We recently launched phase 1 of our NFT platform and shared why we’re focusing on utility over scarcity. We believe that the true economic value of NFTs will come from creators and their fans using NFTs to drive connections, particularly if creators allow more of their fan-base to participate. But not at the expense of the environment.
We’ve gotten lots of questions on how Rally is able to claim it’s an eco-friendly alternative for minting NFTs. In the simplest of explanations, Rally utilizes a sidechain that doesn’t burn energy like other platforms that require Proof of Work calculations for every NFT.
For more context, as The Verge notes, “Proof of work acts as a sort of security system for cryptocurrencies like Ethereum and bitcoin since there’s no third party, like a bank, that oversees transactions. To keep financial records secure, the system forces people to solve complex puzzles using energy-guzzling machines. Solving the puzzles lets users, or “miners,” add a new “block” of verified transactions to a decentralized ledger called the blockchain. The miner then gets new tokens or transaction fees as a reward. The process is incredibly energy inefficient on purpose. The idea is that using up inordinate amounts of electricity — and probably paying a lot for it — makes it less profitable for someone to muck up the ledger.”
At Rally, we do not require or run an open network, meaning only a handful of computers (equivalent to a public cloud) are needed to complete our transactions. There is no solving of complex math problems or needing computers outside of these few in our network to compete for our transactions. The environmental impact to a social token or NFT minted on Rally (about .05 grams of carbon emission) is almost the same as sending a Tweet or performing any other equivalent storage and transmission transaction (estimated at about .02 grams of carbon emissions for Twitter). For comparison, a typical NFT minted through Proof of Work will generate about 2.3 kg of carbon emissions. In other words, minting an NFT using Proof of Work emits about as much carbon as a single user would generate with 115,000 tweets.
The key tradeoff is centralization. Individual creator coins and NFTs on Rally are on a sidechain and don’t rely on a distributed group of computers to process or service transactions. Creators and fans do have the ability to easily move between Rally’s sidechain and mainnet via our bridge out process, but the primary tools of engagement exist on the sidechain. While some will argue this does not reflect the fully decentralized mission of true blockchain, we believe that creators and fans are willing to make this tradeoff for an environmentally friendly, regulatorily compliant, and user-friendly experience. With Rally, fans and creators can still experience some of the most exciting benefits that crypto offers, such as digital ownership and community-driven value. Not only is this a more-eco friendly option, but it’s also a more viable economic design for creators looking to engage their fans with tokens and NFTs without incurring high gas fees and transactions costs on mainnet.
We’ve heard feedback from creators and fans that as main chains like Ethereum become more eco- and user-friendly, they want the option to bridge out of the sidechain. We’re certainly exploring this, and will work with the RLY Network Association to determine when this can happen.
To learn more about NFTs on Rally, check out our resource page.