker Axies for maximum efficiency. 

- Build structures that enable storage, item production, and growth of your settlement’s population. 

- Craft supplies, weapons, armor, and items that aid native adventurers in their battles. 

- Trade with both native Adventurers and other landowners for in-game currency 

- Arm native adventurers with the best equipment and send them into battle against waves of monsters 

- Compete in the leaderboard against fellow owners on both the maturity of your land and how successful your armed adventurers have performed in battle. 

- Show off your creativity and style by designing and decorating your plot. 

- Explore the world and marvel at the real-time growth of Lunacia as players upgrade and enhance their Land."

As Homeland was only introduced on 28 December 2022, the jury is still out as to the extent to which it would be able to stop the tide of the dwindling numbers of Axie Infinity’s active players count. A worrying sign is that during the course of Q4 2022, this count had dropped by a further 36.6% though it should be noted that the price of $SLP had dropped by a similar extent, and the price of $AXS had dropped by more than half during the same period.

![image4.jpg](https://prod-cms-assets.avocadodao.io/image4_c73f550396.jpg)
_Intra-Quarterly Changes in the Metrics of Axie Infinity (Q4 2022) (Source: Avocado DAO)_

### (3) Conclusion
Back in March 2018 when Sky Mavis launched Axie Infinity, GameFi had yet to even be conceptualized. Nonetheless. It is CryptoKitties which predated Axie Infinity by about half a year that is generally regarded as the progenitor of GameFi. That said, Axie Infinity which is in many ways the prime catalyst of the GameFi revolution, is and will always be synonymous with GameFi, at least for the 1.0 version. 

As things stand, Axie Infinity’s 2022 metrics do not bode well for the game’s future. Despite the quadruple launches of Origins, DoLL, Raylights and Homeland, Axie Infinity’s active players count recorded an intra-yearly drop of about 83% in 2022. Towards the end of January 2022, the count was at an all-time high monthly average peak of 2.78+ million but by the end of December 2022, this count had dropped to 468,000+. Although this count is considered low by Axie Infinity's standards, it still ranks among the top tiers in the echelon of the players counts for video games. Using the players count of Steam games in December 2022 for benchmarking purposes, Axie Infinity's count of 468,000+ comes in third, behind only those of Counter Strike: Global Offensive and Dota 2.

![image9 (1).jpg](https://prod-cms-assets.avocadodao.io/image9_1_a5adfa9e09.jpg)
_How Axie Infinity's Players Count Fares Against Steam Games’ in December 2022 (Source: Avocado DAO)_

Only time will tell whether Homeland could help Sky Mavis reinvent Axie Infinity and turn the tide for the game’s active players count. What is clear however, is that true-blue GameFi enthusiasts would be keeping their fingers crossed that Homeland would bring Axie Infinity back to where it belongs.





A Recap of Axie’s Journey to Infinity and Back (1) (1).jpg

A recap of Axie’s journey to Infinity and back

## (1) Introduction

Since the dawn of mankind, humans have embarked on a seemingly eternal quest for omniscience, to transcend the limitations of our minds and the boundaries of our awareness. As we are now in the twenty-first century, technology has enabled us to build a body of scientific knowledge which was unimaginable to our ancestors just a century ago. In many ways, the drive to be all-knowing is rooted in our innate need for transcendence in line with our teleological instinct to strive towards a greater purpose which justifies our earthly existence.  

## (2) Cross the Sea of Ignorance with the Akashic Records
If only there is a universal body of knowledge that we can tap into. The closest thing we have is probably the Akashic records which is said to be a _“compendium of all universal events, thoughts, words, emotions and intent ever to have occurred.”_ Alas, although there are anecdotal accounts of the existence of Akashic records, there is as yet no scientific evidence which can attest to the existence of the records. Nonetheless, the conceptual idea of the Akashic records provides a glimmer of hope for truth seekers who are looking to cross the sea of ignorance.

If something like the Akashic records do exist, we would need a portal to access it and the closest thing to such a portal we have today is OpenAI’s ChatGPT. With ChatGPT’s source data consisting of user generated content on the Internet such as text and voice records, the similarity between ChatGPT’s source data pool and the Akashi records which store the _“thoughts, words, emotions and intent”_ of humans are indeed uncanny. To put it simply, ChatGPT could be the closest thing humanity has to a portal to access something similar to the Akashi records which could help us cross the sea of ignorance.

![image2.png](https://prod-cms-assets.avocadodao.io/image2_c653e3ef90.png)
_Graphi Representation of the Akashic Records (Source: destinationdeluxe.com)_

## (3) Powering Up the Web3 community with ChatGPT’s AI-Based Technologies
From a technological perspective, ChatGPT could be the breakthrough to power up the Web3 community through the application’s use of AI-based natural language processing (NLP), machine learning (ML) and reverse application of computer vision.

### (a) Understanding the collective perspective of the Web3 community with NLP

Web3 envisages the establishment of a community-centric data economy in which users’ data are not owned or controlled by centralized entities but form part of a decentralized network in which data is owned, controlled, produced and utilized by the community itself. According to estimates, Internet users create 2.5 exabytes i.e. 2.5 quintillion bytes of data daily.  With this figure being projected to rise to 463 exabytes by 2025 and the importance of user generated data set to grow in importance in the Web3 era, it is said that _“data is the new oil.”_

This gigantic body of user generated data on the Internet is perhaps the closest thing humanity has ever come to having something like the Akashi records. Nonetheless, the data are of little utility in bringing to life the community-centric agenda of Web3’s data economy if they could not be processed in a way which pays heed to their organic and natural meaning. In the context of user generated content such as text and voice data, ChatGPT’s GPT-3.5 NLP-based model was trained using _“vast amounts of data from the Internet written by humans, including conversations.”_ This effectively enables ChatGPT to “understand” text and voice data in a manner which pays heed to the creator’s intent and sentiment, thereby allowing us to learn more about the collective perspective of the Web3 community. 

![ezgif-3-3c580c390c.jpg](https://prod-cms-assets.avocadodao.io/ezgif_3_3c580c390c_b9d32c94dd.jpg)
_What is ChatGPT? (Source: marketingv20.com)_

### (b) Giving a collective voice to the Web3 community with Machine Learning

Through concepts such as decentralized organization organizations (DAOs) and self-regulatory organizations (SROs), Web3 embraces the ideology of user autonomy where the domain would be governed by the community members themselves. At the crux of Web3’s framework is the decentralization of control through the distribution of decision-making powers to members of the community. This stands in contrast with the centralized framework of Web2 where the element of control is reposed in Big Tech companies and governments. Theoretically, the decentralized framework of Web3 would facilitate censorship resistance and boost privacy levels both of which are pertinent issues associated with the centralized framework of Web2.

![image1.png](https://prod-cms-assets.avocadodao.io/image1_2c9585e5e9.png)
_Avocado DAO’s Web3 Community (Source: Avocado DAO)_

In addition to being able to understand user generated text voice and data in a human-like manner, ChatGPT uses machine learning to produce human-like responses to queries generated based on its understanding of these data. The application of machine learning by ChatGPT is through its GPT-3.5 model which is _“optimized for dialogue by using Reinforcement Learning with Human Feedback (RLHF)...so the responses it provides may sound human-like.”_ This effectively enables ChatGPT to not only understand user generated input i.e. text and voice data in a human-like manner, but also to provide output in the form of human-like responses to queries, thereby enabling the Web3 community to be heard by giving the community a collective voice. The ability of ChatGPT to recognize human slangs and sentiments can be gleaned from the comparison between the responses of ChatGPT and an alternative AI chatbot as follows:-

![image6.png](https://prod-cms-assets.avocadodao.io/image6_25eb309e83.png)
_Chat Log of Responses by ChatGPT (Source: chat.openai.com)_

![image3.png](https://prod-cms-assets.avocadodao.io/image3_46e5a4b46f.png)
_Chat Log of Responses by Alternative AI Chatbot (Source: chat.kuki.ai)_

### (c) Visualizing the collective hopes and dreams of the Web3 community with the reverse application of computer vision

Web3 envisages the establishment of a user-centric creator economy in which content creators can have the autonomy and freedom to generate digital artworks without needing to have recourse to centralized third parties. In many ways, the cloud-based nature of the digital content of Web3’s creator economy is akin to the abstract nature of the contents of the Akashi records which are said _“to be encoded in a non-physical plane of existence known as the mental plane.”_ When it comes to the creator economy which deals with digital content, it would seem that ChatGPT is of limited utility but it does have quite a pertinent role to play particularly when deployed in tandem with another application built by OpenAI i.e. DALL·E 2.

The AI functionality of DALL E-2 which enables it to combine concepts, attributes, and styles to create original, realistic images and art renders it fit like a glove with Web3’s creator economy. The fact that DALL 2-E creates images based on text descriptions is where ChatGPT comes into the picture. Firstly, ChatGPT uses NLP to process user generated data in a human-like manner to  obtain a big picture view of the collective perspective of the Web3 community. ChatGPT then uses ML to produce output in the form of human-like responses to queries to give the Web3 community a voice and enable it to be heard. 

Thereafter, these responses output of ChatGPT are inserted as descriptions in DALL E-2 which then uses the reverse application of computer vision to generate images and art which encapsulate the collective perspective of the Web3 community. In this manner, ChatGPT when used in tandem with DALL E-2 generates a process flow which starts off with the primary input of user generated text and voice data that eventually culminates in the generation of visual images that represent the collective hopes and dreams of the Web3 community.

Harnessing the automated recording features of blockchain, the collective information submitted by Web3 users can be recorded on chain in the form of distributed ledger records. These data would then be submitted as input to DALL E-2 which then interprets the data before using the reverse application of computer vision to generate artworks, images, visuals or even videos that serve as graphical representations of the collective consciousness of humanity as represented by Web3 users. The best part is, the uncensored and immutable features of blockchain would warrant the transparency and true to life nature of these graphical representations. 

![image5.jpg](https://prod-cms-assets.avocadodao.io/image5_910378b6e8.jpg)
_Process Flow of ChatGPT and DALL E-2 (Source: Avocado DAO)_

### (4) Conclusion

At this juncture, some of you may be thinking that ChatGPT is almost God-like but as unfortunate as it is to have our bubbles burst, ChatGPT is not completely foolproof. This is because ChatGPT _“is not connected to the Internet, and it can occasionally produce incorrect answers.”_ Additionally, ChatGPT is also not omniscient or all-knowing as it has _“limited knowledge of world and events after 2021,”_ and may sometimes be prejudiced as it _“may occasionally produce harmful instructions or biased content.”_ Notwithstanding its shortcomings, ChatGPT could be our best bet to use AI to tap into the Akashi records-like pool of user generated data on the Internet to power up the Web3 community. 

Thanks for the pleasant chat, and have a nice day.


Open Chat (1).jpg

An open chat about powering up the Web3 community with Artificial Intelligence (AI)

We’re only in March but its Mayday mayhem in cryptoverse as the $$$ fell like toy soldiers. Three banks, each of whose name starts with a S for $, fell one after another in the span of just a few days. Buckle up Avocadians, as it's gonna be quite a rough ride which takes us right back to November 2022 when FTX went bust. 

## The FTX Contagion Scalps Silvergate Bank
To recap, FTX’s collapse resulted in contagion effects that rippled across both the conventional and crypto financial markets. Silvergate Bank, which counted FTX as one of its major clients, was hit hard with losses of USD1.05 billion in the fourth quarter (Q4) of 2022. Since then, the share price of Silvergate Capital, which is the parent company of Silvergate Bank, has gone on a freefall. 

![image1 (4).png](https://prod-cms-assets.avocadodao.io/image1_4_8498f990ed.png)
_Share Price of Silvergate Capital (Source: YCharts.com)_

On 1 March 2023 which is the submission deadline for its annual 10-K report, Silvergate Capital announced that Silvergate Bank’s losses for Q4 2022 were much more than the reported USD1.05 billion. Consequently, Silvergate Bank had to restate its financial statements for Q4 2022. Alas, just a week later, Silvergate Capital issued an announcement in which it declared its “_intent to wind down operations and voluntarily liquidate_” Silvergate Bank “_in light of recent industry and regulatory developments_”.

## No Crypto Silver Lining for Silicon Valley Bank
Just three days after the fall of Silvergate Bank, Silicon Valley Bank (SVB) was shut down by the California Department of Financial Protection and Innovation amidst liquidity concerns about the Bank. Crypto-friendly SVB's customers' network included prominent crypto and NFT industry players such as Ripple, Yuga Labs and Circle which held USD3.3 billion of its USD Coin (USDC) reserves in the Bank. The news SVB's fall spooked crypto investors so much so that they withdrew about USD880 million worth of Bitcoins (BTCs) from exchanges on the same day.

![image2.png](https://prod-cms-assets.avocadodao.io/image2_f8d5304b3d.png)
_BTC Withdrawals from Exchanges (Source: Messari.io)_

## A Signature Move by the FDIC on Signature Bank
Just one day after the fall of SVB, Signature Bank was shut down by the FDIC on the basis of a supposed need to “_protect the U.S.' economy_”. The FDIC claimed that Signature Bank posed a “systemic risk" to the country's economy. Among the affected crypto entities are crypto exchange, Coinbase and Pax Dollar (USDP) stablecoin issuer, Paxos whose exposure to Signature Bank stood at USD240 million and USD250 million respectively. Additionally, crypto lender Celsius also has an undisclosed exposure to Signature Bank.

![ARTICLE-IMAGES-35-1200x628.png](https://prod-cms-assets.avocadodao.io/ARTICLE_IMAGES_35_1200x628_f36a6b2757.png)
Crypto Entities with Exposure to Signature Bank (Source: Coinpedia.org)

## Conclusion
The first half of March 2023 has not been too kind on the crypto market as U.S.' regulators start to take a hard line on crypto-friendly banks. Whilst the future remains untold, one thing we know for certain is that crypto enthusiasts would be looking to recover some of their $$$ as the seasons in the cryptoverse change from winter to summer (soon). 




Fall of Silvergate bank, Silicon Valley Bank and Signature Bank.jpg

Breaking AvoNewsFlash: Fall of Silvergate Bank, Silicon Valley Bank and Signature Bank

## (1) Introduction

Theoretically, blockchain’s use of cryptographic hashing renders it to be mathematically impossible to be hacked but there is a caveat here. Although blockchain is for all practical purposes indeed hackproof but as always there are exceptions to the rule. Case in point is the significant increase in the value of losses due to crypto hacks from 2020 to 2021 with this trend being set to continue in 2022. It should be noted however, that 2021 was a particularly bad year for the crypto market in terms of hacks statistics. There were 250 hacks in 2021, which was almost 5 times more than the year before. The largest of these hacks was the USD611 million exploit of the PolyNetwork.  

![image3m.jpg](https://prod-cms-assets.avocadodao.io/image3m_b88586560f.jpg)
_Total Value of Losses from Crypto Hacks (2015 - 2022) (Source:blog.chainalysis.com)_ 

## (2) The Whys: Rising Statistics of Crypto Hack

Statistically, the number of crypto hacks have been on the rise over the past few years. Case in point is the fact that the total number of crypto hacks recorded a Year-on-Year (YoY) increase of more than 100% from 2020 (117 hacks) to 2021 (251 hacks). In terms of cryptocurrency value stolen as a result of these hacks, DeFi platforms bore the brunt, accounting for more than USD2 billion of the USD3.1 billion of cryptocurrencies lost. This figure is much higher than the USD1.7 billion in financial losses suffered in 2021 by seniors in the U.S who are particularly vulnerable to frauds and scams. 

![image9m.jpg](https://prod-cms-assets.avocadodao.io/image9m_8510033fab.jpg)
_Statistics for Crypto Hacks and Losses from 2015 to 2022 (Dec) (Source:blog.chainalysis.com)_

In case you are wondering why DeFi platforms are so much more prone to hackings than CEXs, it's because DeFi platforms stay true to the decentralization and transparency ideals of blockchain by operating using open-source protocols. The open-book nature of the program codes of DeFi platforms is akin to Christmas coming early for cyber criminals who can have a field day looking for security vulnerabilities in these codes. Once cyber criminals manage to find any security vulnerability, they would exploit these vulnerabilities to breach the security framework of DeFi platforms. This results in security breaches and code exploits which together constituted almost 100% of the crypto losses in Q1 2022.

![image2m.jpg](https://prod-cms-assets.avocadodao.io/image2m_943be41fe1.jpg)
_Percentage of Crypto Losses from 2020 to Q1 2022 (Source:blog.chainalysis.com)_

At this juncture, some may think that only DeFi platforms are at risk of being hacked but centralized exchanges (CEXs) too are vulnerable to such risks with top CEX Binance being the latest and arguably the most prominent victim in October 2022. A security vulnerability in the smart contracts of Binance’s cross-chain bridge was exploited by hackers who managed to make off with 2 million Binance Chain (BNB) tokens which were worth about USD570 million at the time of the theft. Besides Binance which had previously suffered a USD40 million hack in 2019, other top CEXs including Crypto.com, Coinbase and KuCoin were also not spared by hackers. 

![image10m (1).jpg](https://prod-cms-assets.avocadodao.io/image10m_1_6eb0becfe0.jpg)
_Top CEX Hacks (2016 -2022) (Source: AvocadoDAO)_

## (3) The Hows: Optmizing Security for Crypto Assets
The list of hackings of custodial wallets including those involving Liquid (USD97 million), AscendEX (USD80 million), and BitMart (USD150 million), all 3 of which occurred in 2021 highlights the dangers of such wallets. In terms of the alternatives, there are 2 types of non-custodial wallets i.e. hot and cold wallets. In contrast with cold wallets where private keys and crypto assets are stored offline, the private keys and crypto assets of hot wallets are stored online. The three top brands of cold wallets in the market are Ledger, Trezor and Ellipal whose top of the line models are Ledger Nano X, Trezor Model T and Ellipal Titan Bundle respectively. 

![image5m (1).jpg](https://prod-cms-assets.avocadodao.io/image5m_1_20dce74980.jpg)
Comparison of Top Cold Wallets (Source: guru99.com)

Custodial wallets on the other hand are generally exchange wallets which require trust to be reposed on a third party. 

![image1m.jpg](https://prod-cms-assets.avocadodao.io/image1m_a2ff48df87.jpg)
_Common Cryptocurrency Wallets (Source: dbs.com.sg)_

In terms of their pros, both hot wallets and custodial wallets are convenient and easy to use with the latter having the upper hand in this regard. Nonetheless, cold wallets offer the highest level of security thanks to their offline storage functionality. As for their cons, both hot wallets and custodial wallets are more susceptible to hacks than cold wallets. However, the better security of cold wallets comes at the price of their relatively higher costs and greater usage inconvenience. 

Regardless of their choice of wallet, crypto users would do well to protect their digital assets from the ever-present risks of hackings by following these best practices for the storage and handling of their cryptocurrencies:-

### Best Practice #1: Do not connect
If you choose to store your cryptocurrencies in cold wallets which operate in an offline manner, this disconnection from the Internet significantly reduces the risks of falling victim to hacks. When it comes to staking, opt for cold staking i.e. non-custodial staking whereby you can stake your crypto assets in an offline manner using your cold wallet. 

### Best Practice #2: Do it right
If you choose to use a hot wallet, use strong passwords and activate multi-factor authentication such as two-factor authentication (2FA). As for your private keys, back them up together with your mnemonic phrase preferably in separate hardware locations. If and when you do connect your hot wallet to the Internet, make sure this is done via a private and secure network whereby public WiFi networks are definitely no-nos.

### Best Practice #3: Do your research
If you choose to go for usage convenience with custodial wallets, be sure to do your research into the security background and credentials of the service provider. A good source of reference would be blockchain security platform CertiK which has a designated trust score for most crypto service providers. 

Other than the above mentioned dos and don’ts, some additional tips to protect yourself against crypto scams and hacks are:-

### Tip #1: Verify the legitimacy of websites
Make sure that the websites you are browsing are legitimate by using the organic search function on similarweb.com to verify that the websites are the official sites of the merchants or service providers you are looking to patronize.

### Tip #2: Verify the legitimacy of Telegram channels
Given the plethora of scams making their rounds on Telegram particularly through fake channels, you may want to avoid sourcing for information or entering into any transaction through Telegram as the counterparty may turn out to be an impersonator. Always look for the blue tick beside the profile name as this indicates that it is the official account of the company as verified by Telegram. Additionally, a telltale indication of an impersonating Telegram account is a lack or absence of real life organic conversations between members of the group. You should refrain from clicking on any links or entering into any transactions with anyone from such Telegram accounts.

