Web3++: The Metaverse

What is all the fuss about this thing called the Metaverse. It must be something big if it made Facebook decide to change their name and branding to “Meta” making explicit the company’s new target in the near future. Rivers of ink have been flowing in the past few weeks in the mainstream media with descriptions of what the Metaverse is, its potential impact, and what it could mean for the Internet. Unfortunately, if you have exclusively read this mainstream publications it may seem to you that the Metaverse is something that will simply add an additional dimension to traditional social media to enable richer interactions with your friends; something that will take Fortnite to the next level by offering an immersive experience; or a new way to watch movies and buy online. But the truth is that the Metaverse is all of this at the same time. To me, the Metaverse is a new front-end to the Internet.

“The Metaverse is this promised technology that would revolutionize not just the infrastructure layer of the digital world, but also much of the physical one, as well as all the services and platforms atop them, how they work, and what they sell.” — Mathewball.vc

What Is the Metaverse?

When posed with this question myself, I sometimes have a really hard time explaining what the Metaverse is. One of the reasons for this is that the full vision for the Metaverse remains hard to define, seemingly fantastical, and decades away. However, the pieces have started to feel very real ranging from VR to decentralized identities and DAOs. Something I would like for you to take out of this publication is that the metaverse is not just what Facebook is presumably trying to build, i.e. a 3D walled-garden you can enter to talk and play with your friends, but an open universe of digital worlds collaboratively created and offering you a great gamut of experiences.

Some of the key traits of the Metaverse everyone agrees on are:

• It will be persistent. The Metaverse will never be “reseted”, “paused”, or “ended”, it just continues indefinitely, as is the case for the Internet (or even blockchain networks ;) ). This is one of the reasons why it is not just an “immersive Fortnite”. Websites in the Internet are dynamic, and they may have changed the next time you visit them. The same will happen with the different worlds in the Metaverse, they are dynamic, as they may change and evolve in your absence.
• It will be synchronous and live. Pre-scheduled and self-contained events will happen in the Metaverse just as they do in “real life”, but the core will be a real-time common experience between users in the same part of the Metaverse.
• It won’t be limited in the number of concurrent users that can “exist” at the same time in the Metaverse, while giving each of them an individual sense of “presence”. This will open a set of potentially interesting technical challenges. How can we build an infrastructure whose quality of service is not impacted by the number of users? Or a more philosophical one, how would we model space, time or the laws of physics in this new universe?
• It will be a fully functioning economy on top of the real economy. Individuals and businesses will be able to create, own, invest, sell, and be rewarded for “work” done and “value” produced in the Metaverse and recognized by others. We may even get to the extent where you are “paid to play” in the Metaverse (if this is something other individuals value). And we can’t talk about a digital economy without mentioning the blockchain, cryptocurrencies and DAOs. I will leave this for the next few sections, but web3 technologies will happen to be core for the realization of the Metaverse.
• Is being “inside the Metaverse” and “outside the Metaverse” two excluding experiences? Probably not. Due to the current state of the technology you may be thinking of the Metaverse as this universe in VR, but the Metaverse will span both the physical and digital world through AR (Augmented Reality). Certain worlds of the Metaverse may be tied to physical locations and be only accessible when you are physically located somewhere. These are the kind of experiences any one will be able to build over the Metaverse. So the Metaverse is a platform where creators will be able to build (and own) these digital experiences, the same way the Internet became the platform for the distribution of 2D content. Have you ever dreamed of a world where everyone could fly? Well, this may be closer that you think.
• It will offer unprecedented interoperability: Digital assets are currently scattered in silos over the Internet. Even our data is siloed in the information systems of all the companies we interact with. Your favorite song may only be living in Spotify, while the collectible you unlocked in League of Legends is not there for you to use in Fortnite. Today, the digital world basically in the current Internet acts as if it were a mall where every store used its own currency. The Metaverse will aggregate all of these worlds and experiences under the same set of protocols, the same way IP gave the basic protocol layer for the interoperability of heterogeneous connected devices. The Metaverse is not just “a virtual space” or “virtual reality” as the ones we currently experience with the Oculus Rift. It is not a “game”, a “virtual theme park”, or a new “app store”. When you read the mainstream media you may feel like this is the Metaverse, but the truth is that we better look at the Matrix than read the media to get a real sense of how the Metaverse could look like. It will be a platform where anyone will be able to build their own worlds and experiences (even ones that defies the laws of physics) the same way the Internet has become this platform where anyone can build their own web applications to improve human capabilities.
• It will be decentralized. Anyone will be able to access it and interact with it independent of their location, Internet provider, or device they are running.
• Finally, it will be populated by “content” and “experiences” created and operated by an incredible range of contributors (from individuals to big organizations). And this is the key reason why what Facebook is building is probably not a Metaverse. Does anyone own the Web? Not really. Anyone is free to publish their own service or app. The same will happen with the Metaverse. Anyone will be free to create their own world, experience, content, or sub-economy. And here is where DAOs may have a key role to orchestrate the ownerships and interactions between members of the same world or community. As you create your own world in the Metaverse, you’ll be able to deploy its own DAO to orchestrate the economy of the world, and govern its evolution. No need for any centralized governance entity to ensure the long-term operation of the world, the DAO will implement the rules for members o the community to govern the world.

