Since its inception in the 1990s, “the metaverse” has gotten a lot of attention, especially during the pandemic (because of increased online usage) and even more recently after Facebook changed its name to Meta.

There are a lot of questions about the metaverse, so we figured we’d explain how we think about it and how it relates to web3. Is this just a bunch of opaque marketing speak? What is a metaverse, exactly? What exactly is a metaverse, and how can you distinguish it from another virtual world?

The metaverse is, in many ways, just another name for the internet’s evolution: to become more social, immersive, and economically sophisticated than it is now. In general, there are two opposing perspectives on how to accomplish this: One is decentralized, open and interoperable, and owned by the communities who build and maintain it. The alternative image, which many people today are all too familiar with, is centralized, closed, and prone to corporate whims. It frequently extracts harsh economic rents from its creators, donors, and residents.

The major distinction between these two perspectives is open vs. closed, with the following contrasts:

Individuals can govern their own identities in an open metaverse, which also enforces property rights, aligns incentives, and ensures that users benefit (not platforms). Transparency, permissionlessness, interoperability, and composability are other qualities of an open metaverse (others can freely construct within and across metaverses).

The presence of seven fundamental characteristics is required to create a “real” metaverse – one that is open rather than closed. We believe they must comply with the metaverse’s minimum standards. Our goal is to dispel the fog of misinformation about what is and isn’t a true metaverse and to provide a framework for evaluating early metaverse attempts for builders and would-be players.

1. Decentralization.

Decentralization, the overarching, governing concept of a healthy metaverse, is dependent on or derives from many of the following aspects. Decentralization is defined as not being owned or operated by a single entity or being subject to the whims of a few powerful individuals. Centralized platforms are friendly and cooperative at first to attract users and developers, but as growth slows, they become competitive, extractive, and zero-sum in their interactions. These powerful intermediaries are regularly involved in violations of user rights and de-platforming and hosting captive economies with high take-rates. On the other hand, decentralized systems have equal ownership among stakeholders, less censorship, and greater diversity.

It’s critical to decentralize. Without it, anyone can be “rugged” at any time, providing a danger that deters people from building on top and stifles innovation. Because centralized platforms are unable to make the same types of firm commitments that blockchains do, their pledges can be revoked or amended whenever an agreement no longer makes sense due to the whims of leaders or organizations. The decentralized control is the most effective method for safeguarding a metaverse against such abuses.

2. Property rights

Nowadays, the most popular video games make money by selling in-game items like “skins,” “emotes,” and other digital items. People who buy in-game items now rent them rather than purchase them. If the game in question decides to shut down or change the rules unilaterally, players lose access as soon as someone leaves for another game.

People are so used to borrowing from web2’s centralized services that the idea of genuinely owning things — digital assets that can be sold, transferred, or taken elsewhere — might seem weird. However, the same logic should apply in the digital world as it does in the physical world: when you buy something, you own it. You’ve got it. These rights should be enforced in the same way that courts do in the actual world. True digital property rights were not possible before the emergence of encryption, blockchain technology, and related advances like NFTs. Metaverses, simply put, turn digital serfs into proprietors.

Check out this recent discussion on Virtual Economies with Dr. Rob Cripps! Relevant to:
1. Metaverse
2. Game Design
3. General Macro, Law and Econ, Property Rights and Contract Law in Particular https://t.co/20sEttp2ma#economics #economy #metaverse #EconTwitter #metaverse

— John Vandivier (@JohnVandivier) May 17, 2022

3. Individual autonomy

Identity and property rights are intricately interwoven. You can’t own anything if you don’t own yourself. Just as in the real world, people’s identities must be able to persist across the metaverse without relying primarily on a small number of centralized identity suppliers.

Authentication establishes a person’s identification, such as who they are, what they have access to, and what information they provide. This requires asking an intermediary to do so on one’s behalf on the web today using popular one-click login solutions like social login or single sign-on (SSO). To build their companies, today’s leading tech platforms, such as Meta and Google, collect data in this way: they analyze people’s activity to develop models that give more relevant advertising. Furthermore, because these platforms have complete control over the authentication process, any attempt to innovate on the process is dependent on the platform’s owner’s honesty and motivation.

The cryptography at the heart of web3 allows people to authenticate without relying on these intermediaries, allowing them to govern their identity directly or with the support of services they choose. Wallets can be used to authenticate identities (such as Metamask and Phantom). Projects can work around open source protocols like EIP-4361 (Sign-in with Ethereum) and ENS (Ethereum Name Service) and contribute independently to a deeper, more secure, and ever-changing concept of digital identity.

4. Flexibility

Composability refers to mixing and matching software components in the same way that Lego bricks can be mixed and matched. Each software component only needs to be written once before being reused. It’s analogous to compounding interest in finance or Moore’s law in computing, two of the most powerful known economic forces, because of the exponential potential it may harness.

In order to promote composability, which is closely related to interoperability, a metaverse would need high-quality, open technical standards as a foundation. You can construct digital goods and new experiences using the system’s fundamental components in games like Minecraft and Roblox, but transporting them outside of that setting or changing their inner workings is more difficult. Companies that offer embeddable services, such as Stripe for payments and Twilio for communications, work across websites and apps, but they don’t allow other developers to change or remix their code.