![image7m.jpg](https://prod-cms-assets.avocadodao.io/image7m_d1979090b7.jpg)
_Impersonating Accounts of DeFi Platform Uniswap (Source: Telegram)_

![image4m.jpg](https://prod-cms-assets.avocadodao.io/image4m_61c3f0c8b9.jpg)
_Verified Official Accounts of CEX Huobi (Source: Telegram)_

### Tip #3: Distinguish between Google Ads and search results
When undertaking Google searches, refrain from clicking on advertisements but instead go straight to the search results. You can tell which items are the advertisements and which items are the search results by looking out for the word “Ad” that would appear on the right side of the advertisement items. In terms of their placement, advertisements would appear at the top of the page followed by search results.

![image8m.jpg](https://prod-cms-assets.avocadodao.io/image8m_8f4f79a28c.jpg)
_*1 = Ads , 2 = Search results (Source: support.google.com)_

### Tip #4: Proceed with caution with email attachments and links
Abstain from clicking on links or opening attachments in emails from non-trusted sources as a common phishing method is to trick victims into clicking on malware infected links or opening fraudulent attachments.

## (4) Conclusion
In many ways, the prevalence of crypto hacks is one of the many growing pains of the industry as it charts its way towards becoming a mature financial market. As we await the dawn of the crypto era of stability and security, crypto users can hackproof their digital assets by duly adhering to the best practices for the storage and handling of these assets.


image6 (3).jpg

Hackproof your crypto assets: The whys and the hows  

## Prove Your Worth as the Gladiator in the Arena
Life is about proving our worth. In the Illuvium universe, the place to prove your worth is none other than Illuvium Arena, an auto battler where players battle each other with Illuvials caught during their journey. The Private Beta 2 testing phase opened on 26 September 2022 and will run for as long as required with the Survival Arena being the only available game mode. If you can survive the Survival Arena, you are worthy of the Ascendant and Leviathan arenas, both of which are set to be available when Illuvium Arena is fully launched. 

![image1.png](https://prod-cms-assets.avocadodao.io/image1_6404b20153.png)
_Illuvium Arena Private Beta (Source: Illuvium.io)_

## How to Play Illuvium Arena


[yt=https://www.youtube.com/watch?v=5NAo6zLbnoc]

### The Arenas of Illuvium Arena
There are three Arenas in Illuvium Arena though only the Player-vs-Environment (PVE) mode of Survival Arena will be available during the Private Beta 2 testing phase.

- **Survival Arena**

In the Survival Arena, the G4udi autonomous trainer drone has gone haywire and will take down players rather than train them. As you find yourself facing a seemingly endless onslaught of increasingly powerful Illuvials, you would need to build a team to make it out of the Survival Arena alive. For all its dangers and challenges, the Survival Arena with its player-versus-environment (PvE) features is merely a tutorial that provides you with a taste of what’s to come.

- **Ascendant Arena**

When it's available, the Ascendant Arena would be the premium esport game mode of Illuvium Arena. As the mid-tier Arena that stands between the Survival Arena and the Leviathan Arena, the Ascendant Arena is where you can literally ascend the leaderboard by climbing the ladder. You would face-off against your peers who are at the same level on the ladder. The only way to climb the ladder is for you to prove that you are worth your place at the higher rungs by winning matches against your peers. In addition to experience levels, the other skill-based element in Ascendant Arena is Illuvial points which are the costs associated with the deployment of Illuvials in battles. It's a slug fest, and only the strongest would make it to the top of the ladder in order to qualify for entry to the Leviathan Arena.

- **Leviathan Arena**

The Leviathan Arena is built for the big boys heavy hitters. To use an analogy with the Roman Empire, the Leviathan Arena is akin to the Colosseum where legendary gladiators fight it out, tooth and nail. The Leviathan Arena is the place where the most epic teams imaginable look to assert their dominance. These _creme de la creme_ (best of the best) of fighters take no prisoners as they battle it out to prove their worth as the alphas of gladiators. 

A testament to the no-holds barred combat mode of the Leviathan Arena is the fact that battles in the Arena are unhindered by factors such as experience levels of players and Illuvial points (costs associated with the deployment of Illuvials) that exist in the Ascendant Arena. Instead, the mode of engagement in the Leviathan Arena is that of an all-out, free-for-all Herculean warfare. In true embodiment of the gladiator spirit of times gone by, spectators can wager on the outcome of matches in the Leviathan Arena. In the heat of some of the raging battles in the Leviathan Arena, you may soon find that all bets are off.

![image6.png](https://prod-cms-assets.avocadodao.io/image6_7e9c403e02.png)
_Preparing for Battle in Illuvium Arena (Source: Medium.com/@Rhamphy)_

## Optimizing Your Strategy to Becoming the Gladiator of Illuvium Arena

The path to becoming the Gladiator of Illuvium Arena is an arduous one. With the introduction of checkpoint restore function, your path has become slightly easier as you will not lose all your progress when you fall in battles. Still, you would need to prove your worth as the Gladiator of Illuvium Arena by optimizing your strategies to remain as the last one standing in the Survival Arena.

- **Optimizing the Synergies**

In the Survival Arena, you have a choice of 8 Illuvials from a randomly generated deck. In choosing their Illuvials, you must identify the Illuvials which have high damage per second (DPS) rates and good defensive stats. In line with Illuvium’s Interoperable Blockchain Game (IBG) system, the Illuvials that you managed to capture in Illuvium Overworld can be used for battles in Illuvial Arena. This increases your choices as to which Illuvials to use to survive the waves of attacks by enemy Illuvials in the Survival Arena.

Besides attacking and defensive capabilities, another key consideration is the primary affinities of Illuvials. For example, if you are looking to build Fire Synergy, you would need to choose Illuvials from the Fire class (Illuvials that have Fire affinity). The resulting primary Fire Synergy buff would increase the DPS of the other Illuvials in the your carry unit. The primary Synergy which is based on the affinities of Illuvials can be complemented by composite Synergy that is based on your choice of weapons and armor. 

The considerations for attaining composite Synergy are similar to those for the attaining of primary Synergy. You should choose weapons and armor which characteristics complement the primary Synergy of your Illuvials. An example is where if your Illuvials has primary Earth Synergy, you should choose Earth-based items such as Earth Gauntlet to attain composite Synergy.

![image3.png](https://prod-cms-assets.avocadodao.io/image3_7e32bde425.png)
_Optimizing Synergies (Source: Avocado DAO)_

- **Optimizing the Use of Return Points**

In the Survival Arena, you have 2 Return Points per wave that can be used to recall Illuvials from the Arena during battles. You should base your decision as to when to use your 2 Return Points for each wave based on the relationship of the Synergies between your  Illuvials and those of the enemy Illuvials. For example, if your Illuvials are mainly of Fire affinities (primary Fire Synergy) and complemented by Illuvials of Air affinities (secondary Air Synergy), whereas the primary Synergy of the enemy Illuvials is that of Water, this is an opportune time for you to use Return Points. 

This is because based on the game’s affinities system, Fire Illuvials are weak against Water Illuvials which in turn are weak against Air Illuvials. More information about this affinities system can be found in our [**core article on Illuvium**](https://core.avocadodao.io/games/illuvium/). In order to boost your chances of surviving a wave, you can use your Return Points to recall your Fire Illuvials before replacing them with Air Illuvials as the latter would be able to dispense attacks at higher DPS rates against the enemy Water Illuvials.

![illuvium-affinities.webp](https://prod-cms-assets.avocadodao.io/illuvium_affinities_dbd9ee2439.webp)
_Illuvium's Affinities System (Source: BeansTalk.io)_

- **Optimizing the Use of Mastery Points**

In the Survival Arena, you would receive Mastery Points for each wave that you manage to survive. The optimal use of Mastery Points could make a key difference to your chances of surviving the next wave. If you feel that the Illuvials you have in your carry unit are insufficient, you can use your Mastery Points to shore up your team by acquiring additional Illuvials. Alternatively, you can choose instead to use your Mastery Points to equip your Illuvials with Augments. 

The function of Augments is to modify the purpose and behaviour of Illuvials. Each Illuvial can have up to 2 Augments which enable the Illuvial to deploy special attacks. For example, an Illuvial which is equipped with the Augment of Exalted Vampiric Price would be able to deploy the special attack of Exalted Vengeful Smile.

![image4.png](https://prod-cms-assets.avocadodao.io/image4_997e927849.png)
_Deploying Exacted Vengeful Smile (Source: Avocado DAO)_

- **Optimizing the Use of Hyper Attack Mode**

In the Survival Arena, you can boost your chances of surviving a wave by unleashing the Hyper Attack mode of your Illuvials.  Under the Hyper Attack mode, your Illuvials would go into a frenzied, almost berserk-like state, in which they would be able to dispense special attacks with high DPS rates. When your Illuvials are faced with their favourite opponents, the Illuvials would enter into the Hyper Attack mode.

The favourite opponents of your Illuvials would depend on the the affinities of these Illuvials and those of their opponents. For example, based on the game’s affinities system, Fire Illuvials are strong against Nature and Air Illuvials. Accordingly, you should position your Fire Illuvials against the enemy Nature and Air Illuvials. This would enable your Fire Illuvials to unleash their Hyper Attack mode and dispense special attacks with high DPS rates against these enemy Illuvials.

![Illuvial-Battle-Illuvium-1536x975.jpg.webp](https://prod-cms-assets.avocadodao.io/Illuvial_Battle_Illuvium_1536x975_jpg_0aaf6c4c76.webp)
_Fire Illuvial's Hyper Attack Mode (Source: CoinBureau.com)_

## Getting Started in Illuvium Arena
Illuvium Overworld is playable on both Windows and Mac devices. The first step is to go to the official Illuvium website and sign up for an account before registering for beta access. According to illuvium, some of the factors which they would take into account for their beta tester selection process include but are not limited to “_completeness of registration information and system specifications_”. Those who are selected to be beta testers would receive an invitation email. The next step is to go to the official Illuvium website and select Illuvium Arena. 

![image3.png](https://prod-cms-assets.avocadodao.io/image3_0a4cfcbc50.png)
_Selecting Illuvium Arena (Source: Illuvium.io)_

Next, you would need to click download the Illuvium Arena game client which is the same as that of Illuvium Overworld for the purposes of beta testing .

![image2.png](https://prod-cms-assets.avocadodao.io/image2_1834affca6.png)
_Downloading Illuvium Arena (Source: Illuvium.io)_

After downloading the Illuvium Arena game client, you can proceed to launch the client and login using their Illuvium.io credentials to start playing. 

![image5.png](https://prod-cms-assets.avocadodao.io/image5_0273bc15b3.png)
_Illuvium Arena Login Interface (Source: Illuvium.io)_

As the third game mode in the Illuvium ecosystem, Illuvim Arena brings players in the ecosystem together for full on combat to prove their worth. In your quest to be the supreme gladiator of the Illuvium Arena, you can have recourse to other games in the Illuvium ecosystem. As part of Illuvium's IBG system, the Blueprints generated in Illuvium Zero can be used for the crafting of skins in Illuvium Arena, and as previously mentioned, the Illuvials captured in Illuvium Overworld can be used for battles in Illuvium Arena. 

The key element that weaves a unifying thread through the components of Illuvium ecosystem is Illuvitars which doubles up as your profile picture (PFP) NFT. Hop on to the next and last course of this module, [**To Infinity and Beyond with Illuvium Beyond**](https://core.avocadodao.io/blog/illuvium-course-4-to-infinity-and-beyond-with-illuvium-beyond/) to learn more about how the game brings to life the functions of Illuvitars as the central tenet of Illuvium’s IBG system.


Illuvium Course (9) (1).jpg

Illuvium Course 3: Be the Gladiator of the Illuvium Arena

## A Primer on Illuvitars
Iluvitars are NFT profile pictures comprising three different hand-drawn expressions that double up as customizable avatars which come with utilities in the games comprising the Illuvium ecosystem.  Featuring a random background, each Illuvitar comes with five slots, namely head, body, skin, props, and eyes that can be equipped with accessories from the relevant category.  

![unnamed.png](https://prod-cms-assets.avocadodao.io/unnamed_e09702329a.png)
_Customized Illuvitars_ (Source. Illuvium.io)

Additional customization options are offered in the form of two available finishes, namely colour and holo. Collectively, these accessories and finishes render no two Illuvitars to be alike as each would be uniquely distinctive in their own special ways. Soon, Illuvitars would be granting exclusive features to players through Illuvium Beyond that is set to be launched on 7 March 2023. Mark your calendars, Illuvium fans.

![unnamed (1).png](https://prod-cms-assets.avocadodao.io/unnamed_1_213f0660a3.png)
_Illuvium Beyond Launch Date (Source: Illuvium.io)_

## Going Beyond the Ordinary with Illiuvium Beyond
As a collectible card game, Illuvium Beyond allows you to engage in competitions to collect the most powerful Illuvitar NFTs to be added to your collection. Developed using the industry-leading technologies of Immutable X (ZK-rollup scaling infrastructure), Binance (fiat payment gateway), and Chainlink (warranting the fairness and transparency of the raffles winner selection process using Verifiable Random Function), Illuvium Beyond features two key components namely Illuvitars Core and Illuvitars Album.

### Illuvitars Core

At the heart of Illuvium Beyond is Illuvitars Core that comes with the triple features of Illuvitar D1sks as well as Illuvitars' bonding and synergies.

- **Illuvitar D1sks**

In line with Illuvium's Interoperable Blockchain Game (IBG) system, Illuvitars together with their accessories and borders as well as emotes would be featured in your profile picture across all games in the Illuvium ecosystem. In order to have access to Illuvitars Core, you would need to acquire an Illuvitar D1sk from IlluviDEX. 

![image-8.jpg](https://prod-cms-assets.avocadodao.io/image_8_8a3f44f48a.jpg)
_Illuvitar D1sks (Source: Illuvium.io)_

- **Acquiring Illuvitar D1sks**

![how_to_blog_header.png](https://prod-cms-assets.avocadodao.io/how_to_blog_header_42781e5a8a.png)
_A How to Guide for Illuvium Beyond (Source: Illuvium.io)_

Based on the official guide for Illuvium Beyond, the steps to acquiring Illuvitar D1sks are as below.

1. Navigate to [**IlluviDEX**](https://illuvidex.illuvium.io/) and connect your wallet or Illuvium.io account.

2. Make sure you have funds deposited into your Layer 2 IMX wallet and that you have created an account and logged into the Illuvidex website. 

3. Once you're connected to the Illuvidex website, click on the "Buy Now" option below the D1sk you want to purchase.

4. In the next menu, select the number of D1sks you wish to purchase. Once you have added your desired D1sks to your cart, click "Purchase."

![illuvitar-d1sk-1024x576.webp](https://prod-cms-assets.avocadodao.io/illuvitar_d1sk_1024x576_480b4e8da9.webp)
_Illuvitar D1sk (Source: Illuvium.io)_

5. Choose to pay with either ETH or sILV2, where sILV2 is equal to the current price of ILV.

6. Complete the transaction by signing and confirming the message flow.

7. Once the transaction is complete, you will be directed to a D1sk buying confirmation page. From here, you can do either of the following below.

    (a) Load your D1sk in preparation for its opening

    (b) Return to the Illuvitars sale menu, or

    (c) Check out the Launch Party. 

You can choose not to open your D1sk immediately as you can always open them later, or sell them on the secondary market on Illuvidex.

- **Opening Illuvitar D1sks**

If you choose to open your Illuvitar D1sks, the steps based on the official guide for Illuvium Beyond are as below.

1. After completing the checkout flow, click on "Load D1sk" to open your D1sk. 

2. Choose either the Mega D1sk or Standard D1sk depending on what you purchased.

3. Click "Load" and enjoy the Mozart animation of your D1sk loading its contents.

4. After loading, you will see five cards face down. Choose to reveal them all at once or click on each card individually.

5. After all cards are revealed, choose to load another D1sk or return to your assets inventory.

After opening your D1sks, you can start bonding with your Illuvitars.

- **Illuvitars' Bonding**

Bonding refers to the process in which you can customize your Illuvitars with accessories. These accessories enable you to personalize your Illuvitars and boost their Power Ratings. Based on the official guide for Illuvium Beyond, the steps for bonding accessories with Illuvitars are as below.

1. Navigate to the "Profile" page under the account menu in the top right of the screen.

2. Use the filter to narrow down your Illuvitar search or scroll through all your Illuvitars and select the one you want to bond.

3. Click on "Bond" on the Illuvitar you wish to bond.

4. In the bonding menu, customize your Illuvitar with the accessories available in your inventory.

5. Once you have your Illuvitar customised, click the "Bond" button.

6.  The subsequent 2 steps of the process are as below.

    (a) Firstly, there is the burning of your accessories and Illuvitar, and 

    (b) Secondly, there is the minting of your new bonded Illuvitar,

7. Once completed, you can assign your new Illuvitar to your profile picture that will be used in the Illuvium Universe, you can choose to bond another Illuvitar.

You should take note that the process of bonding accessories with Illuvitars is permanent as it cannot be undone. As its not possible to unbond accessories, you may want to properly consider and think twice before bonding any accessories to your Illuvitars. Once bonded, these accessories would be an indelible part of your Illuvitars' individualities.  After we're done with bonding time, its Synergy time.

- **Illuvitars' Synergies**

Synergies can be attained by completing Illuvitars collections such as the Fire Synergy collection. There are more than 100 collections of varying degree of difficulties to complete. For example, the Illuvial Line collection which contains all the Illuvitars from a particular line is relatively easier to complete. 

In contrast, the Affinity collection which features Illuvitars of a specific element affinity is comparatively more difficult to complete. Although their level of difficulties may differ but the goal is the same, that is to complete the collections for the attaining of synergies. 

![unnamed (2).png](https://prod-cms-assets.avocadodao.io/unnamed_2_fc29cae7e6.png)
_Illuvitars Set 1 Collection (Source: Illuvium.io)_

The attaining of synergies enables you to reach certain milestones. These milestones would enable you to earn collection rewards such as extra Album Points as well as receive borders (which make Illuvitars pop up in profile pictures), and emotes (which are emoticons that can be equipped on profile pictures). 

In a nutshell, you would need to open your D1sks to obtain Illuvitars. You can then bond with your Illuvitars by equipping them with accessories. Thereafter, its time for attaining Illuvitars' Synergies by completing Illuvitars collections. The completed collections can then be stored in your Illuvitars Album.

- **Illuvitars Album**

The Illuvitars Album is where you store your Illuvitars collections. As your Illuvitars collection grows, you would receive Album Points which you can use to unlock rare Illuvitars that have higher Power Ratings. In this way, the accumulation of Album Points plays a key role in helping you secure a higher Rank in the Leaderboard. The top 100 players get the bragging rights as their Username, Rank, and Total Album Points would be displayed on the Leaderboard.

![image1.png](https://prod-cms-assets.avocadodao.io/image1_0fb879e20d.png)
_Leaderboard Ranking (Source: Illuvium.io)_

The launch party of Illuvium Beyond on 7 March 2023 is a 24-hour event that would be featuring a jam-packed bonanza itinerary including D1sks openings as well as non-stop special guests and fun surprises. Topping it off are the music vibes and community giveaways in the form of exclusive emotes rewards for all who purchased D1sks during the party upon the reaching of the sales milestone of 5,000 D1sks. 

To join in on the fun, just head over to [**Illuvium: Beyond -24-Hour Launch Party YouTube video page**](https://www.youtube.com/watch?v=0lzXEkr2L9E) and click on "Notify Me" to receive updates on how to get in on the action.

It's certainly an event not to be missed, so see you there. 






Illuvium Course (10) (1) (1).jpg

Illuvium Course 4: To Infinity and beyond with Illuvium Beyond

## (1) Introduction

Crypto regulations have been a perennial topic since the advent of Bitcoin. On one side of the coin, the imposition of regulations could reduce the risks of cryptocurrencies being misused for money laundering and other illegal purposes. On the other side of the coin, the imposition of regulations could have the effect of stifling the development of a relatively nascent industry. In terms of regulatory approaches, they can be generally categorized as follows:- 

### (a) Outright prohibition
This approach entails the imposition of a total ban on all forms of crypto-related activities. An example of a country which has adopted this regulatory approach is China.

### (b) Selective prohibition
This approach entails the imposition of a ban on certain types of crypto-related activities while allowing others. An example of a country which has adopted this regulatory approach is Indonesia where crypto payment is banned but crypto trading is permitted.