If you want a simpler way to think about the Metaverse, you can imagine it as the Nightmare Before Christmas — you can walk into any experience or activity, and potentially address almost any of your needs, from a single starting point or world that’s also populated by everyone else you know. This is why hypertext is such a key example. But what’s important is to recognize the Metaverse isn’t a game, a piece of hardware, or an online experience. This is like saying is World of Warcraft, the iPhone, or Google is the Internet. They are digital worlds, devices, services, websites, etc. The Internet is a wide set of protocols, technology, tubes and languages, plus access devices and content and communication experiences atop them. Metaverse will be too. — https://www.matthewball.vc

The role of the Web3

In the above description you’ve come across some of the buzz words the web3 thrives on such as “decentralized”, “digital economy”, “decentralized autonomous organizations” or “interoperability”. Another of the questions I started asking myself (and others) when thinking about the Metaverse was “what is the role of the Web3 in the Metaverse”. As before, mainstream media didn’t have compelling answers, but fortunately, the right people were able to give me some light on the matter.

Building an infrastructure able to support the promises of the Metaverse can be technically challenging. Fortunately, some of the modules being built for the web3 can really lighten the challenge towards an open Metaverse:

• A decentralized identity. The metaverse is a continuum that never stops, and any individual is free to access. If we want this universe to be interoperable we can’t afford having to have a different identity according to the world you enter (as is currently the case for the Internet). Your identity may have different traits dependent on the world, but your core identity shouldn’t change. Even more, for digital assets to be interoperable throughout the whole Metaverse, they should be tight for your own identity, which means that this should be unique. There are already several proposals for a decentralized identity in the blockchain world, and there is even a standard being promoted by the DIF (Decentralized Identity Foundation) that is defining the “OSI model” with the stack of protocols required for a decentralized identity.
• Decentralized storage: For the Metaverse to be interoperable, open, and have no downtimes or be affected by the load in the system, it needs to rely on decentralized infrastructure. All the content, the worlds, and the digital assets from the Metaverse need to be hosted somewhere, and I don’t think AWS S3 buckets will be the chosen place for this. Decentralized storage platforms like Filecoin or IPFS will definitely thrive once the Metaverse starts to become a reality, as the needs for storage close to the device will be deemed a requirement.
• Cryptocurrencies and NFTs as the core for the Metaverse’s digital economy. At this point, we can’t think of a digital economy without cryptocurrencies and NFTs. These digital assets have already attracted an impressive amount of capital and paved the way for new financial markets with DeFi and NFTs. Imagine what they could achieve once they become the economy of a new digital universe.
• In the end, DAOs are a set of smart contracts to help orchestrate the decisions of individuals in the community. Thus, whenever a community formed in the Metaverse needs to handle property over a set of digital assets, the interaction of voting and governance, or the distribution of reward to members contributing to the world, they’ll be able to deploy a DAO to orchestrate these. Funding a state in the metaverse and rewarding the actions of individuals in this world through a DAO should be something straightforward in the Metaverse.

And there’s a common denominator in all the web3 modules mentioned above, a blockchain network orchestrating all of these interactions. Every monetary transaction of the Metaverse, every ownership exchange, or even the minting of a new digital asset will potentially be operated and recorded in a blockchain. The same will happen with identity related actions. Unfortunately, in their current state blockchains aren’t well-suited to support the Metaverse: they lack the performance (a thousand transactions per seconds doesn’t seem enough for the Metaverse); the economy of scale is not there yet to plummet transaction costs to an affordable level (only the rich would be able to afford the Metaverse if it was currently built over Ethereum); and we lack the interoperability (we shouldn’t expect a single blockchain network powering the Metaverse but many of them).

