Why the future of the metaverse can only be decentralized

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This article was contributed by Justin Sun, Grenada’s Permanent Representative to the WTO and the founder of TRON

The race to the metaverse has begun, with runners and riders including tech giants like Meta, Microsoft, and Epic, to blockchain old-schoolers like Decentraland and Somnium Space.

The only problem is that it looks suspiciously like a replay of the “format wars” we’ve seen played over and over. Just look at the current video streaming fiasco. We now have to subscribe to ten different streaming services to watch the shows we really want to see. It’s the same old cycle we’ve seen in decades of centralized technology, from VHS versus Betamax in the 1980s to Facebook versus MySpace a decade ago. Now Microsoft and Meta are competing in their bid to dominate virtual space.

A dystopian vision?

Investors in tech stocks can look away now, but these attempts are doomed to fail. Meta’s attempt to compete with Microsoft by penetrating the corporate workspace metaverse has already landed badly. Meanwhile, Mark Zuckerberg’s vision of a centralized Facebook-style social metaverse has been called “dystopian” by one of the company’s early supporters.

Meanwhile, Microsoft itself seems to be taking a zigzag approach to realizing its metaverse ambitions. After Meta’s rebranding last year, Microsoft was quick to announce that Teams would be developed into the workspace’s favorite metaverse, leveraging its massive base of business users.

Within weeks, the company also announced it had made its largest-ever acquisition in an acquisition of gaming company Activision Blizzard, with CEO Satya Nadella telling the FT in an interview that he believes the future of the metaverse is in gaming.

So under this centralized vision, we will have AR-enabled PowerPoint presentations during the day and 3D social networks aimed at collecting even more data at night. It’s not surprising that people don’t get excited.

While major tech companies are scrambling to realize their vision of what we want, decentralized metaverses and Web3 initiatives are currently attracting record investment, raising approximately $30 billion in venture capital last year. What can these investors see that Meta and Microsoft are missing? That the potential of Web3 as the digital infrastructure of the future cannot be overlooked when conceiving a metaverse.

The Power of DAOs

Not only should the ideal metaverse break through technology barriers by providing an unparalleled user experience, but this is also an opportunity to transform the big tech business model we’ve all come to know and dislike. Instead of executing services designed to extract monetary value from users, Web3 innovators are creating platforms aimed at empowering people. Truly autonomous creations where the users are, if not the owners in the traditional sense, then the beneficiaries.

The only way to think of the ideal metaverse is through the building blocks laid by decentralized autonomous organizations, or DAOs. The world is just waking up to the transformative power of DAOs, which have made headlines for attempts to buy a copy of the US Constitution, crowdfund legal fees for Julian Assange and lower barriers to entry into real estate investment. . In the decentralized financial movement, DAOs are now the norm rather than the exception, and as they begin to penetrate the mainstream, it is only a matter of time before this model extends to other platforms and protocols.

How can we be sure of this? Because from the perspective of the users, the DAO model offers unbeatable value. We all know that in the traditional social media model, we – or rather our data – are the product that generates value. Each update or “improvement” is simply trying to get more revenue from our data. However, users don’t see any of this value – instead, it’s being passed back to shareholders.

A social network based on a DAO turns this model on its head to return value to those who generate it. Users have an ownership interest in the platform and assuming it works with the same ad-based revenue model, the user will receive a portion of this revenue as a reward for their engagement.

Unparalleled Network Effects

The network effects of such a model would be unparalleled because the incentives are aligned. Users – let’s go crazy and just call them people now – will want their friends and family to join in so they can participate in the rewards too and make the network a better place to hang out. The more people join, the more developers will want to build third-party apps and services to tap into this growing community of active, engaged people who love being there, and the positive cycle continues.

Moreover, thanks to the underlying blockchain infrastructure, people own the assets and benefits they acquire on a particular platform. In the Web2 model, we don’t own anything, so we’re ultimately tied to platforms and services, just so we can take advantage of the work we’ve put into it over the years. Closing a social media account means losing followers, closing a streaming service means losing playlists and access to streaming content, closing an online marketplace listing destroys a carefully built customer base.

In the Web3 world, we own our assets so we can carry them across platforms without fear of being punished. This also has the potential to make assets exponentially more valuable than in the Web2 world. Spotify, for example, has put the world’s music library in our pockets, but the cost of doing so has reduced the value of a music track to a fraction of a cent.

But when a piece of music is linked to an NFT that is owned and playable on any platform or device, it becomes more valuable to the listener – and the artist is the one who reaps 100% of that extra value.

Decentralization is the only viable model

Coming back to the tension between centralized and decentralized metaverses, it’s unclear how the two can co-exist. Following Twitter’s lead, Meta is said to be rolling out NFT support for Facebook and Instagram and even launching its own NFT marketplace.

It’s hard to imagine who would want to mint NFTs that only work in a closed ecosystem, but it’s even harder to imagine Meta, or any of the other major tech companies, launching NFTs that allow interoperability with the established blockchain infrastructure. .

So big tech has a choice. Embrace the open, decentralized nature of the future in the metaverse, or continue to exploit closed ecosystems designed only to extract value at the expense of their most valuable assets. Because once people start to understand that Web3 allows them to own their data, their followers, their customers, all the value they build and take online, the ‘Web 2.0’ business model is no longer attractive or sustainable.

Justin Sun is Grenada’s Permanent Representative to the WTO and the founder of TRON

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This post Why the future of the metaverse can only be decentralized

was original published at “https://venturebeat.com/2022/03/05/why-the-future-of-the-metaverse-can-only-be-decentralized/”