### (c) Hands off
This approach entails the adoption of a _laissez-faire_ i.e. a free market approach to crypto regulation with the aim of doing no harm. Examples of countries which has adopted this regulatory approach are the Mediterranean countries of Cyprus and Malta.

## (2) The Regulatory Loopholes
Up to this point, a lack of streamlined regulations have enabled crypto entities to harness the borderless nature of cryptocurrencies to skirt existing regulations and sidestep regulatory oversight of the countries in which they operate. A common practice among crypto entities is that of regulatory arbitrage which involves _“utilizing more favourable laws in one jurisdiction to circumvent less favourable regulation elsewhere.”_ Case in point is FTX which had in September 2021 shifted its headquarters from Hong Kong to Bahamas to capitalize on the offshore regulations of Bahamas which are relatively less stringent than those of Hong Kong.

![image2.png](https://prod-cms-assets.avocadodao.io/image2_4cdcad17a3.png)
Regulatory Arbitrage (Source: Investopedia.com)

Another common practice among crypto entities is that of regulatory buyouts which involves acquiring other crypto entities that are already licensed in the jurisdictions which the buying crypto entity is looking to obtain a license in. For example, crypto entity A wants to obtain a license to operate in country B but for one reason or another is unable to do so. What crypto entity A would do is to buyout crypto entity C which is licensed to operate in country B. In this manner crypto entity A would have control over the license of crypto entity C, thereby enabling crypto entity A to effectively be licensed to operate in country B, albeit through the backdoor. 

Case in point is FTX which prior to its collapse had spent some USD2 billion on “acquisitions for regulatory purposes.” A notable example of such an acquisition by FTX is that of U.S-based crypto futures exchange, LedgerX in October 2021 . The acquisition of LedgerX (which was rebranded as FTX US Derivatives post-acquisition) allowed FTX to take control of three Commodities Future Trading Commission (CFTC) licenses, thereby enabling FTX to effectively be a regulated player in the U.S commodities derivatives market. Nonetheless, LedgerX is not the first let alone only acquisition for regulatory purposes by FTX. 

Back in April 2021, FTX had entered into a commercial agreement to acquire an  8% stake in South African crypto exchange, OVEX. This acquisition comes after the local authorities had issued a public advisory to warn that FTX is not licensed to operate in the country. From a financial perspective, FTX’s exponential growth since the first quarter of 2021 (Q1 2021) due to the massive spike in its revenue during the pandemic is what gave the fallen exchange the financial prowess to undertake these acquisitions for regulatory purposes.

![image3.png](https://prod-cms-assets.avocadodao.io/image3_3773aae920.png)
_FTX’s Revenue from Q2 2020 to Q2 2022 (Source: Reuters.com)_

In many ways, the loopholes in the existing crypto regulations enabled FTX to put up a front of being pro-regulation and conjure the illusion of itself as the "most regulated" exchange on the planet. As things turn out, FTX is nothing more than a crypto house of cards built on the loopholes in the existing regulations. These loopholes have enabled FTX to hide under the regulatory veil to undertake various fraud and conspiracy activities as set out in the U.S’ grand jury indictment charge sheet as follows:-

(a) Conspiracy to commit wire fraud on customers

(b) Wire fraud on customers

(c) Conspiracy to commit wire fraud on lenders

(d) Wire fraud on lenders

(e) Conspiracy to commit commodities fraud

(f) Conspiracy to commit securities fraud

(g) Conspiracy to commit money laundering

(h) Conspiracy to defraud the U.S and violate campaign finance laws

## (3) The Regulatory Remedies
If anything, the FTX fallout has indicated that there is a palpable need for the introduction of crypto regulations which pack more of a punch. Leading the global charge in this direction is Europe’s Financial Stability Board (FSB) which is taking the bull by the horns through its plans to introduce recommendations for crypto regulations in early 2023. Laying the groundwork for its recommendations, the FSB had in October 2022 issued its proposed framework titled “International Regulation of Crypto-asset Activities.” With this, let’s explore how FSB’s recommendations can help address the corporate governance and risk management failures which resulted in the FTX fallout:-

### (a) Same activity, same risk, same regulations
The FSB recommends that “_Where crypto-assets and intermediaries perform an equivalent economic function to one performed by instruments and intermediaries of the traditional financial sector, they should be subject to equivalent regulation. This is true regardless of how a particular crypto-asset is characterized (e.g., as a payment, security or other instrument).”_

The application of this recommendation would have meant that FTX (as opposed to its subsidiaries) would have been subjected to the same regulations for financial institutions and investment companies. Financial institutions are generally subjected to banking laws (for FTX’s deposit taking activities) whereas investment companies are generally subjected to securities and commodities laws (for FTX’s facilitating of the trading of cryptocurrencies with features of securities and commodities). In effect the application of these laws to FTX would have mitigated the risks in relation to the charges of wire fraud, commodities fraud, securities fraud and money laundering.

In relation to banking laws, the imposition on FTX of the transparency requirements for the maintenance and publication of audited accounting records and financial statements would have mitigated the risks of the commission of wire fraud and money laundering. As for securities laws, the imposition of FTX of the requirements for clients' assets protection which entail among other things the need to segregate clients' assets by storing these assets in a designated trust account would have mitigated the risks of the commission of commodities and securities fraud.

### (b) Adequate requirements for governance, risk management, reporting and disclosure
The FSB recommended that _“Authorities should, consistent with their respective mandates, have the capacity to identify and monitor interlinkages between the crypto-asset ecosystem and the traditional financial system and cooperate and exchange information with their foreign counterparts to identify and address cross-border spillovers and risks.”_

In the context of traditional financial institutions such as banks, they are generally subjected to some basic parameters which they need to adhere to as part of their governance and risk management frameworks. For example, the Basel III standards stipulate that banks must maintain a minimum Capital Adequacy Ratio (CAR) of 8% to help banks withstand any stressors in the economic and financial markets. In simple terms, CAR refers to a bank’s ability and available financial buffers to cover for a significant loss from economic downturns or financial crisis.

The inclusion of the need to maintain a base level for metrics such as CAR as part of the governance and risk management frameworks of crypto entities would reduce their systemic instabilities in times of high market volatility. With the benefit of hindsight, perhaps this could have prevented the FTX fallout which was due in no small part to the prolonged crypto winter that laid bare the fault lines in the management framework and fiscal discipline of FTX.

Moreover, the imposition of disclosure and reporting obligations on FTX could have prevented the misappropriation of USD10 billion of customers’ funds by the former CEO of FTX, Sam Bankman-Fried aka SBF who transferred these funds to Alameda Research which is the sister trading firm of FTX. Additionally, the imposition of these obligations could have also prevented the further misappropriation of USD40 million of customers’ funds for political donation purposes which led to the charge against SBF of conspiracy to defraud the U.S and violate campaign finance laws.

### (c) Cross-border cooperation, coordination and information sharing
The FSB noted that _“The cross-border nature of crypto-assets raises regulatory, supervisory and enforcement challenges. Jurisdictional differences in legal and regulatory frameworks and supervisory and enforcement outcomes underscore the potential for regulatory fragmentation and arbitrage without cross-border cooperation and information sharing consistent with authorities’ respective mandates and jurisdictional requirements.”_

The application of this recommendation would have discouraged FTX from harnessing its financial prowess to resort to regulatory arbitrage by shifting its headquarters from Hong Kong to the Bahamas. This is because the cross-border cooperation, coordination and information sharing among regulators from different jurisdictions would have meant that the long arm of the law would have reached FTX regardless of where it based its headquarters. Additionally, it would also have discouraged FTX from undertaking its string of acquisitions for regulatory purposes. Effectively this meant that FTX would not have been able to buy its way to become the “most regulated exchange” by leveraging the regulatory fragmentation across the different jurisdictions.

## (4) The Market Impact
Given the close interlinkages between FTX and Solana, it was rather unsurprising that the blockchain ecosystem has been hit hard by the FTX fallout. When FTX halted all crypto withdrawals on 9 November 2022, Solana Foundation’s roughly 3.43 million FTX (FTT) tokens and 134.54 million Serum (SRM) were trapped in the exchange with Solana’s group holdings of 3.24 million shares of FTX common stock further worsening its exposure to FTX which amounted to an estimated total of USD 180 million. As a result of Solana’s exposure to FTX, the total value locked (TVL) in the Solana blockchain dropped by more than 80% to about USD230 million as at the time of writing whereas its native token SOL lost 53% of its market value in the wake of the FTX fallout.

![SOL TVL (1).jpg](https://prod-cms-assets.avocadodao.io/SOL_TVL_1_3bc016984f.jpg)
_Solana’s TVL Chart (Source: DefiLlama.com)_

One of the Solana-based GameFi projects which has been significantly affected by the FTX fallout is the Aurory RPG whose token AURY has dropped by about 50% in price from 11 Nov 2022 to date. Another Solana-based GameFi project which has borne the brunt of the FTX fallout is TapFantasy whose token price has dropped by about 10% from 11 Nov 2022 to date though its unique active wallets (UAW) and transaction volume have since rebounded. Nonetheless, the hardest hit Solana-based game is Star Atlas whose token ATLAS has lost about half its value from 11 Nov 2022 to the end of the month.

![image1.png](https://prod-cms-assets.avocadodao.io/image1_51f3e9754b.png)
_ATLAS’s Price Chart (Source: CoinGecko.com)_

That said, the GameFi’s market metrics such as UAW and transaction volume have remained more or less stable since the FTX fallout as other gaming chains such as EOS, Hive, Wax, Ronin and IMX are relatively unaffected by the FTX fallout. Standing testament to this is the fact that GameFi still remains the blockchain market segment with the largest UAW and highest transaction volume over the last 30 days.

## (5) Conclusion
If there is to be a silver lining to the FTX fallout, it is that it has pointed out the pressing need for crypto regulations to bring an end to the wild west days of the market. Fact of the matter is that the chain of events in the crypto market over the course of 2022 has aptly illustrated that the anti-crypto regulation stance is doing the market more harm than good. As we look set to end the year on a gloomy note for the crypto market, the best Christmas gift for true blue crypto enthusiasts may be the introduction of regulations which could mitigate the risks of another major collapse or fallout that in all probability may be the final blow that could wipe out the market.

FTX Fallout 6 (1).jpg

Regulatory lessons from the FTX fallout

## (1) Introduction
As the dust from the FTX fallout begins to settle, GameFi has emerged as arguably the most resilient blockchain segment. Whilst the trading volume of crypto exchanges and the total value locked (TVL) of decentralized finance (DeFi) platforms have plummeted, the metrics for the GameFi market have remained relatively stable in terms of both its Unique Active Wallets (UAW) and transaction volume.  

![image4 (2) (1).jpg](https://prod-cms-assets.avocadodao.io/image4_2_1_80962e5091.jpg)
_GameFi Market’s UAW and Transaction Volume (Source: DappRadar)_

The resilience of the GameFi market is quite remarkable considering the fact that 75% of crypto gamers are solely interested in earning cryptocurrencies. Whilst this is fine in the context of crypto gamers, the over emphasis of financial rewards by operators of  GameFi projects through their policies of putting “profits above security” are subjecting their users to the risk of security vulnerabilities.

## (2) Security Risks of GameFi Projects
As of December 2022, data collated by Footprint Analytics indicates that there are about 2,000 GameFi projects. In its report on the GameFi market released in August 2022, blockchain security audit company Hacken noted that only 5 GameFi projects have had their platforms audited.

![image2.jpg](https://prod-cms-assets.avocadodao.io/image2_845f594ed8.jpg)
_GameFi Projects with Platform Audits (Source: Avocado DAO)_

The lack of technical audits for the platforms of GameFi projects result in these platforms being vulnerable to “_51% of attacks including denial-of-service (DDoS) attacks, Sybil attacks, double-spending problems, race attacks, eclipse attacks, routing attacks, replay attacks, and some others_.” An example of a DDoS attack involving a GameFi project took place in June 2022 when the platform of popular Move-to-Earn (M2E) game StepN was hit with 25 million DDoS attacks in a short period. The resulting network congestion led to the need for server maintenance. 

As for token audits, data from CER.live indicates that out of the 31 audited GameFi tokens, none received the top security ranking of AAA whereas more than half i.e. 16 received the worst security rating of D. The lack of technical audits for the smart contract codes of GameFi tokens result in these codes being vulnerable to _“hidden backdoors, issues with price oracles, excessive admin rights, reentrancy attacks, design vulnerabilities, and various other factors.”_ 

An example of a backdoor hack involving a GameFi project is Axie Infinity’s USD650 million Ronin Bridge hack which according to the platform’s official blog occurred because “_the attacker found a backdoor through our gas-free RPC node, which they abused to get the signature for the Axie DAO validator_.”  After the hack, SkyMavis who is the developer of Axie Infinity has managed to relaunch the Ronin Chain and restore its operations, thereby allowing users to regain access to their funds.

## (3) Technical Audits for GameFi Projects
In general, the palpable lack of cyber security measures among GameFi projects led Hacken to predict that it was “just a matter of time” before there is a major hacking incident involving such projects. A sure-fire way to mitigate the hacking risks of GameFi projects is for these projects to have their platforms and token smart contract codes technically audited. Besides Hacken, other blockchain security audit companies which provide technical audit services for GameFi projects are PeckShield and CertiK. 

In addition to boosting the security levels of GameFi projects, the undertaking of technical audits would improve user trust and confidence by helping them to feel safe when using the platform or owning the tokens. A common scam that technical audits can help prevent is rug pulls of which they are 2 types i.e. hard and soft. ”_Hard rug pulls occur when project developers code malicious backdoors into their token_” whereas “_soft rug pulls refer to token developers dumping their crypto assets quickly_.”

![image1.jpg](https://prod-cms-assets.avocadodao.io/image1_f30b93574f.jpg)
_Hard and Soft Rug Pulls (Source: NFTNow)_

Although technical audits of GameFi projects are not of much help in terms of preventing soft rug pulls, these audits do have a role to play when it comes to helping users identify GameFi projects which could potentially be subject to hard rug pulls. This is because technical audits would be able to identify potential malicious backdoors which have been coded into smart contracts of GameFi projects by developers who are planning to undertake a hard rug pull on their projects later on. Consequently, the absence of third party technical audits for the smart contract codes and platforms of a GameFi project raises a telling red flag about the risks of the project being subjected to a potential hard rug pull in the future. A recent GameFi rug pull is that of Dragoma in August 2022 which resulted in losses of about USD3.5 million.

## (4) Conclusion
In terms of growth, the GameFi market is projected to record a compound annual growth rate (CAGR) of 23.7% from now till 2031 whereas the annual revenue of GameFi projects is forecasted to amount to a staggering USD74.2 billion by 2031. Consequently, the GameFi market is set to be a prime target for hackers over the course of the next decade.This renders it imperative that the gamification playground be secured through technical audits as the playground is meant for gamers, not hackers.




image3.jpg

Securing the gamification playground with technical audits

## (1) A Primer

TinyTap is currently the world’s largest educational games library and platform, with more than 200,000 lessons and games created by educators and publishers that includes notable organizations such as The Learning Company, Sesame Street and Oxford University Press. 

[yt=https://www.youtube.com/watch?v=Zzqo08L8bvY]

## (2) Key Takeaways

- Bringing the Create-to-Earn (C2E) concept to the early childhood education domain

- Starting them young in the Metaverse by recording lifelong learning records on immutable blockchains

- Web3 integration through the use of Publisher NFTs

- Selling like hot cakes - first batch of 6 Publisher NFTs has already been sold out on Opensea, generating 138.926 ETH

![image_005_34445843d5.jpg](https://prod-cms-assets.avocadodao.io/image_005_34445843d5_1a1df70b50.jpg)
_TinyTap Publisher NFTs' Sales Proceeds (Source: blog.tinytap.com)_

## (3) Introduction

# (a) What is TinyTap?

With the increasing popularity and onslaughts of Play-to-Earn (P2E) games, comes TinyTap. The platform offers a unique and a breath of fresh air into the Web3 metaverse. TinyTap puts a different spin to the P2E concept through the innovative application of the Create-to-Earn (C2E) concept to the children education domain. A subsidiary of Animoca Brands, TinyTap is essentially a platform for user-generated educational games and courses.

Originally a Web2 educational technology (EduTech) platform, the acquisition by Animoca Brands, an industry leader in the blockchain gamification market, has seen TinyTap being integrated into the Web3 space with the incorporation of NFT elements.

![image-000.png](https://prod-cms-assets.avocadodao.io/image_000_486a971ba6.png)
_TinyTap and Animoca Brands (Source: youtube.com/AnimocaBrands)_

TinyTap provides a wide variety of learning courses that includes Mathematics, Language Arts, Reading, Spelling, Science and Social Skills in line with the holistic education approach which emphasizes on the wholesome development of the body and mind. These games and courses are primarily targeted for children or students aged 2-8. Nonetheless, the sky's the limit when it comes to educational materials. Accordingly, there is no limitation even to create contents for students above that age limit.

Educators and teachers can access and even create gamified courses on TinyTap using its code-free authoring platform which in turn can be accessed by teachers and parents as part of TinyTap’s subscription or to be purchased directly.

A portion of the subscription revenue i.e. 50% is shared with the content creators as determined based on the user engagement metrics generated by their content whereas the remaining 50% is used for “the creation platform, providing storage and measurable analytics.” A win-win situation indeed.

# (b) How Much Does It Costs To Use The App?
TinyTap is free to download with selected courses available for a week’s worth of free trial and also worthy to mention that it will be ad-free!

To access the wider range of games and courses which ranges up to over 200,000 , there will be a USD14.99 monthly subscription fee. TinyTap’s affordability is in line with the United Nation (UN)’s Sustainable Development Goal No.4 which is focused on the promotion of inclusive and equitable quality education.

However, some courses are only available as a purchase-only model. All courses purchased will belong to the user indefinitely.

TinyTap will also be available to be played offline. More ways to keep your children entertained on long road trips without fretting about internet connection!

## (4) USER GUIDE

# (a) How To Use And Play The App?

TinyTap’s users can be broadly segmentalized into 3 categories, being Educators, Students and Supporters.

Educators are basically the core to TinyTap, where they can search for existing courses to teach their students. If no suitable courses are available, educators can create their own contents, games and courses. The contents can even be minted as NFTs thereby allowing educators who are also creators to truly own the digital property rights to their content which they can sell or rent as they deem fit!

Students are naturally the primary beneficiaries to the contents created on TinyTap. Courses and games can be selectively chosen to boost the student’s learnings. Students will gain a lifelong record of their learning achievements thanks to the immutability of blockchain and would be able to earn more access passess to additional contents as they progress along their educational journey. What a way to prepare our future generation for the dawn of the blockchain-based Web3 age.

![All_images_were_shared_by_educators_on_their_social_media_640x480_2_4e32710af3.jpg](https://prod-cms-assets.avocadodao.io/All_images_were_shared_by_educators_on_their_social_media_640x480_2_4e32710af3_67becd5085.jpg)
_TinyTap's Student Users (Source: blog.tinytap.com)_

The integration into Web3 and introduction of the publisher NFTs also meant that supporters will play a huge part in enhancing TinyTap. Supporters can support and endorse the contents on TinyTap by purchasing and owning the publishing rights to the course. The owners of the course are free to do their very own marketing and promotion in order to generate income.

# (b) Mechanics For Creating A Game
Creating a game on TinyTap is as easy as ABC. Embodying the concept of user friendliness, creators just need to select the type of game using a simple drag and drop system with pre included graphic materials. No coding knowledge is required!

There are several types of games you can choose to create including rom ‘Asking a question’, ‘Creating a soundboard’, ‘Shape puzzles’ , ‘Say something’, ‘Playing a video’ and’ Talk or type’.

![image6_2_c953de3134.jpg](https://prod-cms-assets.avocadodao.io/image6_2_c953de3134_38a98c43aa.jpg)
_TinyTap's Catalogue of Educational Games (Source: blog.tinytap.com/)_

Different themes and creation packs are available in the app itself and even if there is nothing suitable, a Web search can be done to import photos, animations or even clip arts into the content. Feedbacks can also be recorded when students select their answers.

Try imagining it as simple as creating an interactive slide with the enhanced flexibility and customisation! With TinyTap, the world of education is your playground.

## (5) TINYTAP AND WEB3

# (a) Publisher NFTs

With the integration into Web3 and on top of the subscription revenue that content creators and educators get to earn a percentage of, TinyTap introduced the Publisher NFTs which provides an additional source of income for educators through the C2E concept.

