Building the Metaverse in a Few Easy Steps

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Here’s another perspective on framing the metaverse, this time with respect to its intersection with Web3.

Web3 venture capital firm a16z has issued what it sees as the seven essential ingredients of the evolving internet.

Its goal is to “clear the fog of misinformation” about what is and isn’t a true metaverse for builders, and to provide a framework for evaluating early metaverse attempts.

1. Decentralization

This is the overarching, governing principle of a proper metaverse, and many of the traits that follow depend on or result from this main concept.

By decentralization, a16z mean not owned or operated by a single entity or at the mercy of a few powerbrokers.

“Centralized platforms tend to start friendly and cooperative to attract users and developers, but once growth slows they become competitive, extractive, and zero-sum in their relationships.

“Decentralization matters, they say. Because centralized platforms cannot make the same kinds of strong commitments — controlled by code — that blockchains can, their promises can be revoked or altered whenever an arrangement no longer makes sense to the whims of leaders or organizations.

“The strongest way to protect against abuses and secure a metaverse is to ensure that control is decentralized.”

2. Property Rights

Most successful video games today make money by selling in-game items, like “skins,” “emotes,” and other digital goods. But people who currently buy in-game items aren’t actually buying items — they’re renting them. As soon as anyone leaves for a different game — or the game in question unilaterally decides to shut down or switch up the rules — players lose access.

That changes in the Web3 version of the metaverse.

“The digital world ought to obey the same logic as the physical world: when you buy something, you own it. Just as courts of law uphold these rights in the physical world, so should code enforce it online.”

 It just so happens that true digital property rights weren’t possible before the advent of cryptography, blockchain technology, and related innovations such as NFTs.

“Put simply, metaverses turn digital serfs into homesteaders.

 3. Self-Sovereign Identity

Identity is closely related to property rights. You can’t own anything if you don’t own yourself. As in the real world, people’s identities must be able to persist throughout the metaverse without complete reliance on a small set of centralized identity providers – like Meta and Google.

a16z explain that the cryptography at the core of Web3 enables people to authenticate without relying on these intermediaries. Wallets provide ways for people to verify themselves. Standards (like EIP-4361 Sign-in with Ethereum and ENS (Ethereum Name Service) allow projects to coordinate around open-source protocols. All of this they say, contribute to a richer, more secure, and continually evolving concept of digital identity.

4. Composability

This is a “systems design principle” — specifically, the ability to mix and match software components like Lego bricks. Every software component only needs to be written once, and can thereafter simply be reused. The concept is closely intertwined with interoperability and the desire for open technical standards as a foundation.

In their strongest form, composability and interoperability are possible “permissionessly” across wide ranges of the software stack. Decentralized finance, or DeFi, exemplifies this.

“Anyone can adapt, recycle, change, or import existing code. By composing together powerful new ingredients like property rights, identity, and ownership, builders can create completely new experiences.

 5. Openness/Open Source

True composability is impossible in the absence of open source, which is the practice of making code freely available and able to be redistributed and modified at will.

In a metaverse development context open-source means that codebases, algorithms, marketplaces, and protocols are “transparent public goods.”

In a16z’s vision, “builders can pursue the fullness of their visions and ambitions to build more sophisticated, trustable experiences. Openness leads to more secure software, makes the economic terms more knowable to all parties, and eliminates information asymmetries. The power of composability in Web3 is largely due to its open-source ethos.”

6. Community Ownership

This is the idea of democratic rights for all ‘stakeholders’ in the metaverse, “proportionally to their involvement in the governance of the system”.

“If any one entity owns or controls this virtual world, then much like Disney World, it may offer a certain form of contained escapism but will never live up to its true potential.

a16z goes onto categorize such “community ownership” as the aspect of the metaverse that aligns builders, creators, investors, and users “to cooperate and strive for a common good. This miracle of coordination —not possible without the advent of crypto and blockchains — is orchestrated through the ownership of tokens, the native assets of networks.”

Participants in decentralized autonomous organizations, (DAOs) have taken already this principle to heart.

7. Social Immersion

Here’s where a16z hits hard. Big tech companies, they argue, would have you believe that VR/AR hardware is an essential ingredient in a metaverse. “This is because those devices are a trojan horse,” they counter. “Corporations see them as a way to becoming the dominant computing interface suppliers for 3D virtual worlds, and thereby also becoming the choke points that intermediate people’s metaverse experiences.”

But the metaverse does not have to exist in VR/AR. All that’s necessary for a metaverse to exist is social immersion in the broad sense. What’s more important than hardware is the type of activities metaverses enable. They will let people remotely hang out, work together, mingle with friends, and have fun, much like they do using Discord, Twitter Spaces, or Clubhouse today.

“The metaverse has nothing to do with ‘view’ modalities — the tools you use to see the metaverse. That’s a convenient meme for those who have control over manufacturing hardware.”

Decentralization at the Core

While a number of companies have begun building out different pieces of the whole, if a virtual world is lacking in any of the above seven parts, it doesn’t count as a fully formed metaverse, in a16z’s view.

It believes that a metaverse cannot exist without the fundamental foundations of Web3 tech.

“Openness and decentralization are the pillars upon which the whole edifice rests. Property rights rely on decentralization — they must endure despite the influence of powerful adversaries. Community ownership prevents unilateral control of the system. The approach also bolsters open standards, which are helpful for decentralizing and composability, a closely related property downstream of interoperability.”

The VC underlines its marker in the sand: “When the metaverse arrives, it should embody a full expression of these principles — with decentralization at the core.”