Science fiction like Ready Player One describes ‘the Metaverse’ both as a destination and dystopic process of capture and control.
In RP One: IOI, a single corporation, wants to own and control the OASIS’ servers and databases, enabling them to: delete people, access any information, change the rules of the world, and print themselves infinite currency
The parallels in the first virtual worlds we experience in gaming today and ‘The Web’ more generally are striking: centralised, closed, proprietary, and extractive, with shareholder supremacy elevated over user centricity. A state where giving away your time and data in return for ‘free’ access to platforms has somehow become normalised.
As we invest more time, data, and wealth into digital platforms ($10bn and 4bn hours per month in virtual worlds and gaming environments since 2020 COVID lockdown) it is critical to interrogate their design principles, business models, and terms of service so we as responsible online citizens can decide if we wish to continue to opt-in or divest into alternatives.
By now you’ve heard the term ‘the Metaverse’ thrown around a lot. I know I’ve been interviewed pretty much back-to-back in the media about it ever since the Facebook Meta rebrand. At my investment firm, we’ve been developing a thesis for the Metaverse over several years, publishing a paper called The Open Metaverse OS back in January 2021, pre-empting the hype-cycle that is now unfolding.
Because 12 months is a long time in an exponential technology class we wanted to share a primer and summary of our paper to update and reflect on what we got right, what we’ve learnt since and what might come next. So here it is…
Inspired by Bitcoin back in 2014, I founded Outlier Ventures, what was then Europe’s first venture capital firm dedicated to blockchain, something we began to understand as a new web paradigm, colloquially called Web 3. A paradigm based on the sovereignty of the user, their data, and digital wealth. For us, very early on, it was clear blockchain could not be looked at in isolation because it represented more than just a single technology but a new open economic system that would enable, and be convergent with, other technology trends. It would fundamentally change the business model of The Web and bleed into almost every industry, well beyond narrow pure financial use cases. More recently, through the innovation of NFTs (Non-Fungible Tokens), blockchains allow for new types of unique digital assets that go well beyond crypto-currencies extending into gaming, virtual worlds, and the wider Creator Economy, what you might now refer to as the Metaverse.
Today, through our virtual accelerator, we have invested in 100+ startups, a number we will at least double in the next 12 months and have helped them raise over $250million in seed capital in the last seven months alone. And by now, we have helped launch several billion-dollar crypto networks into the world. This activity, by any measure, makes us one of the most active investment firms (by volume) in our industry, and we believe is quickly cementing us as ‘the Y Combinator of the Metaverse’, a reference to the accelerator that came to dominate two decades of the Web 2 era.
The powerful thing about our accelerator and this volume of investments is it gives us access to a growing brain trust of startups at the very bleeding edge of the Metaverse. And by virtue, we have had over 3,500+ pre-seed / seed startups apply to our accelerator in the last year, giving us a unique perspective on the market. Typically with a 6-12 month window of advantage on seeing what’s next before it hits a wider venture, which is usually probably one to two years before there may be listed crypto assets, and ten years for publicly tradable stock… if that’s even a thing anymore. It’s not rocket science; it’s just the straight-up size of the data set we enjoy, basic pattern recognition, and a refined intuition for the narratives that are forming.
That’s how we spotted crypto nearly eight years ago, NFTs twenty months ago, and now the Metaverse some twelve months ago before it’s going mainstream. Based on these kinds of insights, I’m going to break down how to understand the Metaverse as an investment opportunity. What’s bullshit, and where alpha can be found for what I believe will very quickly simultaneously become the greatest global wealth distribution and wealth creation event humanity has ever known. At least 10 x what China has been for global GDP over the last two decades.
But the first piece of good news I have for you: you are still early!
CEO / Founder of Outlier Ventures
If you are a startup working on any of the ideas discussed in this paper we would love to hear from you to see how we can integrate you into the Open Metaverse OS.
Please apply here.
Now firstly, I know many are sceptical of seemingly new buzzwords, and especially ones as ethereal as the Metaverse. But I want to stress that narratives are powerful at mobilising capital and economic activity, and the Metaverse has shown it can cut through and stand the test of time.