A Publisher NFT, as its name suggests, comes with the shared publisher rights to a course in the form of an NFT. Educators that created a course have the ability to sell their publishing rights to their courses and the holders of the NFT will have the option to share the publishing rights with the educator and earn up to 80% of the revenue generated.

Educators who sell these publishing rights can earn primary profits from the sale of the co-publishing rights. After that they’ll be entitled to the royalties from any of the secondary sales that come from it, on top of the 10% of revenue generated from the course earning. This renders Publisher NFTs to be rare in terms of intellectual property rights (IPR) protection as they depart from the first-sale doctrine that limits the rights of copyright owners to the first i.e. initial buyer of the owners’ rights.

![Publisher NFT-min.jpg](https://prod-cms-assets.avocadodao.io/Publisher_NFT_min_ed11d9d679.jpg)
_Revenue Flow of Publisher NFTs for Educators (Source; Avocado DAO)_

Better still, as an owner of a Publisher NFT, you get to own the publishing rights for as long as you own the NFT. You can further choose to advertise and market the courses on TinyTap and generate revenue through the Platform's subscription model. Additionally you can disseminate the Courses through various alternative channels. You will be able to earn 80% of the money that you generate from your own marketing.

Publisher NFTs are currently the only Web3 mechanics available on TinyTap however, it is only the first step with the establishment of a governance with native token in mind further down the roadmap. These tokens are set to be of core importance in regards to governance, staking, minting new games and ensuring transparency for donors.

![image_004_1_05607bd098.png](https://prod-cms-assets.avocadodao.io/image_004_1_05607bd098_63f243496d.png)
_TinyTap's 6 New Publisher NFTs (Source: blog.tinytap.com)_

The first batch of 6 Publisher NFTs has already been sold out on Opensea, generating 138.926 ETH.

# (b) Why Should You Try Out TinyTap?

TinyTap with its Web3 integration may now only be in its early stages and with some games and courses that could be viewed as relatively too simple for the targeted age groups, the vast support it has garnered from educators and partnerships certainly makes TinyTap a very interesting proposition.

With its impressive library of more than 200,000 lessons and games coupled with its user friendly interface and technology versatility, educators would be able to create tailor-made education contents with ease. Given the platform’s impressive development plans, one would hope that TinyTap does live up to its expectations and hopefully shape the future of childhood education.

![image_003_2_1af0ee02bf.png](https://prod-cms-assets.avocadodao.io/image_003_2_1af0ee02bf_67154b5235.png)
_TinyTap's Library of 200,000 Games (Source: apps.apple.com)_

More auctions of the Publisher NFT will be available soon so do keep a look out if you would like to play a part helping to build a better future for our next generation through the gift of education.

_TinyTap is now available on iOS, Android, Amazon and PC._

TinyTap (10)-min.jpg

Tiny Tap: A Web3 Platform that rewards childhood educators and content creators with digital ownership

## (1) Introduction

In the world of financial investments, leverage is a double-edged sword due to its multiplier effect on both gains and losses. In good times when the market is bullish, highly leveraged investors are able to boost their returns considerably but when the market is bearish, these investors would find themselves extremely vulnerable due to the significant exposure levels of their portfolio. The dangers of excessive leverage is illustrated by the 1929 stock market crash which was caused primarily by the then skyhigh leverage ratio of the stock market. At that time, the practice of margin trading which operates using the same principle as leverage was unregulated.  

## (2) Of Leverage Ratios and Market Crashes

Having learnt its lessons from the crash, the U.S government introduced the Securities Act of 1933 and the Securities Exchange Act of 1934 to regulate the practice of margin trading whereby these regulations helped control the leverage ratio of the stock market. In the context of the crypto market, the use of customers’ deposits by crypto entities to facilitate their crypto lending services is also a form of market leverage. 

The dangers of this are illustrated by the fact that the notable crypto dominoes which have fallen in the wake of the collapse of TerraUSD and the FTX fallout are those which provide crypto lending services. These included Voyager, Celsius Network, Babel Finance and BlockFi. In this regard, it is notable that data indicates there was a significant drop in the leverage ratio of Bitcoin immediately after the FTX fallout.

As Bitcoin is the flagship cryptocurrency, it is generally used for leveraging by crypto investors. Hence, the leverage ratio of the crypto market is premised on the leverage ratio of Bitcoin. On 6 November 2022, the estimated leverage ratio of Bitcoin was 0.34 but in the aftermath of the FTX fallout this dropped to 0.29 just ten days later on 15 November 2022. In simple terms, this could mean either (1) a significant amount of debt in the crypto market has been liquidated or (2) the value of assets in the crypto market has increased considerably. As the reduction of 0.5 in the leverage ratio of Bitcoin occurred in the aftermath of the FTX fallout, (1) is more likely to be the underlying cause of the drop in leverage ratio as the value of crypto assets including Bitcoin has dropped during the relevant period.

![image1.jpg](https://prod-cms-assets.avocadodao.io/image1_44b223b29d.jpg)
_Estimated Leverage Ratio of Bitcoin from 1 January - 1 December 2022 (Source: cryptoquant.com)_

## (3) A Primer on PoRs

Whilst we await the introduction of regulations to control the leverage ratio of the crypto market, CEXs have taken the initiative to restore investor confidence in the market by introducing Proof-of-Reserves (PoR). One of the objectives of PoRs is to ensure that customers’ assets holdings are held as deposits instead of being used for other purposes, thereby safeguarding these assets while reducing the leverage ratio of the crypto market which in turn makes it less volatile i.e. more stable.

### (a) What are PORs, its objectives and limitations?

The PoR verification process involves the use of cryptography for the audit of the financial health of CEXs by verifying the balance of their customers’ accounts through the following methods:-   

(i) Cryptographic message signing which involves crypto exchanges providing information about its reserves by releasing unique cryptographic messages and the exchange’s public keys. Customers and auditors can then use the public keys to verify the authenticity and integrity of the messages. The information in the verified messaged will in return help confirm whether the exchange holds the amount of crypto currency it claims to have; 

(ii) Instructed movement of funds which involves moving a specific amount of funds from the exchange’s wallets to a designated address at a specific time. The designated address in this case can be the auditor’s wallet. This test is important to show that the exchanges have control over the reserves and ultimately cover customer withdrawals.:- and 

(iii) Address searches on blockchain explorers such as EtherScan and BscScan to verify the addresses tagged to a CEX. This involves the use of open source blockchain explorers to warrant the transparency of the balances in the customers' accounts of the CEX which is being audited.

The limitations of PoRs are that they:-

(i) Only cover the balance of customers’ accounts at the relevant time when the financial audit is conducted. In times of high market volatility, there may be a need for more frequent financial audits of PoRs;

![image5.jpg](https://prod-cms-assets.avocadodao.io/image5_6bf02d4565.jpg)
_Bitcoin Reserves of Exchanges from 1 January - 12 December 2022 (Source: cryptoquant.com)_

(ii) Should not be taken as a silver bullet for the problem of trust issues in CEXs notwithstanding the fact that the PoRs are subjected to financial audits. This is because the financial audits of the PoRs of CEXs are not undertaken as assurance engagements which means that the results of the audits do not amount to an assurance conclusion. (See for example the financial audit report issued by Mazars for Binance’s PoR (which has since been removed from public view after Mazars decided to suspend the provision of its financial audit services for crypto companies including Binance, Crypto.com and KuCoin) provides that _“This (Agreed-Upon Procedures) AUP engagement is not an assurance engagement. Accordingly, we do not express an opinion or an assurance conclusion”_

On the assumption that the terms of engagement for the financial audit of Binance’s PoR is a common standard for the financial audits of the PoRs of other CEXs, this effectively means that the financial audit results of the PoRs of CEXs do not amount to _“a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the evaluation or measurement of a subject matter against criteria”_:

In essence non-assurance engagements refers to _"engagements that do not meet the definition of an assurance engagement."_ To put it simply, any reliance by third parties on the findings of a non-assurance engagement would be at their own risk as there may be limited liability protection, lower levels of independence and accuracy compared to an assurance engagement:- and

(iii) _“Don’t include accounts with negative balances”_ as pointed out by the departing CEO of Kraken, Jesse Powell in relation to Binance’s PoR. According to Powell, the scope of Binance’s financial audit process is incomplete as it _“didn't include accounts with negative balances. The statement of assets is pointless without liabilities.“_ In response, co-founder and CEO of Binance, CZ asserted that there is no such thing as “negative balance” in a PoR. The jury is still out. 

Negative balances refer to the accounts in which cryptocurrencies which are owed by the CEX to its customers i.e. form part of the short term liabilities of the CEX. The omission of negative balances renders the appraisal of the financial standing of the CEX which is being audited to be incomplete as these balances are necessary for financial auditors to calculate the liquidity coverage ratio of CEXs. Liquidity coverage ratio refers to _“the proportion of highly liquid assets held by financial institutions, to ensure their ongoing ability to meet short-term obligations."_ To put it simply, the omission of negative balances means the public does not have a full picture of the exchange's financial positions and ultimately this creates uncertainty over the exchange’s full ability to cover customer withdrawals.

![image6.jpg](https://prod-cms-assets.avocadodao.io/image6_58dc3915e0.jpg)
_CZ’s Tweet Reply (Source: twitter.com/cz_binance)_

Notwithstanding its shortcomings, PoR is a step in the right direction for CEXs towards enhancing their transparency levels whereby this step is imperative in view of the custodial nature of their services particularly in the wake of the FTX fallout.

### (b) Which CEXs are leading the way for PoRs?

As at the time of writing, a total of 10 exchanges have published their PoRs with Binance topping the list with about USD60 billion, followed by BitFinex with about USD6 billion and BitFinex with about USD4.4 billion. Do take note however, that the value of CEXs’ reserves would change from time to to time due to the fluctuations in the market value of the underlying crypto assets.

![image2.jpg](https://prod-cms-assets.avocadodao.io/image2_137b314b42.jpg)
_PoRs of Major Exchanges (Source: cryptorank.io)_

### (c) Why are CEXs publishing their PoRs?

On 2 November 2022, a leaked document from the balance sheet of Alameda Research (the sister trading firm of FTX) showed it was highly overleveraged on FTT tokens which eventually culminated in the filing by FTX for bankruptcy protection on 11 November 2022. 

![image3.jpg](https://prod-cms-assets.avocadodao.io/image3_b68c6dd35c.jpg)
_Leaked Document from FTX Balance Sheet (Source: ft.com)_

The ripple effects of the fall of FTX which previously counted itself as among the top few crypto exchanges triggered a significant outflow of Bitcoin from exchanges.

![image8.jpg](https://prod-cms-assets.avocadodao.io/image8_278616a0cb.jpg)
_Outflow of Bitcoin from Exchanges from 1 January - 12 December 2022 (Source: cryptoquant.com)_

The huge outflow of Bitcoin in the aftermath of the FTX fallout resulted in a corresponding significant negative netflow of Bitcoin from exchanges.

![image7.jpg](https://prod-cms-assets.avocadodao.io/image7_09a7a6d874.jpg)
_Netflow of Bitcoin from Exchanges from 1 January - 12 December 2022 (Source: cryptoquant.com)_

In terms of market impact, CEXs bear the brunt upon the occurrence of major events which involve their centralized peers. In May 2022 which is the month when TerraUSD collapsed, the volume of trading on DEX amounted to USD167.37 billion which is a 48% increase from the USD111.23 billion recorded in April 2022. Similarly in November 2022 which is the month the FTX fallout occurred, the volume of trading on DEX amounted to USD112.32 billion which is a 54% increase from the USD51.2 billion recorded in October 2022. 

There seems to be a distinctive pattern where every time a major event happens to a centralized crypto entity, the resulting loss of trust in custodial-based crypto services such as CEXs drive crypto users towards non-custodial based crypto services such as DEXs. This pattern is reflected in the  significant increase in the volume of trading on DEXs in the very same month of the occurrence of a major event affecting a centralized crypto entity.

![image9.jpg](https://prod-cms-assets.avocadodao.io/image9_7a9c7fb8cd.jpg)
_Trading Volume on DEXs from 1 November 2018 to 10 December 2022 (Source: theblock.co)_ 

## (4) Conclusion

From a commercial perspective, the introduction of PoRs is part of the efforts of CEXs to restore public trust in themselves to try to regain the market share which they have lost, and would continue to lose to DEXs every time a major event happens to one of their centralized peers. Nonetheless, it is clear that the future of crypto is a decentralized one because to quote CZ himself, _“I would say maximum, in 10 years, DEXes [and] DeFi are going to be bigger than CeFi.”_






image4.jpg

Restoring public trust in CEXs with Proof of Reserves (PoR)

## (1) Introduction

Wherever you are in this world, there is no escaping from the fact that the crypto age is before us, so much so that the International Monetary Fund (IMF) has coined the term “cryptoization”. The next time you engage in crypto talk, you can act like a know-it-all by sharing your knowledge about the genesis of cryptocurrency, which can be traced to October 2008. At that time, the pseudonymous Satoshi Nakamoto published Bitcoin (BTC)’s whitepaper on the cryptography mailing list of metzdowd.com.  

Since then, crypto has grown into a multi-trillion dollar market with an all-time high capitalization of about USD2.9 trillion, which was recorded in November 2021. As for the trading volume of the crypto market, the all-time high peak was set on 20 May 2021, which recorded a 24-hour trading volume of about USD516 billion. 

![image2.png](https://prod-cms-assets.avocadodao.io/image2_a58e144d89.png)
_Trading Volume of the Crypto Market from July 2020 to Oct 2022 (Source: Statista.com)_

## (2) General Overview of Cryptocurrencies

With all the fear, uncertainty, and doubt (FUD) thrown around, it's hard to keep track of the cyclical trends of the crypto market. In general, the crypto market is subject to 4-year cycles of upswings and downturns due to the coupling effects between the market and BTC, whose halving event occurs every four years. Throughout its bull and bear cycles, the crypto market has, more often than not, emerged more robust, which stands as a testament to its long-term viability. Instead of listening to the prophecies of the naysayers that the end is nigh for crypto, your time may be better spent learning a thing or two about the fundamentals of cryptocurrencies.

### (a) Coins vs. Tokens

Cryptocurrencies can be divided into coins and tokens. The key difference between coins and tokens is that coins have their native blockchain, whereas tokens operate using those of others. Examples of coins are BTC, Ether (ETH), and Binance Coin (BNB), which operate on the Bitcoin, Ethereum, and Binance blockchains, respectively. Examples of tokens are Ripple (XRP), a payment settlement token. Dai (DAI), which, although referred to as a stablecoin, is technically a token, and Axie Infinity Shards (AXS), the governance token for the Axie Infinity game.

![image5.jpg](https://prod-cms-assets.avocadodao.io/image5_69078045b3.jpg)
_Coins vs. Tokens (Source: Avocado DAO)_

### (b) Functions of Coins

The taxonomy classification of coins is such that all coins other than BTC have been categorized as alternative coins (altcoins). Most coins function as units of account, but only a select few coins function as stores of value. Regarding their unit of account functions, most cryptocurrencies are generally divisible by eight or more decimal places. For example, the smallest unit of ETH (gwei), is divisible by nine decimal places, rendering it one billionth of an ETH. 

Concerning their medium of exchange functions, coins can be used for the payment of gas fees for transactions carried out on the coin’s native blockchain or on decentralized applications (dapps) that are built on top of the blockchain. For example, BNB can be used to pay transaction fees on Binance’s exchange and dapps, which operates using Binance’s blockchains. 

As for their store of value functions, this hinges on the ability of a coin to function as a hedge against inflation. In simple terms, the measurement of an inflationary hedge is based on the ability of a financial instrument to retain its value in the long term, as in whether there is substantial dilution in the instrument's value over a long time. In this regard, BTC is generally regarded as the gold standard for the store of value functions of coins. This has prompted some countries particularly those in Latin America to be exploring the possible pegging of their respective national currency to BTC. Leading the way is El Salvador which had in September 2021 adopted BTC as its national currency. However in recent times, ETH has emerged as an altcoin that serves as an alternative crypto store of value to BTC.

![image3.jpg](https://prod-cms-assets.avocadodao.io/image3_bb640e7b61.jpg)
_Functions of Coins (Source: Avocado DAO)_

### (c) Types of Tokens

Tokens can be categorized into governance, utility, payment, security, and stablecoins which, for reasons unknown, are not referred to as stabletokens. 

**(i) Governance Tokens**

Governance tokens are cryptocurrencies that entitle their holders to put forth and vote on proposals concerning the management and operations of the issuer’s ecosystem. An example of a governance token is Uniswap (Uni) which entitles its holders to put forth and vote on proposals concerning the protocol's operations. 

**(ii) Utility Tokens**

Utility tokens such as Filecoin (FIL) and Chainlink (LINK) can be used as a medium of exchange within the ecosystem of their issuer. Another notable example of a utility token is the Basic Attention Token (BAT), which can be used to purchase premium content and services within the Brave browser ecosystem. Users of Brave browsers who view privacy-respecting ads would earn BAT tokens whereas content creators could receive tips and donations in the form of BAT tokens. Payment tokens on the other hand can be used as a medium of exchange beyond the ecosystem of their issuer. Some examples of payment tokens are Bitcoin Cash (BCH), Dash (DASH) and Litecoin (LTC).

**(iii) Security Tokens**

Security tokens are cryptocurrencies that meet the definition of securities as set out in the Howey Test as laid down in the landmark case of **_SEC v. W. J. Howey Co_.** In essence, the Howey Test provides that a financial instrument would amount to a security if it is an investment contract. An investment contract involves an investment of money under a joint enterprise with the expectation of profits that are to be derived from the efforts of others. 

Any token which falls within the scope of the investment contract would amount to a security and be prescribed as such according to the Howey Test. An example of a security token is the Blockchain Capital (BCAP) token which grants its holders rights to the network’s portfolio of funds.

**(iv) Stablecoins**

Stablecoins are tokens whose value is pegged to the underlying assets in their reserve basket. These underlying assets can be fiat, commodity, or other financial instruments such as bank deposits, treasury bonds, or even crypto assets. An example of a stablecoin is Tether (USDT), whose value is pegged to the United States Dollar (USD) on a 1:1 ratio. In general, there are four types of stablecoins namely fiat-backed, crypto-backed, commodity-backed, and algorithmic stablecoins.

Of the four types, algorithmic stablecoins are arguably the most risky store of value because unlike its peers, algorithimic stablecoins are not backed by any physical or digital assets. Instead the value of algorithmic stablecoins is maintained using algorithm mechanisms which could prove to be inadequate in times of high market volatility. Case in point is the crash of the algorithmic stablecoin Terra USD (UST) in May 2022 that wiped out USD45 billion from the crypto market. 

![image1.jpg](https://prod-cms-assets.avocadodao.io/image1_13bf39784b.jpg)
_Types of Tokens (Source: Avocado DAO)_

The plethora of cryptocurrencies with their distinctive uses and functions has allowed these currencies to integrate with multiple aspects of the economics and financial domains. This integration has played a crucial role in the dawn of the age of cryptoization.

## (3) Technical Overview of Cryptocurrencies

As with any commodity, cryptocurrency, too, has its version of gold and silver. BTC is commonly referred to as digital gold, whereas ETH has been referred to as digital silver. The digital nature of cryptocurrencies means that garnering a functional understanding of these currencies would necessitate some discussions about their technical aspects. This includes their trading and storage options, consensus mechanisms as well as interoperability features.

![image4.jpg](https://prod-cms-assets.avocadodao.io/image4_dde87e1751.jpg)
_Technical Aspects of Blockchain and Crypto (Source: Avocado DAO)_

### (a) Trading and Storage

Trading of cryptocurrencies can be done through either a centralized exchange (CEX) or a decentralized exchange (DEX). A CEX operates using an order book through which the exchange matches orders from market makers (sellers) and market takers (buyers). A DEX, on the other hand, uses an automated market maker (AMM), which can be understood as a “money robot” whose algorithms are programmed to price assets automatically based on the mathematical formulae coded into their algorithms. 

The use of AMM allows users to swap tokens through a liquidity pool that optimizes their deposits' contribution to the liquidity levels of the pool. Both CEXs and DEXs have their respective pros and cons, which is why the best tokens can be traded on both types of exchanges. An example of such a token is Avocado DAO (AVG) which powers the decentralized autonomous organization (DAO) of Avocado Guild. AVG tokens can be traded on CEXs such as MEXC as well as DEXs such as Uniswap.

The peer-to-peer (P2P) feature of DEX arises from the fact that other users provide liquidity in their pools. Although CEXs are simpler to use, DEXs offer better security due to the non-custodial nature of their operations. Similarly, non-custodial wallets for which the users themselves store private keys are generally safer than custodial wallets. In the crypto domain, there is a saying, “_not your keys, not your coins_”.

