Is it necessary for the Metaverse to reside on a blockchain?
Over the previous few years, blockchain-based solutions have seen financial, legal, gaming, and social uses, albeit on a modest scale. However, it is unclear whether the blockchain infrastructure layer will be required for the emergence of the Metaverse narrative.
The answer is dependent on how we define the Metaverse. Some definitions of the Metaverse concentrate solely on its experience aspects. The term Metaverse frequently conjures up images of wearing a virtual reality (VR) headset and immersing ourselves in a virtual world.
This is not entirely incorrect, but it is an inadequate definition of the Metaverse. The Metaverse is envisioned as a future version of the internet. That is an excellent vision, but why do we require new internet? The answer is found in another question: do we need blockchain for the Metaverse?
What is the need for a new internet?
Our existing internet connection is insufficient. Incentives are skewed in favor of a small number of stakeholders, artists are exploited, and users have little control over their data. Can the new internet version change that?
Google, Meta (formerly Facebook), Instagram, and Amazon have all helped to build and spread the internet. These programs use a variety of ways to capture and monetize users’ attention. Although many apps generate monetizable value, consumers receive a very little portion of the value generated.
Even when users who have contributed value earn relatively little money, the applications that captured the users’ attention have generated riches for themselves and their shareholders in the billions of millions. For this to change, the internet must become more inclusive.
This is not due to the applications themselves, but rather to the fact that they were developed in a capitalist ecology. The winners take all of the value and money. This is acceptable with the new internet, as long as “winning” has a broader definition.
The exploitation of content creators is another major issue with today’s internet. The internet has provided us with an abundance of content. Even high-quality content authors are rarely compensated. The platforms and intermediaries that provide these content providers with web-shelf space make the majority of the money. This needs to change; the internet needs to be more welcoming to creators.
In addition to distorted incentive processes, the contemporary internet takes user data for granted. Users of the Internet have relatively little control over their data and network. Why does a user have to rebuild their network after switching from Facebook to Twitter? This must change, and the Metaverse is the catalyst.
How would blockchain improve the internet?
The internet processes millions of data transactions per second. In comparison to the present version of the internet, the blockchain infrastructure is in its infancy. However, blockchain is more than simply an infrastructural layer; it is also an economic layer. These economic properties of blockchain can alleviate internet concerns.
Tokenomics of a metaverse (the next internet) platform allows for more inclusive incentives in a blockchain-based world. These metaverse apps can be inclusive in terms of ownership (governance token) and user incentivization (utility token).
Utility tokens are frequently held by active players in metaverse ecosystems. Participants in a gaming metaverse, for example, earn utility tokens by playing and creating games. Participants in an art metaverse earn tokens by making art and serving as art ambassadors by providing helpful reviews.
Participants in the Metaverse can earn money as platform users and creators. Participants in these ecosystems are incentivized as long as they continue to provide value. As these participants add more value to an ecosystem, they get credentials and gain power.
However, if a Web3 metaverse influencer wishes to create a profile in another environment, they should be allowed to bring their connections and network with them. Ecosystem credentials, such as “XP” (experience points), should not be carried over because they are ecosystem specific.
The core principle is that people, not platforms, own their credibility and network.
Nonfungible tokens are the Metaverse’s second key design construct (NFTs). NFTs provide value stability. When a player purchases an in-game asset in a Web2 game, the game studio has an income potential. They do not have ownership of the asset. In the blockchain world, this is changing.
NFTs allow users to not only generate, purchase, and sell Metaverse assets, but also accumulate ecosystem credentials in the form of “soul-bound tokens.” Soul-bound tokens work similarly to credit scores in financial institutions, with Metaverse users accumulating more value faster.
Blockchain’s difficulties in providing the Metaverse
The future Metaverse sounds fantastic, but is it all hype? For the Metaverse narrative to come true, significant technological, experiential, and economic model headwinds must be solved.
Scalability, interoperability, and security issues plague blockchain. Even the most robust chains with large user populations can only handle roughly 50,000 transactions per second. The internet has millions of data interactions per second in the form of emails, tweets, blogs, and so on.
This comparison is based on the assumption that data interactions in a metaverse must be on-chain. As cryptographic approaches (such as zero-knowledge Rollups) improve in addressing scalability issues, economic elements will rightfully take center stage in the development of new Metaverse-based models for the future.
Aside from scale issues, there are significant interoperability issues across blockchains. This is especially relevant to bridges that are used to transfer value from one blockchain to another.
Many cyber attacks on Web3 platforms have taken place over these bridges. Examples include the Ronin bridge attack and the Solana wormhole bridge attack. Interoperability is a significant possibility inside Web3, but it is also a vulnerability that must be handled.
These blockchain infrastructure layer issues continue to hound the ecosystem. One of the more recent difficulties is developing a long-term economic model for the Metaverse. While GameFi has been used to lure players as a growth hack, a scalable token model has yet to be established.
Many unsuccessful economic models have informed and inspired new models and economic approaches to date. However, innovators in this field are still at least a cycle away from developing a sustainable approach. The final impediment is one of user experience. To draw dedicated gamers, producers, and users into the Metaverse, VR hardware and the Web3 onboarding user experience must be more smooth.
Is blockchain prepared to embark on the Metaverse journey?
In summary, the perfect metaverse must be built on blockchain, with inclusive incentives centered on artists and consumers while yet providing immersive and flawless virtual experiences.
The Metaverse is about more than simply the experience; it’s also about the money. Financial incentives should be placed on the true value creators. Those that develop content and communicate and transact on the platform regularly are those who add value.
While the business model possibilities are exciting, and several promising glimpses have appeared, there are major technical obstacles to solve. Deficits in user experiences must also be addressed.
In the short run, a few scalable Web2 Metaverse implementations would embrace the Web2 spirit of encouraging participants. As blockchain technology advances, more hybrid models will emerge, in which Web2 aspects provide scalability and user experience while blockchain handles incentivization. A completely scaled on-chain Metaverse may seem like a pipe dream right now, but it would be the best approach to develop the internet of the future.
Co- founder at Ecosleek Tech Research and Branding at MythX. Talks about #gaming, #metaverse, #blockchain, and #softwaredevelopment
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