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This article was contributed by Justin Sun, Granada’s Permanent Representative to the WTO and founder of TRON.
The race of Metavers is on, with runners and riders including tech giants like Meta, Microsoft and Epic, to blockchain old-schoolers like Decentland and Somnium Space.
The only problem is that it looks suspiciously like a repetition of the “format wars” we’ve seen playing over and over again. Just watch the current video streaming fiasco. We now need to subscribe to ten different streaming services to see the show we really want to see. It’s the same old cycle we’ve seen in Central Tech decades before, from VHS vs. Betamax in the 1980s to Facebook vs. MySpace a decade ago. Now, Microsoft and Meta are categorizing their bids to dominate the virtual space.
A dystopian vision?
Tech stock investors may look away now, but these efforts are doomed to failure. Matani’s bid to compete with Microsoft by entering the enterprise workspace metavars has already come down badly. Meanwhile, Mark Zuckerberg’s vision of centralized Facebook-style social metavars is referred to as “dystopian” by one of the generation’s early proponents.
Meanwhile, Microsoft itself has a zig-zag approach to realizing its Metavers ambitions. After renaming Meta last year, Microsoft quickly jumped on the bandwagon with the announcement that Teams would be developed as the workspace metavars of choice, taking advantage of the large base of its enterprise users.
Within weeks, the firm also announced that it had made its largest-ever acquisition in the takeover of gaming firm Activision Blizzard, with CEO Satya Nadella telling the FT in an interview that he believes Metavors has a future. Gaming
So under this central vision, we will have AR-enabled PowerPoint presentations during the day and 3D social networks aimed at harvesting even more data at night. It’s hardly surprising that people aren’t getting excited.
When big tech companies come out to realize their vision We The Decentralized Metawors and Web 3 initiative is currently attracting record investments, raising about $ 30 billion in venture capital last year. What can these investors see that Meta and Microsoft are missing? The potential of Web3 as the future digital infrastructure cannot be overlooked when imagining metavers.
The power of DAO
Ideal Metawars should not only break down technical barriers by providing an unparalleled user experience, but this is an opportunity to transform the big tech business model that we all know and dislike. Instead of operating services designed to get monetary value from users, Web3 Innovators builds platforms aimed at empowering people. Really autonomous creations where there are users, if not owners in the traditional sense of the word, then beneficiaries.
Building blocks by decentralized autonomous organizations or DAOs are the only way to think of ideal metavars. The world is just waking up to the transformative power of DAOs, which have made headlines for their efforts to buy a copy of the US Constitution, crowdfunding legal fees for Julian Assange and efforts to reduce barriers to entry into real estate. In the decentralized finance movement, DAOs are now the norm rather than the exception, and now that they are beginning to enter 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 users, the DAO model offers invincible value. We all know that in the traditional social media model, we – or rather our data – are the product that generates value. Every update or “correction” just tries to get more revenue from our data. However, users do not see any of this value – instead, it returns to shareholders.
Social networks based on DAO support this model to return value to generators. The platform is owned by the users, and assuming they operate using the same ad-based revenue model, the user will receive a share of this revenue as a reward for their engagement.
Unparalleled network effects
The network effects of such a model would be unparalleled as the incentives are aligned. Users – let’s go crazy and call them people right now – will want their friends and family to join in so they too can participate in the rewards and make the network a better place to hang out. The more people join, the more developers want to create third-party applications and services so they can tap into this growing community of active, engaged people who are happy to be there, and the positive cycle continues.
What’s more, thanks to the built-in blockchain infrastructure, people own the assets and benefits they get on any given platform. In the Web2 model, we have nothing so we just stay connected to the platforms and services so that we can take advantage of the work put into it over the years. Shutting down a social media account means losing followers, shutting down a streaming service means losing access to playlists and streaming content, shutting down an online marketplace listing destroys a carefully crafted customer directory.
In the web 3 world, we have our assets, so we can take it with us on different platforms without fear of penalty. It also has the potential to make assets more valuable than the Web2 world has. For example, Spotify has put the world’s music library in our pockets, but the cost of doing so has reduced the value of the music track by a fraction of a percent.
But if a piece of music is connected to NFT that can be owned and played 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 practical model
Coming back to the tension between central meteors and decentralization, it is unclear how the two coexist. Following Twitter’s lead, Meta is rumored to be rolling out NFT support for Facebook and Instagram and also launching its own NFT marketplace.
It is difficult to imagine who wants to mint NFTs operating in closed ecosystems, but it is more difficult to imagine launching any of the Meta or other large tech firms, NFTs that allow interoperability with established blockchain infrastructure.
So big technology has a choice. Accept the open, decentralized nature of the future in Metavers or continue to operate a closed ecosystem designed to gain value only at the expense of their most valuable assets. Because once people begin to realize that Web3 gives them the right to own their data, the number of followers, their customers, all the value they accrue online and take it with them, 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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