### (b) Consensus Mechanisms

The decentralized feature of blockchain means that there is no single party running the show which is why there’s a need for consensus mechanisms to facilitate collective decision-making. Consensus mechanisms refer to protocols that are used by a blockchain network to enable the achievement of agreement across the participating nodes which refer to devices of stakeholders on the network. The two main types of consensus mechanisms are Proof-of-Work (PoW) which is used by the Bitcoin network, and Proof-of-Stake (PoS), which is used by the Ethereum network. 

**(i) Proof-of-Work (PoW)**

PoW requires the contribution of computing power to solve mathematical equations to deter malicious nodes from taking over the network. The reasoning is that if a malicious node intends to take over a network by controlling 51% or more of the network, this would require an astronomical amount of computing power which though implausible, is not impossible. In return for the nodes’ contributions towards securing a PoW network, the reward for participating nodes is the right to mine for the native cryptocurrency of the network, with a prime example being BTC mining.  

Nodes are computers or other devices that are connected to a blockchain network and help validate transactions on the network. A malicious node is a node that is intentionally trying to disrupt or manipulate the normal functions of the blockchain network on which the node resides.

**(ii) Proof-of-Stake (PoS)**

PoS requires the locking up of cryptocurrencies in return for a right to validate transactions on the network. The reward for PoS is the receipt of interest in the form of the native cryptocurrency of the network upon the completion of the lock-up period. In September 2022, the Ethereum network, through an update codenamed The Merge migrated from PoW to PoS. This transition resulted in the Ethereum network being a green blockchain as it reduced the network's energy consumption by about 99.95%. 

## (c) Blockchain and Crypto Interoperability

Given the various blockchain networks comprising the crypto ecosystem, the interoperability of these networks through the use of cross-chain bridges and wrapped token is critical to the generation of network effects for the ecosystem. 

**(i) Cross-Chain Bridges**

The advent of cross-chain bridges such as Binance Bridge has paved the way for the interoperability of blockchain networks. In simple terms, cross-chain bridges help transfer information and assets between different blockchain networks, thereby allowing for cross-chain transactions, which refer to transactions across different blockchain networks.

**(ii) Wrapped Tokens**

In tandem with the use of cross-chain bridges is the use of wrapped tokens such as Wrapped BTC (WBTC). In simple terms, wrapped tokens are converted cryptocurrencies that can be used on other blockchains besides their native blockchain. How it works is that the wrapped token would be pegged to the value of the cryptocurrency it represents before being transferred to another blockchain network. Once this transfer has been completed, the wrapped token is then unwrapped, after which it reverts to its original form.

The combination of cross-chain bridges and wrapped tokens has paved the way for the interoperability of cryptocurrencies across blockchain networks. This element of interoperability has allowed the ecosystem as a whole to benefit from the efficiencies arising from economies of scale and scope. 

The application of blockchain technology is set to become increasingly sophisticated as the crypto market grows in maturity. In this context, Learn-and-Earn (L&E) courses under the banner of educational finance (EduFi) banner would play a key role in supporting blockchain and crypto education among the masses. A case in point is Avocado DAO’s [**Questing Portal**](https://quests.avocadodao.io/) which offers short Learn-and-Earn (L&E) courses on Web3-related topics with AVG tokens and non-fungible token (NFT) badges as completion rewards.

## (4) Conclusion

A decade and a half after the introduction of BTC, the crypto market has defied all odds to take on a life of its own. While the pseudonymous Satoshi Nakamoto remains mysteriously unidentified, one can safely assume that he/she/they would be pretty amazed by the age of cryptoization that his/her/their BTC pet project has catalyzed.

In this course we have learnt about the fundamentals of cryptocurrencies. In our next course, [**Why We Need to Connect to Web3**](https://core.avocadodao.io/blog/l-and-e-course-2-why-we-need-to-connect-with-web3/), we would be exploring the next generation of the Internet, Web3.





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Web3 L&E Course #1: Embracing the age of cryptoization

## (1) Introduction 

The first evolutionary stage of the Internet, the World Wide Web (WWW), started around the early 1990s in the guise of Web1. The hallmark of Web1, referred to as the read-only web or Hypertext Web, is its simple interface through static web pages. Data were retrieved from the file systems of servers and displayed through browsers such as Netscape Navigator, which in many ways is synonymous with Web1. In the mid-2000s, a paradigmatic shift took place when static web pages were replaced with interactive pages and user-generated content on social platforms. With these features, Web2 has dawned on the Internet. 

Referred to as the read-write web or Social Web, Web2 entailed social connectivity and interactivity as well as the propagation and distribution of user-generated content (UGC). The fast-rising global rates of household internet connections and mobile device penetration allowed the seamless sharing of UGC. Both these factors paved the way for the rise of Web2-based social media platforms such as Facebook, Instagram, TikTok, Twitter, Uber, WhatsApp, and YouTube. 

Web3 is set to take the form of the read-write-own web or Semantic Web. According to the standards set by the World Wide Web Consortium (W3C), the goal of Web3 is "_to make Internet data machine-readable_". Regarding its structure, Sir Tim Berners-Lee, who invented the WWW, conceptualized Web3 based on two key features, notably decentralization and bottom-up design. The advent of blockchain meant that the time had come for Berners-Lee's vision of Web3 to turn into reality.

## (2) Systemic Issues of Web2

The centralized nature of Web2 results in users being monetized as products under the pretext of “free” services. The primary systemic issues of the second generation of the Internet are mainly due to its top-down structure, use of walled gardens and lack of privacy protection.

![image1.jpg](https://prod-cms-assets.avocadodao.io/image1_6284e0c3d8.jpg)
_Systemic Issues of Web2 (Source: Avocado DAO)_

### (a) Top-Down Structure

The top-down structure of Web2 is such that control over the means of production of digital goods and services is reposed in the hands of a select few private entities, notably the proverbial Big Five Tech Giants of Alphabet (Google), Amazon, Apple, Meta (Facebook), and Microsoft. These entities, which stand at the top of the hierarchy in the digital economy, can dictate the terms and conditions of their goods and services offered to consumers on a take-it-or-leave-it basis. This results in issues such as unfair censorship in the social media domain, which restricts the freedom of thought and rights to free speech of users.

### (b) Walled Gardens

The framework of Web2’s digital economy is devised based on the walled garden concept. In simple terms, the walled garden concept of Web2’s digital economy is rooted in the drive to retain dominant market positions. A case in point is that Apple once shut down Animoca Brands’ co-founder Yat Siu’s Web2 game applications due to the immense success of the applications. The shutting down of Yat Siu’s Web2 game applications is a classic example of the abuse of dominant market position to retain the status quo. The common elements of walled gardens include,

(i) a data platform for the collection and storage of user data,

(ii) an advertisement platform to facilitate the purchase of ads in an automated manner, and

(iii) a data optimization system to extract data from the data platform to be used for the running of personalized ads. 

For Google, its data platform is its network of services, notably its Search and Workspace suite of offerings. Google’s data optimization system is deployed through its advertisement platform in the form of its AdSense. As for Meta, its data platform would be its services offerings such as Facebook, Instagram, and WhatsApp, whereas the deployment of its data optimization system is through its advertisement platform in the form of Facebook Showcase. For this reason, Facebook and its fellow Big Five Tech Giant, Microsoft, have been referred to by Yat Siu as “digital dictatorships”.

The top-heavy regime of Web2 platforms is reflected in the restrictions on the use of their content. Whether its a song bought from iTunes, an ebook purchased from Amazon, or a movie downloaded from the Google Play Store, these digital products are merely leased to the users. In other words, the users merely acquire leasing rights instead of ownership rights in these digital products. The absence of ownership rights to the “purchased” digital products is why sharing these products with third parties is prohibited. 

### (c) Privacy Breaches

With the global Internet penetration rate at 62.5% as of 2022, there are 4.95 billion Internet users worldwide. The centralized nature of Web2 means that the personal data of these users are stored in centralized repositories, which are controlled by digital content platforms. Besides the risks of hacking, there are the risks of misuse of personal information by the data controllers, notably Web2 platforms.

Cases in point are the string of hefty fines imposed by European regulators for violations of the General Data Protection Regulation (GDPR). Among the notable Web2 platforms which have been hit with fines for breaches of the GDPR are:

(i) 	Amazon (USD887 million, 2021) - For an undisclosed breach of the GDPR,

(ii) 	Meta (USD410 million, 2023) - For running behavioral ads under the pretext of contractual necessity, 

(iii) 	WhatsApp (USD267 million, 2021) - For not properly explaining what amount to “legitimate interests” in its privacy policy, and

(iv) 	Google (USD102 million, 2022) - For making it difficult for YouTube users to refuse consent to cookies

As the saying goes, "_if it ain't broke, don't fix it_". In the context of Web2, however, some parts are broken and require some fixing. Web2’s authoritarian model of governance stems from its top-down structure. Besides this, the other issues of Web2 are its profit-oriented monetization models and privacy breaches. These are just some of the significant systemic issues of the second generation of the Internet. Web3, with its decentralized solutions, could help repair the “broken” Internet by fixing the systemic issues of Web2.

## (3) Decentralized Solutions of Web3

Web3 refers to the third generation of community-centric Internet built on decentralized web technologies. With the advent of blockchain, Web3 has emerged as a plausible reality. The close relationship between Web3 and blockchain is such that Web3 has been described as "_a decentralized Internet built on an open blockchain network_". The key function of blockchain in relation to Web3 is through nodes. In simple terms, nodes of a blockchain network in the Web3 ecosystem helps maintains the security and integrity of transactions. This is done through the broadcasting of transactions to all the nodes of the network. The nodes then validate the transactions, thereby mitigating the risks of fraud and inaccuracies. 

As in explain in [**Part 1**](https://core.avocadodao.io/blog/l-and-e-course-1-embracing-the-age-of-cryptoization/) of the Web3 Beginner Course, nodes are computers or other devices that are connected to a blockchain network and help validate transactions on the network. The higher the number of nodes on a blockchain network, the more secure the network will be. This is because the difficulty level to take control of a blockchain network or manipulate the information increases in tandem with the number of nodes on the network. Collectively, the decentralized features of blockchain network paves the way for an open creator economy and improves the systemic security of Web3 through the use of decentralized identifiers (DIDs). 

![image2 (1).jpg](https://prod-cms-assets.avocadodao.io/image2_1_bf2148ad1b.jpg)
_Decentralized Solutions of Web3 (Source: Avocado DAO)_

### (a) Decentralization 

Web3 as the decentralized Internet would be built under a bottom-up structure. In this manner, the decision-making process concerning the administration and management of the operations of Web3 networks would be undertaken collectively by members of the respective communities. The agreement of the majority of community members to decisions made concerning the operations of a Web3 network is warranted by the use of the decentralized autonomous organization (DAO) framework. 

For example, Ethereum decentralized governance is such that no single party owns or controls the Ethereum protocol. Instead, anyone in the Ethreum community can put forth Ethereum Improvement Proposals (EIPs). If an EIP garners sufficient support from members of the Ethereum community, it would be forwarded to the protocol developers of the network. If the EIP is accepted by these developers, it would be iterated into a final proposal before it is tested, implemented and scheduled for the next network upgrade.

### (b) Open Creator Economy

Web3 embodies the concept of an open creator economy, which entails creating and trading digital content with minimal restrictions and limitations. In contrast with Web2’s walled gardens, Web3’s open creator economy would grant full ownership rights to digital content creators to their creations. This is done through the use of non-fungible tokens (NFTs) as instruments for storing these rights. From a financial perspective, this enables Web3 digital content creators to have unrestricted rights to monetize their creations. 

Under the framework of Web3’s open creator economy, creators can share the ownership rights to their creations with their fans without going through any third party. Removing third-party intermediaries would bring about cost savings for creators and consumers, as there would be no need to pay fees to any middleman. Additionally, reducing the number of transactions in the process chain for transferring ownership rights to creators' creations to their fans would also result in time savings. On top that, the removal of intermediating Web2 platforms would allow creators to break free from the restrictive algorithms of Big Five Tech Giants such as YouTube.

### (c) Decentralized Identifiers (DIDs)
Web3 would bring to life the concept of self-sovereign identity (SSI). In essence, SSI provides that users should fully control the personal information underlying their digital identities. The concept of SSI is a welcome change from the prevalent privacy breaches involving Web2-based digital services providers, particularly social media platforms. In terms of its implementation, Web3 would bring to life the concept of SSI through the use of decentralized identifiers (DIDs), defined as “_a new type of identifier that enables verifiable, decentralized digital identity_”. 

In simple terms, DIDs enable the verification of the digital identities of Web3 users to be done without the need to involve any centralized entity. The dispensation of the involvement of centralized entities significantly reduces the risks of privacy breaches due to the absence of the need for disclosure, processing, and storage of personal data by such entities. 

## (4) Conclusion

With decentralization as its central tenet, Web3 would be restoring personal autonomy for users and transferring financial control to the hands of creators. Little wonder Web3 has emerged in recent times as a new iteration of the Internet that could help address the systemic issues of Web2. It's about time that we establish a connection with Web3.

Once we have connected with Web3, we would need to learn more about the blockchain features of Web3 that makes it the decentralized Internet. We would be discussing about this in our next course, [**Blockchain as the Building Block of Web3**](https://core.avocadodao.io/blog/l-and-e-course-3-blockchain-as-the-building-block-of-web3/).

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Web3 L&E Course #2: Why we need to connect with Web3

## (1) Introduction 

Distributed Ledger Technology (DLT) refers to databases that store ledger records in a decentralized manner. This decentralization feature entails the element of disintermediation by eliminating the need for any intermediary such as banks for the processing and and validating the authentication of transactions. As for blockchain, it is a specific subset of DLT which uses cryptographic hashing.  

In essence, data on blockchain networks are stored in blocks and chained together using cryptographic hashes, hence the name blockchain. The relationship between blockchain and DLT is best explained as "_all blockchains are DLT but not all DLT are blockchains_".

## (2) Key Features of Blockchain

Thanks to its decentralized governance, automated recording, and perpetual immutability features, blockchain has embodied the nature of being trustless as well as functioning as a single source of truth and trust anchor.

![image1 (1) (1).jpg](https://prod-cms-assets.avocadodao.io/image1_1_1_f82a4a080d.jpg)
_Features of Blockchain (Source: Avocado DAO)_

### (a) Decentralized Governance

The decentralized governance framework of blockchain renders the technology to be trustless. With its peer-to-peer (P2P) network, blockchain’s operations do not require nodes to know or trust each other. This dispensation of the need to know creates a trustless environment where no single authority controls the system.

### (b) Automated Recording

The automated recording feature of blockchain records renders the technology to be the single source of truth. As every single transaction undertaken on a blockchain network would be automatically recorded, there is no need to refer to other sources of information beyond these records. 

### (c) Perpetual Immutability

The perpetual immutability nature of blockchain records renders the technology to be a trust anchor. Thanks to the permanent and indelible nature of its records, the data stored in the ledger records of blockchain networks can be taken at face value as the be-all and end-all of the subject matter under consideration.

Through its key features of decentralized governance, automated recording, and perpetual immutability, blockchain is the primary technological enabler that renders Web3 a plausible reality.

## (3) Blockchain as the Technological Enabler of Web3

In many ways, blockchain and Web3 are inextricably tied to one another, so much so that blockchain has become synonymous with Web3. The synonymous nature of blockchain and Web3 is due to the role of the blockchain in supporting the governance, financial and security blocks of Web3.

![image2.jpg](https://prod-cms-assets.avocadodao.io/image2_314c6890eb.jpg)
_Blockchain’s Web3 Blocks (Source: Avocado DAO)_

### (a) Governance Block

The advent of blockchain has given rise to smart contracts. The rise in smart contracts, in turn, has facilitated the establishment of Decentralized Autonomous Organizations (DAOs), a staple of Web3. The role of blockchain-based smart contracts in DAOs is that they facilitate the submission and voting of proposals concerning the governance of these organizations. 

In this manner, DAOs are operated and managed by the members of Web3-based communities themselves. An example of a DAO is Avocado DAO, the DAO for Avocado Guild.

### (b) Financial Block

The economic framework of Web3 is supported by cryptocurrencies and non-fungible tokens (NFTs). Concerning cryptocurrencies, they have catalyzed the establishment of the decentralized finance (DeFI) domain which serves as the financial bedrock of Web3. Additionally, cryptocurrencies have also catalyzed the establishment of industry horizontals such as educational finance (EduFi), gamification (GameFi), and social finance (SocialFi) which are enmeshed in the fabric of Web3. 

Topping it all off are NFTs which serve as the foundation that supports Web3’s creator economy. The key feature of NFT is that its value is determined primarily by the community. In addition to the background and portfolio of the creator, some other factors on which the value of an NFT is based includes its originality, rarity and utility.  

### (c) Security Block

Thanks to cryptographic hashing (which refers to the use of cryptographic functions to convert inputs in the form of letters and numbers into encrypted outputs), blockchain networks are mathematically impossible and impractical to hack. Accordingly, using blockchain networks provides a high degree of security protection for Web3 as these networks are immune to data tampering and double-spending as well as Denial of Service (DoS) and Man-in-the-Middle (MITM) attacks. Nonetheless, blockchain networks are not foolproof as they are not entirely immune to security risks, with the vulnerability stemming from both the network itself and the users themselves. 

Network security risks include malicious nodes (which refer to nodes that are intentionally acting in a manner that is harmful to a blockchain network) and smart contracts exploits (which refer to security vulnerabilities in the codes of these contracts). Additionally, there are the risks of the proverbial 51% attack which occurs when miners who collectively control more than 50% of the hash rate of a network misuse their control to interfere with the normal functioning of a blockchain network. The decentralized nature of a blockchain network mitigates this risks by making these attacks extremely difficult and expensive to achieve. An attacker would have to control more than 50% of a blockchain network.

As for users' security risks, they take the form of, among others, the theft of seed phrases (which are recovery or backup phrases that are used to recover access to a cryptocurrency wallet), and the hacking of private keys (which are cryptographic keys that grant access to and control over a cryptocurrency wallet) through phishing or other fraudulent methods. One way to boost the security of blockchain networks is by undertaking security audits. For example, the blockchain network of AVG token is audited by CertiK.

## (4) Conclusion

Through its functional role as the governance, economic and security blocks of Web3, blockchain is serving as the primary technological enabler of Web3. Thanks to blockchain, Web3 can fulfill its potential as a community-governed, crypto-powered, and NFT-supported third generation of the Internet.

In this course, we have covered the use of blockchain as the technology which powers Web3. In our next course, [**Making Web3 Smart with Smart Contracts**](https://core.avocadodao.io/blog/l-and-e-course-4-making-web3-smart-with-smart-contracts/), we would be zooming in on the use of blockchain-based smart contracts to support the functions of Web3.




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Web3 L&E Course #3: Blockchain as the building block of Web3

## (1) Introduction

There is no running away from the worldwide phenomenon of rising inflation which affects almost everyone. With the economic pie looking increasingly likely to be shrinking with the impending global recession, achieving efficiency gains through cost-savings by reducing transaction costs is one way to go.  

In 1996, the inventor of smart contracts, Nick Szabo, in his paper titled “Smart Contracts: Building Blocks for Digital Markets,” theorized about the importance of smart contracts “_as the basic building block of a free market economy_”. In the paper, he discussed how smart contracts could create new kinds of businesses and social institutions by significantly reducing transaction costs.  Nick proposed the correct use of smart contracts could bring about a commercial and social revolution.

Fast forward to 2023, with the impending arrival of Web3, Nick Szabo’s vision of a digital market that operates using smart contracts and cryptographic assets is increasingly becoming a reality thanks to the technological wonders of blockchain.

## (2) Smart Contracts as Digital Vending Machines

Smart contracts facilitate the automated initiation, implementation, and enforcement of contractual obligations through the programming of these obligations in the codes of these contracts. Functionally, the idea of smart contracts is similar to the humble vending machine, but instead of dispensing Coke and Pepsi, these contracts dispense cryptocurrencies and non-fungible tokens (NFTs). In this regard, smart contracts are advanced digital vending machines that entail the key features of automation, decentralization, and being empirical.

![image1.jpg](https://prod-cms-assets.avocadodao.io/image1_ff2b84575c.jpg)
_Features of Smart Contracts (Source: Avocado DAO)_

### (a) Automated

The automated feature of smart contracts means that their operations would not require the intervention of any intermediary. This dispensation of intermediation is because the process chains of smart contracts would automatically be initiated once the coded parameters have been fulfilled. 