Our @DavidBaszucki had a chance to talk about how we build our technology—and our team—to bring the metaverse to millions of daily users, creators, and brands. https://t.co/PUhTHLTeLD

— Roblox (@Roblox) May 10, 2022

Composability and interoperability are acceptable across a large spectrum of the software stack in their purest form. Decentralized finance, or DeFi, is an example of this resilient form. Anyone can adapt, recycle, change, or import code that already exists. Not only that, but engineers may work on live programs like Compound’s lending protocols or Uniswap’s automated market-making exchanges at their leisure, side by side in the memory of a shared virtual computer (Ethereum). By combining powerful new components like property rights, identification, and ownership, builders may create entirely new experiences.

5. Open source/transparency

True composability is unattainable without open source. The technique of making code publicly available and allowing it to be shared and updated at will is known as open source. Despite the fact that open source as a concept overlaps with composability, it is so fundamental to the construction of a metaverse that we’ve separated it out as its own distinct ingredient.

So, what exactly does open source mean in terms of metaverse development? The best programmers and producers, not the platforms, deserve unlimited control to be truly innovative. Developers may be able to completely achieve their goals and desires to create more sophisticated, trustworthy experiences once codebases, algorithms, marketplaces, and protocols are accessible to the public. Open source and openness make this possible.

Openness contributes to better safe software, more transparent economic arrangements for all parties involved, and the closure of information gaps. These features can aid in the development of more egalitarian and fair systems that align network participants. They may even make obsolete US securities laws obsolete, which were developed decades ago to address the long-standing principal-agent dilemma and commercial knowledge asymmetry.

🚀Announcing strategic partnership with @wodoio🚀

Wodo is an open-source platform offering a wide range of solutions and APIs to adopt blockchain, NFT and metaverse capabilities in the gaming ecosystem.

Stay tuned!🌟 pic.twitter.com/HMPrhQzZkw

— Gotbit Capital Global (@gotbit_io) May 12, 2022

6. Community involvement

If a single entity owns or controls this virtual world, it will provide limited escapism but never reach its full potential, similar to Disney World. People should not be forced to follow the orders of a group of digital product managers. All stakeholders in a metaverse should have a say in system governance proportional to their participation.

Community ownership is the missing ingredient that brings together network players — builders, creators, investors, and consumers — to collaborate and achieve a common goal. This marvel of coordination, which was previously unmanageable or impossible without the arrival of crypto and blockchains, is orchestrated by the ownership of tokens, the native assets of networks.

Beyond the technological advantages of decentralization, the metaverse’s success depends on the philosophical implications of a community-controlled environment. Web3 members in decentralized autonomous organizations, or DAOs, have hearted this idea. They’re moving away from the formal rigidity of corporate institutions and toward more flexible, diversified democratic, and informal governance experiments. Communities can now be governed, constructed, and propelled forward by their users rather than being controlled, built, and propelled forward by a single body.

7. Total involvement in social situations

Big tech corporations would have you believe that powerful virtual reality or augmented reality (VR/AR) hardware is an essential — if not essential — component of a metaverse. Because those devices are Trojan horses, this is the case. Corporations see them as a way to become the primary providers of 3D virtual world computing interfaces, and hence the choke points that connect people’s metaverse experiences.

A metaverse is not required in VR/AR. Social immersion is required for a metaverse to exist in the fullest sense. Metaverses enable activities that are more important than hardware. People will be able to interact, cooperate, mingle, and have fun from afar, similar to how they can now with Discord, Twitter Spaces, and Clubhouse.

The epidemic underlined the need for more immersive experiences — beyond typical text-based communication channels like email — as the use of various remote conferencing and telepresence services, such as Zoom and others, grew. Furthermore, because of the economic elements outlined previously – property rights, self-sovereignty, and community ownership – metaverses can enable people to earn a living, engage in commerce, and acquire status. In a regular knowledge worker’s employment, people collaborate using platforms like Slack, but in the bottom-up organizational movement of DAOs, Discord and Telegram reign supreme.

The metaverse has nothing to do with the instruments you use to examine it, known as “view” modalities. That’s a useful meme for people in charge of hardware creation.
While some companies have begun building various metaverse features, we do not feel that a virtual environment that lacks any of the above components qualifies as a fully developed metaverse. As illustrated by this architecture, we feel that a metaverse cannot exist without the key underpinnings of web3 technology.

The entire system is built on the principles of openness and decentralization. Property rights, which must withstand the influence of powerful opponents, rely on decentralization to thrive. Because of collective ownership, the system cannot be managed unilaterally. The policy also encourages open standards, which facilitate decentralization and composability, which comes after interoperability.

Also, read – A beginner’s guide to Decentralized Finance- Exclusive Insights

It will take time for a perfect multi-dimensional virtual world to emerge. Many difficulties must be addressed in order to avoid a dystopian version of Ready Player One’s IOI-mediated Oasis. This outcome will be less likely if builders adhere to these assumptions. (If you’re a problem-solver or builder like this, get in touch with us!)

The metaverse, when it arrives, should fully represent these ideas, with decentralization at its heart.