Before we get into technical analysis of what the Metaverse is, I think it’s important to say it is first and foremost a contact language for Tech, Finance & Culture to converge and collaborate around a shared vision for the future. Both the future we do and don’t want.
Like the film Ready Player One, science fiction has described ‘the Metaverse’ both as a destination and a dystopic process of capture and control. In Ready Player One, IOI, a single corporation, wanted to own and control the OASIS’ servers and databases, where they could: delete people, access any information, change the rules of the world, and print themselves infinite currency.
The parallels in the first virtual worlds we experience in gaming today and The Web more generally are striking: centralised, closed, proprietary and extractive, with shareholder supremacy (that is structurally prioritised and rewarded) over user-centricity. A place where giving away your time and data in return for ‘free’ access to platforms has become normalised.
This post summarizes the key themes we laid out in a more technical Open Metaverse OS paper, which can be downloaded (for free) from our website, and serves as both an antidote, framework, and thesis for how we can achieve a more open alternative. But it is also a reflection on its success at predicting the world we now find emerging, at an exponential rate, just several months on.
Defining the Metaverse
Technically, the original vision and definition of the Metaverse was a point in time when a user interface made up of both hardware and software blurs the distinction between the physical and digital. This has typically been thought of in the context of advances in AR (Augmented Reality) and VR (Virtual Reality), together known as Mixed Reality, becoming ubiquitous.
However, we believe it’s important we think of it not as a destination, but as a journey or process. This is because it’s important to acknowledge the beginnings of the Metaverse are already here; we are just experiencing it largely in 2D. This is also critical to understand because if we think of the Metaverse as a far off destination, we will almost definitely sleepwalk into not addressing some fundamental design choices about the principles of how we want it to operate, and potentially replicate or deepen what is broken about the Web today.
When you think that with wonderfully immersive devices like the Oculus VR headset Facebook can now track your retinal response to visual stimuli (literally going inside your body to capture biometric data, emotions and feelings you aren’t even aware of) or is actively mapping the floorplan of your home, and the objects in it, given their track record with a pervasive and proven abusive form of what has been called Surveillance Capitalism one can’t help but be sceptical and concerned we are potentially extending a dystopia real-time. This makes it all the more imperative we properly interrogate any Metaverse propositions privacy paradigm, especially Big Tech like Facebook’s, something I wrote about recently.
As I will outline, the process of the Metaverse is multi-dimensional and has already begun through the creation of new virtual worlds, both in the context of gaming with MMORPG (Massively Multiplayer Online Role-Playing Games), and other social venues and experiences. Each exists on a spectrum with often several conflicting characteristics; where the production of content is both by studios and independent creators, value transfer is bi-directional (from digital to physical and physical to digital), and where it is both transformed entirely or just represented to be passively and/or actively consumed. Much of this process is bottom-up and driven by market forces and the general direction of technical innovation. However, we also believe it will increasingly begin to interplay and be informed by top-down government policy around data rights, privacy, antitrust and, most importantly, financial legislation, all of which of course vary wildly around the globe.
Hillary hates crypto
— ric.eth 🦇🔊⚖️ (@ricburton) November 21, 2021
Furthermore, people today still make a distinction between the physical and digital economy, even though in reality a company like Amazon is a hybrid of the two. On the one hand, direct-to-consumer has dematerialized much of the retail supply chain, but it’s still both a virtual mall and network of physical fulfilment centres moving around physical goods, as well as a business with a growing number of virtual goods and services like ebooks, music, and video streaming, all of which are consumed entirely on its proprietary devices and platform. So is a company like Amazon or Facebook part of the Metaverse? Let’s take a look..
It seems one of the defining characteristics of a metaverse in sci-fi was that somehow it was an economic system independent of, and enjoyed supremacy to, old fiat-based economies controlled by nation-states. This is not true for a platform like Amazon, primarily a US-based company, that uses the local fiat currencies for customers and staff and is increasingly entwined with the US state and its various agencies, but still ultimately at the mercy of central banks and various government policies. And if we look at Facebook’s efforts to launch its own digital currency with Libra (which presumably just like its Universal Login would have extended into its VR platform, Oculus), but because it is a highly centralised and fiat-based company, it has been aggressively constrained and in effect neutered as a genuine disruptive and sovereign cryptocurrency.