When the preset preconditions as programmed into the codes of a smart contract are fulfilled, the smart contract will initiate the relevant process chain through the use of self-executing codes, thereby eliminating the need for any intermediary. This dispensation of intermediation reduces or perhaps even eliminates the need of transaction costs, and lowers the risks of fraud and errors arising from the use of intermediaries.

### (b) Decentralized

The self-executing codes of smart contracts are stored on decentralized blockchain networks. The storage of their codes on blockchain networks renders these contracts autonomous, as they are beyond the control or influence of any single entity. 

Not only that, the immutable and transparent nature of blockchain records helps warrant the accountability and integrity of the processes and transactions of smart contracts. From the perspective of technical application, the decentralized feature of smart contracts enables them to be the back-end mechanism that supports decentralized instruments and frameworks such as decentralized applications (dApps) and decentralized autonomous organizations (DAOs).

### (c) Empirical

The operations of smart contracts depend on reliable data feeds from oracles which are lines of codes that supply information to blockchain networks to inform the processes of these contracts. Concerning on-chain data, these data can be obtained directly from the blockchain networks to which a smart contract is connected. As for off-chain data, smart contracts rely on oracles, which source and verify external information. 

A notable use case of on-chain and off-chain data of a blockchain-based smart contracts network is IBM's Hyperledger Fabric platform. The platform is designed in such a way that allows organizations to incorporate the use of blockchain as part of their operations through a range of enterprise use cases. In terms of on-chain data, Hyperledger Fabric allows its enterprise users to store information pertaining to their digital assets including transaction history on their blockchain network. 

As for off-chain data, Hyperledger Fabric allows its enterprise users to store sensitive information such as those in relation to confidential transactions outside the platform's blockchain network. Although these information are off-chain, they can be retrieved by Hyperledger Fabric using rather complex mechanisms such as oracles, sidechains or state channels, whether by themselves or in combination. However as off-chain information is not stored on the platform's blockchain network, their credibility and integrity would have to be cryptographically verified. 

With its self-executory, decentralized, and empirical features, smart contracts could be digital vending machines that would bring Web3 to life. 

## (3) Bringing Web3 to Life with Smart Contracts

Now we know smart contracts are like computer programs that can run independently. Smart contracts use machine-readable data to do things automatically without any middleman or operator. Through the use of smart contracts, we can bring to life many exciting things like DAOs, dApps, and NFTs. These are new and innovative ways to use technology, and they all work together to make Web3 a reality.

![image2.jpg](https://prod-cms-assets.avocadodao.io/image2_5f7bf4d950.jpg)
_Web3 Items Dispensed by Smart Contracts Digital Vending Machines (Source: Avocado DAO)_

### (a) Decentralized Autonomous Organizations (DAOs)

DAOs rely on smart contracts for the establishment of governing rules and execution of majority decisions based on coded consensus mechanisms. These mechanisms refer to how consensus is achieved under the frameworks of smart contracts. 

The hegemony of Web2 platforms, which has been described as akin to “digital dictatorships”, brings about barriers to entry issues for content creators' and unfair censorship problems for web users. Through the use of DAOs, the element of control would be taken out of the hands of Web2 platforms and reposed in the hands of creators and users. 

### (b) Decentralized Applications (dApps)

Under Web2 frameworks, the choices of content creators and the rights of consumers are curtailed by the walled gardens of Web2 platforms. Even with these platforms’ rather restrictive terms of use, content creators have limited choices on where to market and distribute their contents. The natural consequence is that consumers have little practical choice but to rely on Web2 platforms to access and acquire the content they want. 

Similar to content creators, consumers too have little alternative but to patronize Web2 platforms even though it means that they are getting the short end of the stick as they would merely be acquiring the leasing as opposed to ownership rights to the purchased content. The advent of smart contracts also has given rise to dApps. 

DApps can be thought of as vending machines for digital content that allow you to access and use digital content without needing to go through a centralized platform. The content creator can stock their creations on dApps. When a consumer wants to buy somethings they simply send a cryptocurrency payment to the content creator's wallet and the content is made available to them through the dApp.

Just as a vending machine doesn't require a middleman like a store to sell its products, dApps doesn't require a centralized platform like a social media site to distribute its content. The vending machine owner and the content creator both have more control over their products, and the customers and users have a more direct and transparent transaction.

### (c) Non-Fungible Tokens (NFTs)

Content creators can sell Digital items on dApps as an NFT, a token recorded on the blockchain, verifying the ownership of the underlying digital item. NFTs are made possible by smart contracts. Smart contracts enable the minting of NFTs, recording the attributes and metadata of the NFTs on the blockchain.

When a buyer purchases an NFT on a dApp, the dApp's smart contract transfers the ownership of the NFT to the new buyer. The ownership metadata of the NFT is edited by the dApp's smart contract and submitted to the blockchain. Buying an NFT on a dApp like Opensea is an example of this.

Web3 powered by smart contracts would break the Web2 mold, ushering in a new online ecosystem where content creators can better monetize their creations, and consumers can acquire ownership rights to digital purchases.

## (4) Conclusion

In 1994, when Nick Szabo came up with the concept of smart contracts, the Internet was still in its infancy. Fast forward almost three decades later, smart contracts look set to catalyze the rise of the third generation of the Internet in the form of Web3, which would be much smarter than its predecessors. 

In this course, we have covered how the use of smart contracts supports the functions of Web3. Our next course, [**Immersing Ourselves in the Metaverse Using Immersive Technology**](https://core.avocadodao.io/blog/l-and-e-course-5-immersing-ourselves-in-the-metaverse-using-immersive-technology/), we would discuss how these functions of Web3 enable it to have an almost surreal level of immersion.

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Web3 L&E Course #4: Making Web3 smart with smart contracts

## (1) Introduction 

Movie buffs who have watched The Matrix would have an idea of how it feels to live in a simulated reality to which the Metaverse would take us a big step closer. The genesis of the concept of Metaverse dates back more than three decades. Back in 1992, when the Internet was little more than just ten years old, Neal Stephenson, in his novel titled “Snow Crash” gave birth to the term “Metaverse”. 

In the novel, Metaverse (the term is capitalized in the novel) refers to “_a fictional structure made out of codes_” where “_information is power_” as it is controlled by those who have the “_semi-mystical ability to speak magic computer languages_”. Fast forward to 2023, and lo and behold, the Metaverse is right here in our digital doorway.

A particular domain to which the concept of Metaverse fits like a glove is that of video gaming. From the outset, gamers can create their virtual identities in the form of Metaverse avatars. This allows for a personalized and customized experience as gamers forge their identities and chart their path in the Metaverse. Secondly, the Metaverse identities of gamers allow them to collect virtual rewards such as non-fungible token (NFT) badges or financial rewards such as in-game cryptocurrencies. The digital wallets of gamers can be linked to their virtual identities using Soulbound Tokens (SBTs), thereby allowing for the building of the gamers' reputational score in the Metaverse.

Additionally, from the perspective of gameplay experience, the higher levels of immersion brought about by playing games in the Metaverse could significantly ramp up the level of players' engagement. This enhanced immersion is brought about by the use of alternate realities such as virtual reality (VR), augmented reality (AR) and mixed reality (MR) under the banner of extended reality (XR). Last but not least, as much as gaming is a form of entertainment, it is also a social experience. In this regard, the social interactivity of the Metaverse that allows users to transcend the boundaries of geographical space would transform the gaming experience into a social one. In turn this would boost the fluidity of multiplayer gameplay modes such as player-versus-player (PvP) and team-based challenges.   

## (2) Technological Enablers and Concepts

In the Metaverse, the past, present, and future are separated by only a click of a button. Given its futuristic nature, the Metaverse was only possible with the unprecedented rate of technological developments in the past few decades, which brought us to where we are today. Some of the critical technological enablers and concepts which have catalyzed the rise of the Metaverse are fast bandwidth networks, alternate realities and real time 3D (RT3D).

![image2.jpg](https://prod-cms-assets.avocadodao.io/image2_5f84ab96d1.jpg)
_Metaverse Technological Enablers and Concepts (Source: Avocado DAO)_

### (a) Fast Network Bandwidth

The operations of the Metaverse require the transmission of voluminous amounts of data, which can make do with the high bandwidth (high data transmission speed) and low latency (reduced time delay in the initiation and commencement of data transmission process) of fast  bandwidth networks. Without fast bandwidth networks, the Metaverse would have remained a utopian digital dream. 

### (b) Alternate Realities

The terms virtual reality (VR), augmented reality (AR), mixed reality (MR), and extended reality (XR) have been going around in conversations about the Metaverse. For starters, VR involves a purely digital environment mimicking an artificial 3D domain. The tricky ones are AR and MR, which are conceptually quite similar, albeit with some slight distinctions. 

Both AR and MR involve an overlay between the real and digital worlds. The key difference is that whereas the overlay of AR is merely visual in nature, MR goes further as it entails the element of immersive interaction with real-world objects. As for XR, it is an umbrella concept encapsulating the triple realities of VR, AR, and MR.The terms virtual reality (VR), augmented reality (AR), mixed reality (MR), and extended reality (XR) have been going around in conversations about the Metaverse. For starters, VR involves a purely digital environment mimicking an artificial 3D domain. A notable use case example of VR is Beat Saber, a rhythm game set in a futuristic VR environment. In the game, players put on VR headsets and motion controllers to slash through color-coded blocks representing musical beats. 

Both AR and MR involve an overlay between the real and digital worlds. The key difference is that whereas the overlay of AR is merely visual, MR goes further as it entails the element of immersive interaction with real-world objects. 

Pokemon Go, uses AR technology to allow players to catch Pokemon in real-world environments. As for MR, Microsoft's Fragments is a detective game that involves players using the HoloLens device to explore a virtual crime scene. The games use MR technology to superimpose digital crime scenes, evidence, and clues against the real-world environment. 

XR, is an umbrella concept encapsulating the triple realities of VR, AR, and MR.

### (c) Real Time 3D (RT3D)

RT3D is the technology that is bringing to life the concept of XR. In essence, RT3D allows for rendering 3D images in real-time. Through RT3D, 2D images and models can be transformed into 3D ones faster than the eye can blink. In this manner, RT3D can imbue the digital environment with an almost surreal element of realism through the use of photorealistic 3D effects. A real world use case of RT3D is by BMW Group who is using the technology for its production chain. In particular BMW Group is using RT3D technology to train its frontline workers, for the planning of the workstations of its assembly lines, and for the maintenance of quality control for its finished products. 

RT3D experiences are both immersive and interactive, with the element of immersion provided by the lifelike mimicry of our analog experience in the real world. As for the element of interaction, RT3D experiences enable users to have precise control over their experiences through the coordination of real-time movements. Whilst the jury is still out as to the validity of the simulation theory (which posits that our reality is a computer-generated simulation). RT3D certainly lays some credence to the theory.

The term “Meta” originates from Greek, meaning beyond, which renders the word Metaverse to mean beyond the universe. With fast bandwidth networks as the technology enabler, the concepts of VR, AR, MR, and XR as the conceptual wayposts, and RT3D for the visual rendering of XR, we are well on our way to going beyond the universe.

## (3) Making the Metaverse Real

While going beyond the universe may sound like a lot of fun, there’s not much point in merely aimlessly orbiting around the celestial Milky Way. This aimless orbiting would render the Metaverse akin to being much ado about nothing. That’s why for all its hype, the actual value of the concept of Metaverse is only as good as its practical utility. This point brings us to the real-world applications of this out-of-this-world concept of Metaverse, with the notable key areas including immersive learning, immersive retail and immersive socialization.

![image1.jpg](https://prod-cms-assets.avocadodao.io/image1_77492e080d.jpg)
_Real-World Immersive Applications of the Metaverse (Source: Avocado DAO)_

### (a) Immersive Learning

The concept of immersive learning entails using alternate realities such as VR, AR, MR, and XR to simulate the real-world environment in a digital classroom. In contrast with conventional classrooms that adopt auditory and written information for the teaching and learning process, immersive learning classrooms adopt visual and kinesthetic sensory information for this process. This learning mode is particularly suited for hands-on subjects and vocations such as medicine and engineering, which are more practical rather than theoretical. 

Nonetheless, immersive learning does have something to offer to conventional classrooms as well. In a research paper titled "_Delivering Educational Multimedia Contents through an Augmented Reality Application: a Case Study on its Impact on Knowledge Acquisition and Retention_", it was reported that a study found that "_students using the AR application retained more concepts that those learning the topic in a traditional setting"._  Additionally, the study also found that "_an increased knowledge retention on students using AR multimedia contents as opposed to those following traditional courses_". 

### (b) Immersive Retail

User engagement and retention are crucial parts of retail businesses, and immersion fits like a glove when it comes to engaging and retaining users, particularly for e-commerce platforms. A retail e-commerce giant that has adopted immersive technologies for its online platform is Amazon with its AR View, which helps users visualize how products would complement the layout of their homes. 

Beating Amazon in its own game is Ikea with its Kreativ app, which uses LiDAR (laser imaging, detection, and ranging) technology to build 3D replicas of the interior of users’ homes to help them visualize how new furniture would fit in. In simple terms, LiDAR uses laser projections to scan real-world surroundings before replicating the nature of the surroundings in digital form.

### (c) Immersive Socialization

Tapping into the innate need for social connections in human beings, social media apps such as Facebook, Instagram, and TikTok have taken the world by storm. Leading the way for the embracing of the Metaverse is Facebook, which had in October 2021 gone to such lengths as to change the name of its parent company to Meta as part of a rebranding process to embrace the concept of Metaverse. 

The technological bridge for immersive socialization may be photogrammetry, which can transform 2D photographs into 3D visuals. In simple terms, photogrammetry works by using two or more vantage points from a 2D photograph as observational points to create the perception of depth in 3D visuals created based on the 2D photograph. 

At the forefront of the use of photogrammetry is Google Poly which allows users to “_browse, distribute, and download 3D objects for use in virtual reality and augmented reality applications_”. By integrating Google Poly with social media apps, immersive socialization could be the next wave in the evolution of these apps, whereby social media users could be sharing 3D visuals instead of 2D photographs. Talk about getting real on social media.

These are just some of the notable real-world use case applications of immersive technologies in the Metaverse. As we get closer to bringing to life the Metaverse in time to come, the use of immersive technologies through macro concepts such as smart cities is set to transcend into almost every aspect of our lives. Long story short, the Metaverse is coming our way, whether we like it or not, want it or not.

## (4) Conclusion

In “Snow Crash,” Neal Stephenson described the Metaverse as “_a global network where magic is possible_”. Thanks to technological advancements and concepts such as fast bandwidth networks, VR, AR, MR, XR, and RT3D, the Metaverse is no longer a magical possibility but a digital reality. With the dawn of the Web3 age, we could soon find ourselves immersed in learning, shopping, and socializing activities in the Metaverse. 

In this course we have covered the immersive reality of the Metaverse. In our next course, [**Securing Our Digital Souls in Web3**](https://core.avocadodao.io/blog/l-and-e-course-6-securing-our-digital-souls-in-web3/), we would be discussing about how we can secure our digital identities to enable us to venture safely into the immersive reality of the Metaverse.



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Web3 L&E Course #5: Immersing ourselves in the Metaverse using immersive technology

## Introduction

In tandem with the digital age of our times, the lines between the real and virtual worlds are becoming increasingly blurred. Think about your daily life and how it would come to a standstill if you lose access to your digital device or network connectivity. While the dawn of the digital age is well and good, one of the World Wide Web’s (WWW) pain points is the infrastructural flaws of Web2 platforms stemming from their data monetization models. The centralized framework of these models gives rise to risks associated with a lack of transparency about data management, such as undue disclosure. 

A notable example is the Cambridge Analytica scandal involving Facebook, in which the personal data of up to 87 million users of the Web2 social media platform was unduly exposed. For all we know, the next victim could be you, me, or any other web user. Web3, as the next iteration of the Internet, maybe the solution for the personal data protection deficiencies of Web2.

## Web3 and Personal Data Protection

If, like most web users, you prefer to be in control of your personal data, then Web3 is the thing for you. The central tenet of Web3 is user autonomy. In the context of personal data, the element of autonomy for Web3 users means that the users would have the right to decide for themselves the management and usage of their personal data. In line with this agenda, a few concepts and instruments could bring to life the ideals of Web3 when it comes to warranting user autonomy over their personal data. Some of these concepts and instruments are self-sovereign identity (SSI), decentralized identifiers (DIDs), and digital footprint security.

![Concepts and Features of Web3 Personal Data Protection.jpg](https://prod-cms-assets.avocadodao.io/Concepts_and_Features_of_Web3_Personal_Data_Protection_54c6d8068e.jpg)
_Concepts and Features of Web3 Personal Data Protection (Source: Avocado DAO)_

### Self-Sovereign Identity (SSI)

The core idea of SSI is that users ought to have absolute control over the personal data underlying their digital identities. In effect, this means that users should not have to rely on third parties to store, process, and share their personal data.

For example, the identity authentication frameworks of Web2 platforms are such that users have to share their credentials with third parties, namely the platform owners. This need for data sharing with third parties departs from the concept of SSI and contrasts with Web3’s notion of user autonomy.

### Decentralized Identifiers (DIDs)

In essence, DIDs are pseudo-anonymous identifiers that enable users to verify their digital identities without disclosing their private data or relying upon a centralized intermediary like Facebook or your bank. Users can use their private keys to create a digital signature and apply it to a message like proving their identity to a dApp platform. The dApp platform, such as Uniswap, will match the user’s public key to their digital signature and authenticate the user as the valid owner of the wallet.

- **Private keys:** A private key is a unique and secret code used to sign and authorize digital transactions. The user must keep the private key secret and never share it with others to protect their DIDs.
- **Digital signatures:** A mathematical code generated using a private key and applied to a message or transaction. Digital signatures prove authenticity, and the signatory cannot repudiate a signature completed in the past.
- **Public keys:** A public key is a code derived from a private key. Unlike private keys, the user can share public keys with other parties. Anyone can use the public key to verify a digital signature to prove the authenticity of a message or transaction.

### Digital Footprints Integrity
Digital footprints refer to the trail of data and information left behind by web users. These could include online purchases, financial transactions, social media activities, and the completion of online courses. The immutable and tamper-proof nature of blockchain records significantly reduces the risks of undue manipulation or unauthorized alteration by web users of their digital footprints. This paves the way for the concept of Proof-of-Completion (PoC), which entails verifying the successful completion of a task or activity by a web user. The use of PoC allows organizations such as educational institutions and prospective employers to verify that applicants have obtained the necessary skills or knowledge through their participation in online courses and programs.

## Implementing Web3’s Personal Data Protection with Blockchain

A few examples of real-world implementations of the Web3 concepts described above exist. The examples we want to highlight in this course are Soulbound Tokens (SBTs) and Zero Knowledge Proof (ZKP) protocols.

### Soulbound Tokens (SBTs)

SBTs use blockchain to power the social identities of individuals in decentralized communities. In essence, SBT is an NFT, which stores the verifiable credentials of its owner. SBTs are also non-transferable and permanently bound to their holding wallets. These qualities enable the SBTs suitable for both the verification of identities and the tracking of reputation. In this way, it would not be possible for web users to dissociate themselves from their real-world identities or for another party to imitate them. SBT helps fulfill the Web3 concept of SSI and digital footprint integrity.

An interesting use case of SBT has come about from the collaboration between Masa Finance and Celo blockchain. Under the collaboration, the 10+ million active wallet holders in the Celo ecosystem would be able to use Masa Finance's protocol to generate a prosperity passport. The passport comes with a host of SBT features including " _an authenticated user verification SBT, a credit score SBT, a community reputation SBT and a “.celo” domain name SBT_".

### Zero-Knowledge Proof (ZKP) Protocols

The use of ZKP cryptographic protocols enables the authentication of users’ digital identities by verifying a piece of information without sharing the whole. 
The main benefit of using ZKP protocols for everyday users is that it allows the verification of digital identities without requiring the disclosure of personal information to the authenticating party. Using ZKP protocols would help mitigate the risks of undue disclosure and security breaches since third parties would not have access to your complete personal information, such as financial information. 

Additionally, the use of ZKP protocols would also shorten the time required for the digital identity verification process as it reduces the amount of information needed to be transmitted and verified. These qualities of ZKP protocols help it fulfill the Web3 concepts of SSI and DIDs, securing our digital identities for a safer web.