This is why all of the advancements being made by projects in the blockchain space are not only important for the blockchain market, but it may also unlock impactful use cases at the Metaverse. Projects like Metis exploring a L2 to minimize gas costs leveraging the trust of Ethereum could be a good entrypoint for the integration of the Metaverse with blockchain. Or the advancements around sharding and interoperability, enabling different worlds, assets and identities to be hosted in different blockchain networks but enabling a smooth interaction between them.

Improvements like the one I mentioned in this post to avoid the fragmentation of digital assets in different blockchain networks will end up being a utmost requirement in a blockchain network supporting the Metaverse.

Metaverses, DAOs and DACs

In many of my publications, I’ve introduced the concept of Decentralized Autonomous Organizations (DAOs), and Decentralized Autonomous Corporations (DACs). They are both a key module in the future of Web 3.0. The Metaverse is as much a technical revolution as a social revolution, and DAOs, being the operating system of communities, will be key for the Metaverse. DAOs offer a technical layer to provide global and decentralized collaboration between individuals without having to trust third-parties or a small number of representatives (as is the case nowadays, see organization structures or representative democracies).

DAOs are a set of smart contracts to help orchestrate the decisions of individuals in the community. Thus, whenever a community formed in the Metaverse needs to handle property over a set of digital assets, or even the interaction of voting and governance. Funding a state in the metaverse and rewarding the actions of individuals in this world through a DAO should be something straightforward.

Unfortunately, DAOs may not be a perfect fit for the Metaverse, and may lack some important features to support the digital economy of a community in the Metaverse. This is why projects like Metis are exploring the evolution of DAOs, DACs. What are the improvements of DACs over DAOs and how do they fit the Metaverse? Apart from plain voting and the orchestration for governance, DACs are more scalable enabling horizontal scalability as the organization grows; DACs will be able to grow or be subdivided as the organization changes. DACs also have ways to implement access permissions and roles to different participants, enabling for richer interactions and use cases. They also include capabilities to implement HR, payrolls, corporate management, etc. in a decentralized manner, i.e. everything you need to start your own decentralized corporation. But what does this mean in the Metaverse?

• Roles and reputation: In “traditional” DAOs, every member has the same role, there is no way of setting special permissions or “powers” over different participants. DACs support this, allowing implement something like a DAC for a business in the Metaverse, where according to your position in the business, you have a different role, and thus you can influence in a different way how the business (and thus the DAC works). This links with another nice feature from DACs, an embedded reputation system that allows other DAC members to evaluate other members’ contributions within the ecosystem..
• Scalability: As mentioned above, organizations in the Metaverse should expect millions of transactions a day, and the system shouldn’t be affected by the number of parallel users, which means that interactions in the Metaverse and the DACs deployed in it should be able to scale seamlessly.
• Finally, no one knows how HR, payroll, or corporate governance will work for digital organizations in a digital universe where users can come and go, and you can’t trust a single “corporate governance entity” always available and connected to the system. DACs payroll, HR, and management will offer the capabilities to start designing what HR, payroll, and organizations look like in the Metaverse.

What are the use cases?

At first, it was really hard for me to think about use cases of the Metaverse aside from games and virtual spaces. Then a good colleague of mine told me “think of the Metaverse as adding an additional dimension to the Web”. Since then, when I want to think about the potential impact and use cases of the Metaverse, I try to add an additional dimension to the current use cases in the Web. Try imagining how online shopping would look if you could do it in 3D and have an immersive experience. Or imagine how cool it would be if all over the Metaverse there were Quidditch fields for anyone to use. You could meet with your friends to play Quidditch the same way you do every Saturday in the basketball court next to your house. Even more, as you need a good pair of shoes to play basketball every weekend, you’ll need a brand new Nimbus 2000 broom for your Saturday Quidditch games. A broom that you’ll need to pay for, and which can be an actual NFT (only for you to own).

But the Metaverse is not only for fun. Think of the possibilities it opens for work. What happens if you add a third dimension to Google Drive, or Zoom? No more “I wish I had a whiteboard to show you what I mean”. You and your colleagues could be in the same space sharing a whiteboard and brainstorming as if you were in the same room.

If I had to summarize the Metaverse in a sentence it would be: “the front-end to a 3D-version of the Web”. Will we reach this? We’ll see, what it is clear is that many of the web3 modules required to build the promise of the Metaverse are here to stay.