Now it could be considered partially true that some games platforms like Roblox or Fortnite are so big they are closed micro-economies, with their own currencies which they control centrally and value systems, like experience points systems, in-game items (skins) and marketplaces, where significant amounts of the wealth are held and traded. This is even more substantial when you think of that as a proportion of a person’s wealth, especially when seen in younger generations. But the reality is only a few games even let you transact in and out of their closed platform using fiat in order to interact with the ‘real’ world because of limitations imposed by governments around fears of money laundering. But even more importantly, wealth is not directly transferable between these microeconomics into a virtual meta economy, or metaverse, with its own sovereign currencies. And you can’t generally borrow against virtual wealth, what you might call MetaFi, to buy physical assets, putting a growing class of digital natives at an economic disadvantage, where 63% of gamers said they would actually spend more on skins if they had ‘real world value’.
Earlier in the year, it was reported users spend 5 times more money in blockchain games than traditional ones, but the sample size was reported as too small and not comparable to the wider gaming industry. However, the recent breakout success of a blockchain-based game Axie Infinity has now proven beyond reasonable doubt what many suspected; that players will spend more money in-game when that value is freely transferable off-platform and value earnt or bought is easily convertible into cryptocurrencies like Bitcoin or Ethereum. A process their co-founder Jiho describes as; ‘what happens when you give users digital property rights’.
It’s what’s helped Axies achieve a record $1.2 billion USD in sales, growing exponentially from just over 108,000 daily active users in June to more than a million daily active users today—now reporting sales of nearly $780 million in the last 30 days alone and more than 1.4 million individual transactions. To give you context, this outperforms every game in every category from AAA to free-to-play globally. And in the process, popularises a new category of gaming, ‘play to earn’.
As you will learn throughout this article this is why I propose perhaps the defining characteristic of a true Metaverse is that it is in fact, rather than necessarily a particular kind of virtual experience, a meta-economy with currencies native to it; where value can be earnt, spent, lent, borrowed, or invested interchangeably in both a physical or virtual sense permissionlessly, importantly without the need for a government or platform.
Now of course it is also true there are competing visions for the Metaverse, a tension which seemed to be present even in Mark Zuckerberg’s own recent musings on what Facebook as a Metaverse company looks like. And it is not yet clear if they can and will co-exist or must be in competition. But to put it simply, there are at least two versions of the Metaverse we observe emerging: one dominated by closed platforms and Big Tech like Facebook / Oculus and the other built on open protocols leveraging blockchains, such as the decentralised virtual land Decentraland and Sandbox.
The distinction of open and closed isn’t just limited to technology choices and the extent to which platforms embrace open source principles with their code and data, but importantly whether they have a closed economy, within or across their own proprietary games, or whether they allow transferability of value outside their ecosystem, how that interacts with fiat-based systems, and to what extent they do or don’t control the monetary and fiscal policy of the underlying economy itself.
It is interesting to see Tim Sweeny himself, CEO of Epic Games and the Unreal gaming engine, which currently enjoys a market duopoly, has chosen to raise a billion dollars to both support the Open Metaverse alternative through grants and investments into startups, including several startups that have been through our accelerator, but also to transition his company and properties into its direction. However, since Steem said they would block NFT enabled games Epic have come out and given more nuance to their approach saying they would explore a more permissioned / curated version of NFTs, presumably akin to an App Store, something echoed by Zuckerberg in his Meta interviews.
Furthermore, there is also another technical and philosophical distinction between visions and emergent actualities of the Metaverse which could be described as “low-fi to hi-fi.” There are platforms that deliberately push the technical boundaries of the experience through both software and the expensive hardware requirements like Oculus and those that design for the lowest possible device and bandwidth requirements for universal accessibility like blockchain-based Cryptovoxels, which is more akin to blockchain based Minecraft. This is critical when you think about these as an economic system and their requirement to not just be immersive but inclusive. However, it must be said, to our knowledge, all of these virtual worlds still require at least a smartphone, which currently excludes 60% of the global population.