## Conclusion

As our real-world existence is increasingly assimilated with our digital personalities, the issue of personal data protection is set to become increasingly pertinent moving forward. In contrast with the data monetization models of Web2 platforms under which user data are products to be monetized, Web3 deems such data as having the right to be protected. Given the potential of blockchain for personal data protection, it could prove to be the technological enabler that helps secure our Web3 souls.

In this course, we have covered the different ways in which the use of blockchain can help secure our Web3 digital identities. In our next course, [**The Dollars and Cents of Web3**](https://core.avocadodao.io/blog/l-and-e-course-7-the-dollars-and-cents-of-web3/), we are going to discuss the use of blockchain for the financing aspects of Web3 through the cryptoization mechanism.





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Web3 L&E Course #6: Securing our digital souls in Web3

## Introduction

As they say, “_money makes the world go round_,” and money will make Web3 go big. In 2022, Web3-related investment funding amounted to USD 7.1 billion. Topping the list is the category of gamification (USD 4.5 billion), followed by Metaverse investments (USD 1.8 billion) and social networks (USD 259.1 million).  

Regarding individual projects, the top-grossing fundraising action took place in the Metaverse category, where the proprietor of the Bored Ape Yacht Club (BAYC) franchise, Yuga Labs, raised over USD 450 million in 2022. Coming in a distant second is blockchain gaming developer, Immutable, who raked in over USD200 million throughout 2022, followed by blockchain infrastructure service provider, Improbable, who collected over USD150 million last year.

![image5.png](https://prod-cms-assets.avocadodao.io/image5_9a0d78274f.png)
_Top Investments Grossing Web3 Projects in 2022 (Source: MPost.io)_

## Crypto Crowdfunding for Web3 Financing

It always feels good to be part of a cause bigger than ourselves. One way to be part of Web3 projects is by participating in crypto crowdfunding. In essence, the concept of crypto crowdfunding entails raising money from the public through the issuance of cryptocurrencies. 

### Types of Crypto Crowdfunding

The genesis of crypto crowdfunding started with Initial Coin Offering (ICO). The first ICO was that of Mastercoin (MSC). The ICO for MSC, which was held in July 2013, lasted for about a month and raised over USD 750k worth of Bitcoin (BTC). The proceeds were used to establish the Mastercoin Foundation, which has since been rebranded as Omni Layer. 

For a few years following the introduction of the concept by Mastercoin, there was a boom in ICO. The boom peaked in early 2018 when ICOs raised a total of USD 6.3 billion in the first three months alone. This amount was a 118% increase from the ICO proceeds for 2017. Alas, ICO became a victim of its success as fraudsters hijacked it. By August 2018, a report found that 80% of ICOs were scams. 

Since then, the number of ICOs and the number of funds raised by these offerings have fallen by the wayside. With ICO fading into oblivion, it was later replaced by alternative crypto crowdfunding mechanisms such as Initial Exchange Offerings (IEOs) and Initial Decentralized Offerings (IDOs).

![image4 (1).jpg](https://prod-cms-assets.avocadodao.io/image4_1_d546d482c0.jpg)
_ICO Statistics for 2022 (Source: Avocado DAO)_

### Initial Exchange Offering (IEO)

Having learned its lessons from the demise of ICO, the crypto market introduced the crypto crowdfunding concept of IEO. The idea behind the advent of IEO is to warrant investor protection through centralized exchanges (CEXs) as host platforms for IEOs. These host exchanges are tasked with vetting the legitimacy of the proprietor of a proposed IEO and the viability of the underlying project of the IEO. In this manner, the host exchanges serve as trust anchors by acting as assessors of the IEOs launched through their platforms. 

In return for putting their reputational scores on the line as they underwrite the risks of the IEOs hosted on their platforms, the host exchanges are rewarded with listing fees that could go up to a million bucks for reputable top exchanges. In 2022, there were a total of 165 IEOs, with the top 5 most popular CEX hosting platforms being Gate.io Startup (97), Huobi Primelist (25), Bybit (15), as well as KuCoin Spotlight and Bitforex Turbo Starter with seven each. In terms of Web3 market categories, GameFi IEOs led the way with an average Return on Investment (ROI) of about 1,500% in 2022. 

![Average Return on Investments (ROIs) of Initial Exchange Offerings (IEOs) by Web3 Market Category in 2022 (3).jpg](https://prod-cms-assets.avocadodao.io/Average_Return_on_Investments_RO_Is_of_Initial_Exchange_Offerings_IE_Os_by_Web3_Market_Category_in_2022_3_a8d0b3678e.jpg)
_Average ROIs of IEOs in 2022 (Source: Avocado DAO)_

### Initial DEX Offering (IDO)

The use of CEXs as gatekeepers for the IEOs hosted on their platforms was able to address the risks of crypto crowdfunding scams. However, the centralized structure of IEO frameworks was an aberrant departure from the decentralized ideals of cryptocurrencies. This issue gave rise to IDO, whereby the role of exchanges as gatekeepers were replaced by community members as watchdogs. 

How it works is that instead of CEXs evaluating the legitimacy of the proprietors of the token issuers and the viability of the underlying projects, this is done by community members of a DEX protocol. The governance token holders of a decentralized protocol would vote on the IDO projects proposed to be hosted on the protocol’s DEX. 

Not only is this more in line with the decentralization ideals of cryptocurrencies, but it is also more transparent. This element of transparency is because the IEO listing requirements of CEXs tend to be opaque due to their public inaccessibility. In 2022, there were a total of 373 IDOs, with the top 5 most popular DEX hosting platforms being Kommunitas (42), MoonStarter (29), EnjinStarter (28), TrustPad (25), and GameStarter (24). IDOs across the top five Web3 market categories recorded negative average ROIs in 2022. 

![Average Return on Investments (ROIs) of Initial Decentralized Offerings (IDOs) by Web3 Market Category in 2022 (4).jpg](https://prod-cms-assets.avocadodao.io/Average_Return_on_Investments_RO_Is_of_Initial_Decentralized_Offerings_ID_Os_by_Web3_Market_Category_in_2022_4_9b7e560c55.jpg)
_Average ROIs of IDOs in 2022 (Source: Avocado DAO)_

Besides IEO and IDO, there are a host of other crypto crowdfunding mechanisms such as Decentralized Autonomous Initial Coin Offerings (DAICO), Initial Bounty Offerings (IBO), Security Token Offerings (STO), Initial Game Offerings (IGO), Initial Liquidity Offering (ILO), Initial NFT Offering (INO), Initial Farm Offering (IFO), Initial Stake Pool Offering (ISPO)), Strong Holder Offering (SHO) and Wallet Holder Offering (WHO). Each of them has something distinctively unique to offer for Web3 financing.

## Value Generation Through Web3 Horizontals

Venture capitalist (VC) and crypto crowdfunding investments for Web3 are all well and good. However, if Web3 investments are to be commercially sustainable, the business models of its platforms must entail value generation instead of merely the element of value transfer in the following horizontals.

### Decentralized Finance (DeFi)

The provision of liquidity warrants the element of value generation in DeFi. The key to sustaining any business startup, including Web3 projects, is having sufficient liquidity. Through the Proof-of-Stake (PoS) model of DeFi, Web3 projects can secure liquidity through the automated market model (AMM) frameworks of DeFi protocols. How it works is that token holders of a Web3 project can contribute to the project’s liquidity by depositing and locking their tokens in the relevant liquidity pools of DeFi protocols. 

In return, token holders who stake their tokens would receive staking rewards in the form of interest receipts that usually take the form of staked tokens. For example, Avocado DAO (AVG) tokens can be staked for returns with annual percentage rates (APRs) of up to 100%. Talking about generating passive income, Warren Buffett once said, “_If you don’t find a way to make money while you sleep, you will work until you die_.” 

### Gamification (GameFi)

The element of value generation of GameFi is heralded by the arrival of GameFi 2.0. This new and improved version of GameFi entails lowering the barriers to entry for GameFi projects. A case in point is Axie Infinity Origins which provides new players with three free Axies. This free-to-play model contrasts with Axie Infinity Classic, which requires new players to buy their first Axies to play the game. The replacement of Classic with Origins in June 2022 signifies the end of an era for GameFi 1.0, which was replaced with GameFi 2.0. With this, the door to the GameFi domain is open to all.

In addition to lowering the barriers to entry, GameFi 2.0 also entails the shifting of focus from profit-making to community building. In other words, whereas GameFi 1.0 was focused on attaining financial rewards, GameFi 2.0 is focused on something more meaningful through the forming of social connections, which brings a sense of belonging to community members. Leading the way for GameFi 2.0 is Avocado DAO, whose [**Discord community**](https://discord.com/invite/avocadoguild) has about 94k members as of February 2023. 

### Social Finance (SocialFi)

The element of value generation of GameFi stems from the ownership and creator economies of Web3. In essence, the concept of SocialFi entails rewarding Web3 users for creating, sharing, and transferring user-generated content (UGC). After creating their UGC, creators can share this content with fellow Web3 users. The rankings of UGC would be determined through upvotes and downvotes under a Decentralized Autonomous Organization (DAO) framework. Rewards in the form of SocialFi tokens would be given to creators based on the reception of their UGC among members of the Web3 community in which the content was shared. 

To top it all off, members of a Web3 community can acquire ownership rights to UGC shared in the community. The use of non-fungible tokens (NFTs) for the tokenizing of UGC enables the creators of this content to fully own their UGC creations. In line with the community-centric nature of Web3, creators of UGC can transfer their ownership rights to these UGC to their fellow Web3 users in return for SocialFi tokens of the community to which they belong. 

![image2.jpg](https://prod-cms-assets.avocadodao.io/image2_76499d011b.jpg)
_Web3 Value Generation (Source: Avocado DAO)_

The embracing of the concept of value generation through its horizontals of DeFi, GameFi, and SocialFi enhances the sustainability of Web3’s financial framework. This concept would strengthen the interlinkages of Web3’s financial framework with the real money economy, thereby shoring up the foundations and long-term viability of the Web3 domain.

## Conclusion

For all the conceptual ideals of Web3, the realization of these ideals hinges on the commercial viability and business sense of Web3’s financial framework. The high inflow of VC investments is a testament to investor confidence in Web3 projects, whereas the various crypto crowdfunding mechanisms serve as alternative financing channels for these projects. Lastly, the value generation features of Web3’s DeFi, GameFi, and SocialFi horizontals substantively validate the dollars and cents of Web3.

This course draws to a close our beginner curriculum for Web3 users. If you’re interested to learn more about Web3, do look out for our intermediate curriculum that would feature a deeper dive into the next generation of the Internet. 

ICO (3) (1).jpg

Web3 L&E Course #7: The dollars and cents of Web3

## Mighty Bear Games Takes on Battle Royale with Mighty Action Heroes

Mighty Action Heroes is the latest Web3 gaming offering by Mighty Bear Games, a leading multi-platform game development studio in Southeast Asia. Mighty Bear Games' mission is to make Web3 gaming fun by going back to the drawing board to reinvent gaming genres. This is precisely what they are doing for the battle royale genre with Mighty Action Heroes. The game is a real-time multiplayer third person mobile shooter that features fast-paced action and a variety of playable characters with unique abilities. It features serious action with a lighthearted feel and tons of fun factor thanks to the game's colorful graphics. 

![image6 (2) (1).png](https://prod-cms-assets.avocadodao.io/image6_2_1_227a576384.png)
Colorful Graphics (Source: MightyActionHeroes.com)

If having some serious fun is your kind of thing, read on to find out how to join in on the mighty action fun.

## MightyNet Genesis Pass: Your Exclusive Ticket to Mighty Action Heroes’ Multiplayer Alpha

As Mighty Action Heroes is currently in alpha, only early access ticket holders get to be part of the mighty action. Your early access ticket to Mighty Action Heroes takes the form of a MightyNet Genesis Pass or Big Bear Syndicate NFT. As the first entry points to the MightyNet ecosystem, these NFTs will allow you to have exclusive access to Mighty Action Heroes as well as all the other games in the MightyNet ecosystem come the future. On top of early access, holders of these NFTs would also receive other privileges such as access to future in-game NFT drops and exclusive in-game content, as well as unlock rewards if they hold these NTFs for the long term. 

![image1 (5).png](https://prod-cms-assets.avocadodao.io/image1_5_03776ebc50.png)
The MightyNet Ecosystem (Source: MightyActionHeroes.com)

The low supply of MightyNet Genesis Passes coupled with the use of an application list approach to their issuance ensures the exclusivity of these passes. They are only available to Web3 gamers who fit the bill as highly-engaged community members with the requisite vision and vigor to support Mighty Action Heroes' development team. As previously mentioned, besides a MightyNet Genesis Pass, you can obtain early access to Mighty Action Heroes by getting your hands on a Big Bear Syndicate NFT from MightyNet’s Gen1 personal profile picture (PFP) collection. 

If you think you have what it takes to be one of the pioneering mighty action heroes, head over to OpenSea and check out the [**MightyNet Genesis Pass**](https://opensea.io/collection/mightynet-genesis-pass) and the [**Big Bear Syndicate**](https://opensea.io/collection/big-bear-syndicate) NFT collections. 

## Mighty Action Heroes: Gameplay Elements and Modes Explained

Once you have got your hands on a MightyNet Genesis Pass or Big Bear Syndicate NFT, you can get in on the action in Mighty Action Heroes by jumping into the arena from your browser. For now, the Battle Royale mode which features up to 20 players per game is the sole available gameplay mode in Mighty Action Heroes. In time to come, the game will feature additional gameplay modes among other features. The early access features of Mighty Action Heroes’ gameplay are as below.

- Showcase your gunmanship and shoot your way to victory in 20-player games.

![image6 (1) (1) (1) (1).png](https://prod-cms-assets.avocadodao.io/image6_1_1_1_1_777fa17b9d.png)
Shooting Away (Source: MightyActionHeroes.com)


- Get your game face on by playing as 1 of several different action heroes.

![image5.png](https://prod-cms-assets.avocadodao.io/image5_a1cb59bcac.png)
Action Heroes (Source: MightyActionHeroes.com)

- No need to wait for your turn to have some fun with tons of guns.

![image5 (2).png](https://prod-cms-assets.avocadodao.io/image5_2_2bc178a3f0.png)
Fun Guns (Source: MightyActionHeroes.com)

- Get set to fight fire with fire as you enter buildings for exciting firefights.

![image2 (8).png](https://prod-cms-assets.avocadodao.io/image2_8_be1750ebff.png)
Exciting Firefights (Source: MightyActionHeroes.com)

## From Twitter to Discord: Stay Connected with Mighty Action Heroes’ Growing Community

In line with Mighty Bear Games' community-centric approach, holders of MightyNet Genesis Pass and Big Bear Syndicate NFTs get to be involved in the development of Mighty Action Heroes. The development framework of Mighty Action Heroes is structured in such a manner that the game is built for the community by the community. 

![image4.png](https://prod-cms-assets.avocadodao.io/image4_f9757e1780.png)
Some of the Mighty Bear team (Source: MightyActionHeroes.com)

In addition to obtaining a MightyNet Genesis Pass or Big Bear Syndicate NFT to get early access to the game, you can be part of Mighty Action Heroes’ community by joining the game’s 12K+ strong Twitter community, 10K+ strong Discord group, or just by reading the articles on the game’s Medium page. 

## Conclusion

Once Mighty Action Heroes is fully developed, F2P players will be able to collect and earn rewards subject to the caveat that opportunities to earn on-chain rewards are only available to high-ranked F2P players. The skill-based matches of Mighty Action Heroes is a reflection of Mighty Bear Games' spirit of fairness. To quote the game’s litepaper, _“those who invest time and energy to master the game and contribute to the community should be fairly rewarded for their efforts_.” With this, let’s start investing some time and energy into mastering your gunmanship to conquer the battle arenas in Mighty Action Heroes and be fairly rewarded for your efforts.


Game On (2) (1).jpg

_A bite-sized battle royale built for the blockchain. Experience fun, skill, chaos, and tons of guns!_



Mighty Action Heroes: A bite-sized battle royale built for the blockchain. Experience fun, skill, chaos, and tons of guns!

30 July 2015 is an important day for the crypto domain as it is the birth date of Ethereum, whose original name was Olympic. Ethereum was developed by a team led by Vitalik Buterin, a Canadian-Russian programmer and cryptocurrency researcher previously involved in Bitcoin's development. As the story goes, Vitalik Buterin felt constrained by the limitations of Bitcoin and decided to establish an alternative blockchain to allow for the development of more complex decentralized applications (dApps). With this, Ethereum was born. 

![image5.png](https://prod-cms-assets.avocadodao.io/image5_6d93151a42.png)
_Ethereum’s Early History (Source: Media.Consensys.net)_

## Ethereum-as-a-Solution to the Scalability Trilemma

The vision statement of Ethereum is to overcome blockchain's scalability trilemma. In simple terms, the scalability trilemma refers to the catch-22 problem of blockchain networks when balancing the triple factors of security, decentralization, and scalability. As the trilemma goes, a blockchain network can't have all three of the qualities simultaneously, as it is only possible for it to have at most two of these qualities at any one time. 

Ethereum aims to resolve the scalability trilemma by boosting the efficiency of its data processing functions. This would enable its network to process large amounts of transactions without sacrificing security while operating in a decentralized manner. Some of the scalability mechanisms deployed by Ethereum are as below.

![image1 (4).jpg](https://prod-cms-assets.avocadodao.io/image1_4_5d2e02e521.jpg)
_Scalability Mechanisms of Ethereum (Source: Avocado DAO)_

- **Sharding Technique**

The use of the sharding technique boosts Ethereum's bandwidth by dividing the network into partitions (shards) that can process transactions in a manner independent of one another.

- **Layer-2 Solutions**

The use of Layer-2 solutions boosts Ethereum's latency (time required for end-to-end data transmission) and throughput (speed of data transmission by using state channels and side chains to process the network's transactions in an off-chain manner.

- **Proof-of-Stake (PoS) Mechanism**

The use of the PoS mechanism boosts Ethereum's throughput by reducing the network's energy consumption, thereby allowing for higher transactions per second (TPS) limits.

With this, Ethereum is well on its way to becoming a blockchain network "_powerful enough to help all of humanity_." Backed by its powerful mission, Ethereum recorded USD139.96 million in earnings in Q1 2023, a 2,264% increase over the network’s earnings of USD5.92 million in Q4 2022.

![image2.png](https://prod-cms-assets.avocadodao.io/image2_982114b8e3.png)
_Ethereum’s Financial Statement (Source: TokenTerminal.com)_

## Powering the Ethereum Network with the Ethereum Virtual Machine (EVM)

At the heart of the Ethereum network is the Ethereum Virtual Machine (EVM), a software environment that powers the Ethereum ecosystem. In simple terms, the EVM functions as a virtual computer that executes smart contracts, which are self-executing programs that automatically enforce the rules and instructions (EVM bytecodes) of an agreement between parties. With the EVM at its core, Ethereum has become a booming ecosystem with over 4,000 decentralized applications (dApps) at the time of writing in mid-April 2023. 

The gas fees for transactions undertaken through dApps operating on the Ethereum network are payable using Ether (ETH). The high watermark for ETH was in November 2021 when the token reached an all-time high (ATH) market capitalization of USD569 billion.

![image6 (1).jpg](https://prod-cms-assets.avocadodao.io/image6_1_34e3353fd6.jpg)
_Market Capitalization of ETH from 30 July 2015 to 3 April 2023 (Source: Etherscan.io)_

Regarding trading activities on the Ethereum network, Kyber Network is leading by a mile as the top decentralized exchange (DEX), followed by Uniswap and SushiSwap. 

![image3.jpg](https://prod-cms-assets.avocadodao.io/image3_c460952ddc.jpg)
_All-Time Trading Activities of DEXs on the Ethereum Network up to 3 April 2023 (Source: Etherscan.io)_

With the key metrics of its network being on the rise over the last quarter, Ethereum is well on its way to building "_a digital future on a global scale_."

## Zero-Knowledge Proofing the Ethereum Network

Zero-Knowledge Ethereum Virtual Machine (zkEVM) is a privacy-focused protocol that runs on top of the Ethereum blockchain. Incorporating the use of zero-knowledge proof (ZKP) as part of the EVM, the main goal of zkEVM is to allow for private transactions and smart contract executions without revealing sensitive information. 

This enables EVM to operate in a manner that balances the transparency of Ethereum's network and its users' privacy. Given the potential of zkEVM, it's not surprising that there has been quite a lot of action on this front in what has been dubbed the “zkEVM Wars.”