As you can see above you can take these as a form of axes that allow for a crude classification of metaverse platforms and virtual worlds that emerge. We believe these two axes are the most important to consider because, when combined, they represent the cost to enter the economic system and the ability to offset that cost by earning value for as broad a range of demographics as possible.
It could be said there is a third classification about whether the platform allows for user-generated content or not, but we think this difference will fade away with time. Most platforms, to varying degrees, will allow for UGC like Roblox or Minecraft and will fall under the degree to which the virtual world is generally ‘open.’ Hence, UGC is not important as a separate dimension when looking to project into the future of the Metaverse. However, the degree of 3rd party developer freedom (whether a professional or user), especially the ability to integrate into crypto and NFTs, will become an important distinction as well as how the economics are split and the degree of data that can be collected from apps to be monetised for the purpose of advertising. As we have seen with Apple’s recent App Tracking Transparency (ATT) features it has become a battle line between platforms and developers costing Facebook’s mobile app business billions in lost advertising revenue making them more intent on controlling the stack down to the hardware level.
It is our belief, and thesis, that with time an open metaverse built on shared open-source protocols, open infrastructure, and a single unifying yet open financial system will erode, or ‘eat,’ and potentially replace closed platforms due to powerful network effects. Today, for many, it’s almost impossible to see how a ragtag of decentralised protocols that make up the Open Metaverse could ever compete with Facebook. But I circle back to my earlier point; whilst they have shown they can build great VR hardware and addictive digital experience, the failure of Facebook’s Libra has shown no private company, no matter their scale, will ever be allowed to create a meta-economy independent of fiat and nation-states.
Meanwhile, Bitcoin has shown how some simple code and elegant game theory can be seeded onto The Web and mobilise, bottom-up, trillions of dollars of capital and physical distributed infrastructure all around the world to create an unstoppable economic system.This tells us, whilst you may be good at creating immersive experiences, it very likely makes good business sense to bite the bullet, connect your digital platforms and worlds to crypto and subordinate them to the decentralised and open meta-economy. And perhaps, if, like Oculus, Fortnite, or Roblox, you currently don’t, are you even part of the Metaverse at all? The painful reality is no matter what you tell your shareholders through metaverse drenched press releases, you are in reality just an isolated game, platform, or virtual world that users will see decreasing reasons to invest their time and money in.
Web 3, a stack for an Open Metaverse
So why are we so convinced of this eventuality? Well over the last decade, since the inception of Bitcoin, and the maturation of blockchains like Ethereum, we have seen an open and permissionless Web 3 stack emerge where ‘the user is the platform.’
It is a paradigm ultimately based on blockchains and their atomic units of account becoming the global digital settlement layer and means that value is ‘minted’ (created), stored, or transferred across other technologies as a form of wealth. But digital wealth can be programmable and represent an increasingly complex range of assets from in-game items and virtual land to loan agreements or futures contracts. In aggregate, this represents an entirely new financial system of currencies, exchanges, borrowing and lending, often referred to as DeFi (Decentralised Finance).
Whilst today relatively small, at just over $2 trillion in combined market capitalisation, you can think of this confluence of convergent technologies as both a new financial system and open operating system for a more open metaverse, an Open Metaverse OS, that sits between the hardware, application software, and the user. Due to its open-source characteristics, anything that is born on-chain (on a blockchain) is transferable and its metadata visible. And therefore the DNA of the virtual worlds that get built on top of it, fully or even just partly, is passed on or inherited. In an evolutionary sense, by using the Open Metaverse OS, the virtual world is pregnant with Web 3. And in aggregate everything that flows through this crypto enabled financial system could in aggregate be considered Metaverse GDP (Gross Domestic Product), or at least Open Metaverse GDP.
The Open Metaverse OS
So how ready is The Open Metaverse OS, for prime time? Well, on the one hand, the Web 3 ecosystem is thriving with several nascent technologies that can enable many aspects of an Open Metaverse, and is being deployed in virtual worlds and experiences as we speak, albeit in an incremental fashion. But on the other, it’s still significantly behind on several measures such as performance and cost when compared to Web 2, which has had decades to mature and where the benefits of economies of scale have been achieved by platform monopolies, which allow some like Amazon to be multi-billion dollar ‘loss making’ companies that ruthlessly undercut any and all competition.
Equally, Web 3 technology has instead been optimised primarily for high degrees of decentralisation and transaction security rather than, and sometimes at the expense of, enabling smooth, real-time interactions and its applications for more 2D web based experiences on desktops and mobiles. As a consequence, user experience in Web 3 has to date been relatively poor and required a high degree of technical literacy due to both the radically different security model of self custody and the nascency of the industry. With frictionless user experience of Web 3 technologies within gaming engines even further away. But this is changing as the world of Web 3 and crypto increasingly converges with new environments like gaming and VR, and there is a generational shift away from Web 2 platforms.
Therefore, the Open Metaverse OS is best understood as an evolving collection of highly composable technologies that will increasingly, but pragmatically, be used to make aspects of an Open Metaverse possible as it seeks to serve a greater global population across several use cases and environments. As it stands, The Open Metaverse OS is concentrated on the critical lower layers of the stack, including what should be non-negotiable features such as user-sovereign identity and assets, in world economics and bridges into and out of its economy, and between each themselves leaving the intricacies of gaming engines, 3D modelling toolchains, and rendering stacks to the primarily centralized world. However, over time we expect the Open Metaverse OS to eat further downwards to decentralise those aspects as well.
In summary, the Open Metaverse is emerging, first slowly and then at neck-breaking speeds given their “exponential nature.”
MetaFi and Its Exponential Assets
At the beginning part of the year, when we first wrote our paper, it was fair to say The Open Metaverse, when compared to The Closed Metaverse, was one full of empty worlds. The number of daily active users across all platforms was sub-one hundred thousand and to be frank completely irrelevant when compared to even Fortnite alone, which at the time enjoyed over 350 million monthly users and had generated $5 billion in revenue in 2020, accelerated by a year of COVID. But we rightly believed this to be deceiving. Rather than their models having any kind of long-term superiority, it was simply a decade of a head start and at that time a lack of alternatives. And whose closed nature only served as a temporary form of moat, that frustrates users and creators alike.
As we have already discussed just several months on, due to the exponential nature of the Open Metaverse, Axie Infinity has now likely already overtaken Fortnite in annualised profits. This fact is truly incredible when you think of the time and cost to develop and launch an AAA game is on average between $60-80 million, can take 2-3 years, requiring a team of 150-250 people. This meant in the past, creating content was extremely expensive, and led to a highly concentrated industry difficult for new players to enter and challenge the status quo. And yet somehow Axies, totally outside the gaming system, and in just two years, with just $9 million in funding, overtook them all.
Now Roblox, is often lauded as somehow a more open kind of metaverse and as an example of the power of letting independent creators build games based on a shared but closed technology stack and centralised, permissioned economic layer. Achieving $150 million monthly users and creators and paying out $250 million to developers in 2020. But, importantly through our lens Roblox is barely close to what you could consider a part of the Open Metaverse. For example, you can’t clone and fork the entire platform and it still serves as a closed ecosystem requiring 850 full-time staff to operate it and $530 million of venture capital to continue steady growth. Far from being the future as we will see it could be seen as the walking dead.
So how can open virtual worlds first catch up and then at least equal let alone surpass the content and rich experiences of today’s dominant yet centralised virtual world and gaming platforms? Well, firstly, there are a longtail of millions of creators (in all forms of media production) currently locked out of participating and monetising their work at all in today’s virtual worlds. And in aggregate they dwarf the industry’s staff working for closed platforms. In fact, many of them are already contractors who would prefer to be doing their own thing. So it seems evident that the creatively excluded serfs will be more than willing to migrate their time, energy and ultimately careers to experiment in our open and permissionless economic systems, especially when they can derive a greater return on their time not just in the initial creation of work but in perpetuity through secondary sales through ‘on-chain royalties’.