![image4 (2).jpg](https://prod-cms-assets.avocadodao.io/image4_2_ceebfda4db.jpg)
_Participants in the zkEVM Wars (Source: Avocado DAO)_

- **25 March 2023**

Matter Labs announced the public alpha launch of its zkSync Era, an open source permissionless zkEVM mainnet. Notable platforms on the network include  DeFi wallets Argent and MetaMask, as well as decentralized exchanges 1inch and Uniswap.

- **27 March 2023**

Polygon announced the public beta launch of Polygon zkEVM. Vitalik Buterin was given the honor of initiating the first transaction on the Polygon zkEVM network. He successfully sent 0.005 ETH to a random address with the message, "_A few million constraints for man, unconstrained scalability for mankind_," in an implicit reference to Neil Armstrong's Moon landing quote, "_That's one small step for man, one giant leap for mankind._" 

- **28 March 2023**

ConsenSys announced the launch of the public testnet of its zkEVM network dubbed Linea. The network has processed more than 350,000 transactions since the launch of its private testnet in December 2022. As the company behind MetaMask, ConsenSys would be integrating the highly popular self-custodial wallet with Linea along with its developer toolkit, Truffle. 

Given the immense potential of zkEVM in supporting the future development of the Ethereum network, this could be just the start of the zkEVM Wars.

## Conclusion

If Web3 is to fulfill its potential as the next iteration of the Internet, a solution must be found for the scalability trilemma of blockchain. At the forefront of this search is Ethereum, whose EVM, once scaled up using ZKP, may be taking the digital age of decentralization to Web3 and beyond.

With Ethereum's scalability opening up the door to Web3 for the masses, learn about how Ethereum is using Soulbound tokens (SBTs) and zero-knowledge decentralized identitifers (ZkDIDs) to help users of the network secure their digital identities in our next course, "[**Securing the Web3 Digital Identities of Ethereum Users with ZkDIDs**](https://www.avocadodao.io/learn/ethereum-l-and-e-course-3-securing-the-web3-digital-identities-of-ethereum-users-with-zk-dids/)."



Bringing to Life The Ether of Ethereum with The Shanghai Upgrade (2) (1) (1).jpg

Ethereum L&E Course #2: Scaling Up the Ethereum Virtual Machine (EVM) with ZKP

As the very first cryptocurrency, Bitcoin led the way for the approximately 23,000 altcoins that we have as at the time of writing in mid-April 2023. One of these altcoins is Ethereum. Over the past few years, Ethereum has been gradually reducing Bitcoin's market dominance.

![image4.png](https://prod-cms-assets.avocadodao.io/image4_dab08e6f4a.png)
_Bitcoin and Ethereum Market Dominance Chart (Source: BTCTools.io)_

## Bitcoin vs. Ethereum: The Crypto Evolution Battle

In contrast with Bitcoin whose main functions are as a payment and investment instrument. Ethereum has the extra feature of programmability. This is why Bitcoin is dubbed as digital gold, whereas Ethereum is referred to as digital silver, albeit one which functions as the electricity of the crypto universe. A case in point is the host of Ethereum Virtual Machine (EVM)-compatible blockchains as below.

![image1 (3).jpg](https://prod-cms-assets.avocadodao.io/image1_3_f9c796bf94.jpg)
_EVM-Compatible Blockchains (Source: Avocado DAO)_

The sheer utility of EVM is the hallmark of Ethereum's success story. As for Bitcoin, its high watermark is its recognition as store of value and legal tender in the Central African Republic and El Salvador, and its acceptance as a means of payment by more than 15,000 businesses worldwide.

## Ethereum Network’s Achilles Heels

Notwithstanding its strengths, the Ethereum network has a few Achilles heels, notably its high energy consumption, gas fees, and low transaction speed. The effects of these cons on users of the Ethereum network are as below.

![image3.jpg](https://prod-cms-assets.avocadodao.io/image3_ba9fef4de4.jpg)
_Ethereum Network’s Achilles Heels (Source: Avocado DAO)_

- **High Energy Consumption**

Reduces the network's environmental friendliness, resulting in more distinct carbon footprints for users.

- **High Gas Fees**

Lowers the network’s cost efficiency, resulting in high transaction costs for users.

- **Low Transaction Speed**

Increases the network’s processing time, resulting in longer waits for confirmation of transactions for users.

Cumulatively, these Achilles heels of the Ethereum network elevate the network’s barriers to entry and reduce its overall quality of user experience (UX). Fret not, however, as the visionary Vitalik Buterin has incorporated in Ethereum's roadmap various categories of upgrades, primarily of which is The Merge, to address the network's pain points.

## The Merge: The Birth of Ethereum 2.0

Ethereum’s network shift to Proof-of-Stake (PoS) through the Merge paved the way for the use of Layer-2 scaling solutions such as zk-rollups. In simple terms, zk-rollups record batches of multiple transactions as a single transaction off-chain before verifying them using zero-knowledge proof (ZKP). 

ZKP balances transparency with privacy by enabling the verification of the data validity of a batch of transactions without revealing the data of the individual transactions themselves. The benefits from The Merge and the use of zk-rollups for users of the Ethereum network are as below.

- **Lower Carbon Footprints**

The shift to the less energy-intensive PoS consensus mechanism reduces the energy consumption of the Ethereum network by ~99.95%. For users, this would mean much less distinct carbon footprints.

- **Lower Transaction Costs**

The bundling of multiple transactions into a single transaction that is processed in one go elevates cost efficiency by reducing gas fees by up to 200x on the Ethereum network. For users, this would mean lower transaction costs.

- **Shorter Waiting Time**

The processing of bundled transactions off-chain boosts the latency (time required for end-to-end data transmission) and throughput (speed of data transmission) of the Ethereum network. For users, this would mean higher transactional speeds and shorter waiting times for confirmation of transactions.

Having shifted to the PoS consensus mechanism post-The Merge, the Ethereum network is fully secured by staked Ether (ETH). The available staking options for ETH holders are as below.

![image2.jpg](https://prod-cms-assets.avocadodao.io/image2_1b19b39c36.jpg)
_Staking Options for ETH Holders (Source: Avocado DAO)_

- **Solo Staking**

The minimum deposit requirement for solo staking is 32 ETH. Solo stakers must maintain Internet-connected hardware that runs both an Ethereum execution client (which are like workers who perform specific tasks and actions) and consensus client (which are like managers who ensure that the workers follow the rules). Other than the loss of staked ETH, the risks of solo staking include the imposition of penalties if a solo staker’s hardware goes offline.

- **Staking-as-a-Service (SaaS)**

Similar to solo staking, the minimum deposit requirement for SaaS staking is 32 ETH. SaaS stakers are required to generate their keys before storing them safely. In addition to the risks of solo staking, SaaS staking has an additional risk element in the form of counter-party service provider risks.

- **Pooled Staking**

Pooled staking is the most accessible ETH staking option, with some projects merely requiring 0.1 ETH. The risks of pooled staking vary depending on the particular method used. 

The protocol rules of the Ethereum network are such that ETH stakers are not allowed to withdraw their staked ETH and ETH rewards. Come 12 April 2023, these rules are set to change after the Shanghai upgrade, allowing ETH stakers to unlock their staked ETH and withdraw their ETH rewards through the options below.

- **Partial Withdrawal**

Through this option, ETH stakers can withdraw their accumulated ETH rewards. The withdrawal can be undertaken with immediate effect.

- **Full Withdrawal**

Through this option, ETH stakers can withdraw both their staked deposit and accumulated ETH rewards. The withdrawal takes time because the validator needs to transmit a message to the Ethereum network to add itself to the exit queue.

The Shanghai upgrade would pave the way for the next major upgrade, Proto-Danksharding that would open the door for the Ethereum network to reach processing speeds of >100,000 transactions per second (TPS).

## Conclusion
While Bitcoin continues to be the main barometer of the crypto market, Ethereum with its Ether is giving Bitcoin a run for its money as the top cryptocurrency. If Ethereum is to take over the crypto mantle from Bitcoin, it would have to first fulfil its mission to solve blockchain's scalability trilemma. 

Learn more about how Ethereum is taking on the scalability trilemma without compromising on the privacy of Web3 users in our next course,  "[**Scaling Up the Ethereum Virtual Machine (EVM) with ZKP**](https://www.avocadodao.io/learn/ethereum-l-and-e-course-2-scaling-up-the-ethereum-virtual-machine-evm-with-zkp/)."




Bringing to Life The Ether of Ethereum with The Shanghai Upgrade (1).jpg

Ethereum L&E Course #1: Bringing to Life the Ether of Ethereum with the Shanghai Upgrade

## (1) Introduction

2022 has been a year of learning for humanity in general and the crypto community in particular. The persisting onslaught of the Covid-19 panndemic and Russia-Ukraine crisis continue to generate economic headwinds which threaten to slow down global growth or even reverse some of the progress made in the past few years. Based on a survey conducted by the World Economic Forum (WEF) in September 2022, most economists are of the opinion that the incessantly rising levels of global inflation is set to unleash a cost of living crisis for both high and low income countries alike.

![image6.png](https://prod-cms-assets.avocadodao.io/image6_8fa64b68f5.png)
_Global Cost of Living Crisis (Source: weforum.org)_

## (2) Brace Yourselves for Global Recession in 2023
The World Bank in its policy note titled “Is a Global Recession Imminent?” issued in September 2022 relied on insights from previous global recessions to put into perspective the current economic climate. In its study, the World Bank analyzed the recent trends in the global economy and presented plausible scenarios for 2022 to 2024 with the three key main findings of the World Bank being as follows:

- With the International Monetary Fund (IMF) projecting that global economic growth would be slowing down by 2.8% Year-on-Year (YoY) to 3.2% in 2022 from the 6% of 2021, the World Bank is raising the red flag that _“every global recession since 1970 was preceded by a significant weakening of global growth in the previous year.”_

![image4.png](https://prod-cms-assets.avocadodao.io/image4_9ec3376119.png)
_Global Gross Domestic Product (GDP) Growth Projections (Source: imf.org)_

- There has been a seemingly unprecedented synchronous raising of interest rates by central banks around the world with the exception of those in Central and East Asia. Whilst this is a necessary evil to tame the rising levels of global inflation, the World Bank cautioned that _“their mutually compounding effects could have larger impacts than envisioned—both in tightening financial conditions and in steepening the global growth slowdown.”_

![image9.png](https://prod-cms-assets.avocadodao.io/image9_6cf6941e48.png)
_Interest Rate Changes Heatmap (Source: statista.com)
_
- In the event the fiscal policies tightening measures of central banks fail to reduce inflation rates to the prescribed targets, the projected inverse relationship between inflation and global growth in 2023 means that there is a high likelihood of recession next year. As the World Bank warned, _“experience from previous global recessions suggests that this could cause significant financial stress and increase the likelihood of a global recession next year.”_

![image2.png](https://prod-cms-assets.avocadodao.io/image2_e8be5a41af.png)
_Projected Global Growth and Inflation Rates in 2023 (Source: openknowledge.worldbank.org)_

## (3) Weather the Impending Global Recession and Cost of Living Crisis with GameFi
Fair to say, things are looking rather bleak for the global economy but fret not as GameFi is here to provide a glimmer of hope. With the cost of living crisis that is set to befall both high and low income countries, the expanding community of play-to-earn (P2E) gamers could harness the financial elements of GameFi to get through the cost of living crisis particularly in view of the impending global recession.

![image5.png](https://prod-cms-assets.avocadodao.io/image5_887ecfe77c.png)
_GameFi UAWs Statistics from 2018 to 2022 (Source: cointelegraph.com)_

Regardless of whether the global economy enters into a state of recession in 2023, the prevalent economic headwinds from the double whammy of the Covid-19 pandemic and the Russia-Ukraine crisis are set to throw Asia’s economy into a tailspin. With regard to the Covid-19 pandemic, the IMF expects Asia’s emerging markets and developing economies (EMDEs) which include countries such as China, India, Indonesia, Malaysia, Thailand, the Philippines and Vietnam to suffer the most in terms of the aftereffects of the pandemic. Based on the IMF’s estimations, the collective GDP of Asia’s EMDEs is set to contract by about 9 percentage points in the medium term commencing from October 2022.

![image7.png](https://prod-cms-assets.avocadodao.io/image7_61dce2c5f8.png)
_Medium Term Projections for Asia vis-a-vis Global Economies (Source: imf.org/en/blogs)_

Nonetheless, the digital savior that is the Metaverse is set to save the day for Asian economies. Global financial audit firm, Deloitte in its report titled “The Metaverse in Asia Strategies for Accelerating Economic Impact” has projected that Metaverse-related industries are set to contribute between USD800 to USD1,400 billion to Asian economies by 2035, accounting for roughly 1.3 – 2.4% of the continent’s overall GDP. In this manner, the Metaverse would be giving Asian economies a massive shot in the arm to help them mitigate the prolonged aftereffects of the impending global recession.

![image3.png](https://prod-cms-assets.avocadodao.io/image3_9910451d33.png)
_Projections of the Metaverse’s GDP Contribution to Asia’s Economy (Source: deloitte.com)_

As one of the key onboarding points to the Metaverse, the GameFi market would be playing a crucial role in supporting the realization of the full potential of Metaverse in Asia. The coming to the fore of the Metaverse in Asia could be the continent’s trillion dollar ticket out of the ravages of the impending global recession. With the Southeast Asia (SEA)'s digital boom having paved the way for its skyrocketing Internet connectivity and electronic devices ownership rate, this region is set to be GameFi hub in the Asian Metaverse. 

Better still, GameFi would be giving the lower income groups from low and middle income countries (LMICs) in Asia particular those from SEA some respite from the sky-high global inflation rate that is projected to be at a staggering 8.8% in 2022 which is an 87% YoY increase from the rate of 4.7% recorded in 2021. This is because P2E gamers from LMICs such as Bangladesh, India, Indonesia, Malaysia and the Philippines now have the option of using their GameFi token earnings to settle their utility bills through XLD Finance’s xSpend platform. This would help ease the cost of living burden of GameFi players from these countries particularly those from lower income groups.

![image1.png](https://prod-cms-assets.avocadodao.io/image1_5b4693605b.png)
_Supported Merchants on xSpend (Source:xld.medium)_

## (4) Conclusion
Taken together, the projections of the World Bank, IMF and WEF paint a rather despondent picture of the global economic outlook for 2023. Nonetheless, it is not all doom and gloom as GameFi through its role as a key onboarding point to the Metaverse as well as the availability of the option for utility payment for selected LMICs in Asia is paving the way for the deployment of gamification as a solution to mitigate the effects of the global cost of living crisis. This functional role of gamification could be of critical importance in view of the fact that this crisis could be made all the worse if the much dreaded global economic recession befalls us in the year ahead.



Gamification (1) (1).jpg

## (1) Introduction

2022 has been a year of learning for humanity in general and the crypto community in particular. The persisting onslaught of the Covid-19 panndemic and Russia-Ukraine crisis continue to generate economic headwinds which threaten to slow down global growth or even reverse some of the progress made in the past few years. Based on a survey conducted by the World Economic Forum (WEF) in September 2022, most economists are of the opinion that the incessantly rising levels of global inflation is set to unleash a cost of living crisis for both high and low income countries alike. 

![image6.png](https://prod-cms-assets.avocadodao.io/image6_8fa64b68f5.png)
_Global Cost of Living Crisis (Source: weforum.org)_


Gamification as a solution to boost Asia’s economy

A level playing field is a key part of any game, more so a Web3 game in which every participant should be treated as equals. In this context, the co-founder of Ethereum, Vitalik Buterin, has developed the concept of a decentralized society (DeSoc). In simple terms, DeSoc refers to the devolution of control through the distribution of decision-making powers across a network of individuals or entities. This stands in contrast with Web2's framework under which control is concentrated in the hands of a few centralized entities, such as governments or corporations. 

With the advent of blockchain, the concept of DeSoc is now a plausible reality as the technology facilitates the recording of transactions in a transparent and immutable manner. These records are then shared through distribution with network participants. However, before a member of a DeSoc can have a voice, they would first need to have an identity, which brings us to Soulbound tokens (SBTs).

## Building a DeSoc in Web3 with SBTs

As our lives become increasingly premised in the digital sphere, our digital identities are set to play an increasingly important role. As the brains behind the concept of DeSoc, Vitalik Buterin has devised the idea of SBTs as digital assets uniquely associated with a particular user or character within a virtual world or blockchain-based ecosystem. 

In his paper titled “Decentralized Society: Finding Web3’s Soul” (“the Paper”), Vitalik Buterin used the term "Soul" to highlight the unique and personalized nature of SBTs, which renders them to be neither exchangeable, tradable nor transferable. These features of SBTs boost the authenticity levels of digital identities, facilitating the verification of these identities. As for utility, SBTs can be used across wide cross-sections of Web3 horizontals as below.

![image1.jpg](https://prod-cms-assets.avocadodao.io/image1_dcd68d995c.jpg)
Web3 Horizontals of SBT Uses (Source: Avocado DAO)

- **Education Finance (EduFi)**

SBTs can facilitate the verification of the identity, qualifications, or achievements of Web3 users through verifiable credentials.

- **Gamification (GameFi)**

SBTs can bind in-game items to the characters of Web3 gamers through the linkage between the digital identities of these gamers with their wallets in which the items are stored. 

- **Social Finance (SocialFi)**

SBTs can transform Web3 user-generated content (UGC) into blockchain-based collectibles or digital art by facilitating the verification of the original creators of these collectibles and art pieces to ascertain their ownership rights.

The functions of SBTs in boosting the authenticity and utility of digital identities help pave the way for establishing a DeSoc in Web3. The use of zero-knowledge decentralized identifiers (zkDIDs) would add the extra functional element of privacy to SBTs without compromising on transparency.

## Privacy-Proofing the Web3 Digital identities of Ethereum Users with ZkDIDs
As the name suggests, ZkDIDs combine the concepts of zero-knowledge proof (ZKP) and decentralized identifiers (DIDs). In simple terms, ZKP is a cryptographic technique that allows the proving that a statement is true without revealing the actual information which makes the statement true. As for DIDs, they are unique identifiers that can be used to verify information, such as public keys or other credentials, to authenticate digital identities without relying on any central intermediary. From a conceptual perspective, DIDs are based on the idea of self-sovereign identity (SSI), which is a digital identity model where individuals have complete ownership and control over their personal information including the use and sharing of these information with third parties. 

Through the combined use of ZKP and DID, zkDIDs allow web users to have full control over the creating and managing of their digital identities by dispensing with the need for any central intermediary. In this manner, zkDIDs allow for the quadruple elements of user privacy and control as well as data transparency and security. Some notable use cases of zkDIDs on the Ethereum network are as below.

![image2.jpg](https://prod-cms-assets.avocadodao.io/image2_5dee6bc648.jpg)
ZkDIDs Use Cases on Ethereum (Source: Avocado DAO)

- **Polygon ID**

Polygon IDs combine verifiable credentials with DIDs to allow users to interact with smart contracts without disclosing their personal information. As for developers, the EVM compatibility of Polygon IDs allows for their interoperability with decentralized applications (dApps) on the Ethereum network for identity verification without sacrificing user privacy.

- **Sismo ZK Badges**

Sisom's ZK Badges allow users to selectively share the verifiable credentials in their Data Vault with applications or services on the Ethereum network. In this manner, holders of ZK Badges can choose to only share the parcel of information required to access a specific application or service without disclosing their entire Web3 data history. 

- **ZkPass' zkSBT**

ZkPass' zkSBTs are privacy-preserving tokens that operate using zkPass' composable identity protocol. The protocol leverages ZKP and multi-party computation (MPC) to introduce the element of programmable privacy into social relationships in Web3. MPC is a cryptographic technique that allows multiple parties to securely collaborate and compute a result without revealing their private inputs to each other.

The zkDID use cases on the Ethereum network would enable the approximately 10 million users of the network to enjoy Web3 services without sacrificing their privacy.

## Conclusion

Through the concept of SBTs and the use of ZkDIDs, members of the DeSoc community can harness decentralization to protect their privacy. With this, Ethereum is leading by example by showing the way forward for the use of blockchain in realizing the user autonomy ideals of Web3. 

With the digital identities of Web3 users being secured, Ethereum can proceed to unlock the full potential of Web3 which we would learning more about in our next course, "[**Ethereum as the Quantum Factor in the Web3 Equation**](https://www.avocadodao.io/learn/ethereum-l-and-e-course-4-ethereum-as-the-quantum-factor-in-the-web3-equation/)."