Now, several months on from our paper, this is no longer just conceptual. It is abundantly evidenced in the successes of a growing ecosystem of diverse NFT minting platforms and marketplaces such as SuperRare, who achieved their highest monthly sale of $31m in October 2021, set against 2020’s high of $147,000 in December. Let alone Nifty Gateway (owned by Gemini), achieving an average of 50% monthly growth since its launch in March 2020 and OpenSea’s mega $1 billion in trading volume in August of 2021 alone. It has become clear creators when given the option, will overwhelmingly join The Open Metaverse, and people will value their digital works more when they can transfer it off any one platform and trade freely in open secondary markets. And we have only just got started; if you think of the growth curves enjoyed by fungible crypto exchanges like Binance and Coinbase who have onboarded millions of new users into crypto-currency imagine what happens when every possible non-fungible digital asset can be bought and sold freely. And in fact, they have both now launched NFT product offerings and Coinbase CEO Brian Armstrong announced he believed it would quickly become their primary driver of revenue and growth.
Furthermore, saw Beeple (Mike Winkelmann), a digital artist leveraging NFTs and a friend of mine, break art auction records selling a single NFT, Everydays: The First 5000 Days, for nearly $70 million almost immediately after we published our paper, and global franchises such as the NBA Top Shot NFTs generating a high of $231 million in sales in February of 2021, and reported $700m in total sales earlier this year from digital trading cards. But perhaps even more interestingly, rather than existing IP being translated into the Open Metaverse we are beginning to see what you might regard as entirely new ‘metaverse native brands’ emerge on top of blockchains, bottom-up.
A recent example is The Bored Ape Yacht Club (BAYC), a collection of 10,000 unique 8-bit 2D avatars released by an anonymous collective. It has now become a non-fungible token franchise and economy to rival those of crypto-currencies, now at the time of writing worth over a billion dollars. With someone recently paying a total of $3.4 million at Sotheby’s Natively Digital 1.2 online auction for Bored Ape Yacht Club #8817, which, like the rest of the collection, possesses unique traits and characteristics. In early September, Sotheby’s sold 101 NFTs from BAYC for around $24m, to put this into perspective the last 7 days trading volume has hit $23m where the majority of revenue goes to its early collectors and supporters making many millionaires in the process.
What’s truly remarkable and unusual here is whilst a user owns an ape they hold the rights to exploit their individual ape’s IP commercially either permanently if they continue hold it or just momentarily leading to whole ecosystems of BAYC derivatives from 3D avatars, clothing lines, wine, and even sports merchandise, becoming a truly global transmedia brand in just four months.
But it doesn’t stop here! In the closed virtual worlds of platforms like Fortnite, because of their sheer reach, they became powerful ways for entertainers like Travis Scott to reach new audiences. However, very quickly artists, like electronic music producer and recent member of the Outlier partnership Deadmau5, have come to realise rather than momentarily playing in our people’s platforms he can retain direct and full creative and financial control of the experience through what could be considered new kinds of ‘Direct-to-Creator economies’ in his own virtual world, called Oberhasli.
Furthermore, with LiDAR technology now available to anybody with the latest iPhone, the physical world can be mass rendered, translated into machine-readable 3D models, and can in theory be converted into tradable NFTs. These NFTs will be uploaded quickly into open virtual worlds, populating them with avatars, wearables, furniture, and even whole buildings and streets. And because they are machine-readable, leveraging open source standards like Pixar’s USD, NVIDIA’s MDL, Khronos Group and NVIDIA’s Omniverse, they can be fed into AI to spit out infinite variations which again can be better monetised in global and open markets than any one closed platform.
Just as we predicted projects like Mark Cuban backed Alethea AI project are now taking advantage of innovations AI, in the form of GPT-3 from Open AI, to use deep learning to produce human-like text and speech to bring to life otherwise dumb NFT avatars into characters imbuing them with ‘interactive superpowers’. And one can imagine when it extends to other forms of media, virtual worlds and their content will be able to be automatically produced infinitely.
This all means we can expect to dramatically reduce the time and cost to produce games or whole virtual worlds and economies whilst also tapping into a global workforce of millions of creators allowing seamless and decentralised collaboration well beyond the capabilities of a single gaming studio, record label or virtual platform.
Humanity’s greatest socio-economic experiment
One of the most exciting and intellectually interesting things about an Open Metaverse, pregnant with Web 3 principles, is that you can openly (and in a permissionless way) experiment with its underlying economics. Where the same level of experimentation applies to rules of the game that underpin it both at the protocol layer and within each virtual world itself. And each experiment can be done in parallel to the other, in concert and/or direct competition.
For example, a project like Axie Infinity by design makes sure you can not derive value in the system through pure speculation only by buying and holding Axies (playing cards). To earn a yield or at the very least not see your investment decay, you must put them to use regularly in play. If you don’t want to or lack the skill to do that yourself, you must create jobs by lending your NFTs to players to put them to work. This means you can participate in the system by productive capital or through the work itself. The consequence is there are whole villages in Southeast Asian countries like the Philippines doing just that, where the income available is better than many ‘real world’ jobs if they exist at all. And you can imagine it will be the same for the great unemployed youth from the COVID economic fallout.
This activity doesn’t just replace the economy proper, it creates entirely new wealth in a purely virtual sense, but one that actually puts bread on the table and roofs over people’s heads. Whilst play-to-earn is nothing new, it is now going mainstream as ‘play as work,’ where hold to play, share or curate to earn, and play for keeps, could become the primary income for hundreds of millions of people as a form of financial emancipation rather than digital feudalism.
Conclusion: Metaverse Washing, a GDP and The Open Meta DAO
In writing this post, it has been interesting to revisit many of the themes proposed in our thesis published in just January of this year (2021) and see that they have come true much sooner than we expected. As Raoul Pal of Global Macro Adviser says, this is The Exponential Age, made up of convergent exponential technologies and now assets. In short, things move dizzyingly fast.
Since our first paper, Facebook and their recent rebrand to Meta has dominated the headlines. And now every Big Tech company is obliged to present their Metaverse strategy and credentials to capture the zeitgeist and the stock market premium it brings.
It has forced every tech and media company to have a position on NFTs. Steam, the gaming publisher, has said they won’t allow games that enable NFTs. Epic has said they will roll out NFTs but in a permissioned way and Discord faced serious backlash at an aborted roll-out of NFTs from their user base showing that it isn’t entirely obvious to all companies and users, especially in gaming, why this is anything more than a passing fad and why digital property rights in the metaverse are so important.
Many are using the Metaverse narrative to push their own agenda and either deliberately or accidentally conflating key points and principles like Facebook Meta talking about privacy, not in the context of the privacy paradigm of user data and what they do or don’t do with it but instead simply being able to block people you don’t want to interact with. And if you subscribe to our proposition that the Metaverse is first and foremost a meta-economy, we believe enabled by integrating into the open and permissionless system of crypto, Big Tech would rather focus purely on the interface layer, and shiny UX, than addressing the economic systems and their business models.
Equally, I’ve been incredibly disappointed that even supposed champions of the Open Metaverse let Zuckerberg and Facebook business practices with all its contradictions with an Open Metaverse go unchallenged on what now looks to be a rather cynical ‘friendly influencer not mainstream media’ roadshow to distract from the mounting problems at Facebook HQ.
When combined with political headwinds in US and Europe taking a combative stance to crypto, primarily around stable-coins, I fear there will be an ‘out of the box state captured’ permissioned Metaverse where Big Tech as its corporate stakeholders will be coerced to integrate into the existing broken fiat-based system and forced to adopt CBDCs (Central Bank Digital Currencies) which perpetuate the indebted, inflationary and exclusionary financial system.
This is why we are deeply committed to and vocal about the Open Metaverse its principles as a counterpoint to Big Tech’s supposed version of the Metaverse. And will follow up with two more bodies of work that build on the Open Metaverse OS Paper one being on the subject of MetaFi; how DeFi can be leveraged in the Metaverse and what kinds of collateral will emerge and secondly beginning to formally track an Open Metaverse GDP; that is GDP created in a shared and open economic system enabled by crypto.
In short, we had a good fight ahead of us. We invite you to join us in it.
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