DeFi in the Metaverse Era
A major attribute of the metaverse is that it will have a fully functioning digital economy. An economy that uses digitalized and decentralized financial services that are truly inclusive. DeFi integrates blockchain technology and smart contracts to enable users to carry out financial transactions without a third party.
On this post, we’ll cover the role of DeFi and NFTs towards building a fully functional economy on the Metaverse.
Index
What is the MetaVerse?
What is not the Metaverse?
What’s Facebook Metaverse all about?
How the Metaverse Works
Web3.0 and the Metaverse
Metaverse and Blockchain
Benefits of the Metaverse
MetaFi: DeFi for Metaverse
What is MetaFi?
How MetaFi Works
The Metaverse and NFTs
The role of NFTs in the Metaverse
NFTs and Real Estate in the Metaverse
NFTs and Gaming in the Metaverse
How NFTs Can Connect the Virtual Life and Real Life
The RSK Approach to Metaverses
What is the Metaverse?
The metaverse is a virtual environment that combines aspects of online gaming, virtual reality (VR), augmented reality (AR), social media and cryptocurrencies. However, there’s one major and significant difference. On a metaverse, users immerse themselves in a virtual space where the physical and digital world converge.
You could think about the metaverse as a 3D virtual world that allows you to game, work, socialize, etc. with other users’ avatars. Augmented reality overlays the visuals/sounds and the other sensory inputs into the real world. You can work in your virtual office where you interact with your colleagues’ avatars, attend a virtual music concert/show or get together with family and friends.
While the idea of a Metaverse was once fictional, it is already becoming a reality and the future. There are already several elements of the metaverse existing in GameFi. However, Metaverse is not only about gaming and social interaction. The Metaverse will also combine elements of digital identities, decentralized governances, economies and other applications.
What is not the Metaverse?
The Metaverse is not just virtual reality (VR) or virtual worlds like GameFi projects. Although it incorporates several elements of online gaming, like using digital avatars to represent users, it is not just a game. Neither is it a virtual theme park. The Metaverse is fundamentally different from existing contemporary design or internet/mobile paradigms.
What’s Facebook’s Metaverse all about?
The Tech giant announced its rebranding as Meta and the formation of a metaverse product team. Meta’s CEO, Mark Zuckerberg, in his founder’s letter released in October 2021, explains:
“In the metaverse, you’ll be able to do almost anything you can imagine—get together with friends and family, work, learn, play, shop, create—as well as completely new experiences that don’t really fit how we think about computers or phones today. In this future, you will be able to teleport instantly as a hologram to be at the office without a commute, at a concert with friends, or in your parent’s living room to catch up.”
The company has invested heavily in Metaverse technology. In September 2021, the company announced an investment of $50 million in the global research of developing the Metaverse responsibly. Furthermore, the company is developing hardware for the metaverse like the Oculus VR headsets, AR glasses and wristbands.
Meta is not the only big tech giant involved and trying to shape up the Metaverse. Other tech giants, including Microsoft, Apple and Amazon are also actively involved in shaping up the Metaverse.
How the Metaverse Works
The Metaverse will be a massively scaled interoperable network of real-time 3D virtual worlds (metaverses) which you can experience synchronously and continuously with a unique sense of presence. It will also provide users with data continuity like identity, payments, communications, history and objects.
The Metaverse though is not going to replace mobile internet. Instead, it will build on it and iteratively transform the internet. The Metaverse is a combination of the following technologies:
Virtual Reality and Augmented Reality
These 3D technologies are essential to engaging and immersive 3D experiences that the metaverse promises. Virtual reality creates computer-generated virtual spaces that users can access through VR headsets, sensors and gloves.
Blockchain and Cryptocurrencies
Blockchain is one of the vital technologies that is shaping up the metaverse. Blockchain technology allows for trustless, decentralized, and transparent solutions to many metaverse attributes. For example, identification and digital proof of ownership. Cryptocurrencies and NFTs will power the Metaverse economy.
Artificial Intelligence (AI)
Artificial Intelligence serves as a tool for creating avatars and responsive functionalities from non-player characters in the metaverse.
Web 3.0
Web 3.0 bridges the gap between virtual and real worlds. IoT connects devices to get a massive variety of data. This will help collect and provide data from the real world for improving the accuracy of digital representations in the Metaverse.
3D Reconstruction
3D reconstruction will be essential for Metaverse’s real estate. It will play a vital role in creating real estate for different metaverses.
Metaverse and Web 3.0
Web 3.0 and the Metaverse support each other and are dependent on each other. Web 3.0 pushes the concept of a decentralized internet that gives users control over their assets and online identities. While the Metaverse is a digital world, you can interact in 3D with other users and objects. The Metaverse requires some elements of Web 3.0, including decentralization and online identities. These features give users complete control of their interactions in the Metaverse.
Metaverse and Blockchain
Blockchain offers a decentralized, transparent and secure way of dealing with several problems the Metaverse might face. For the Metaverse to be fully functional, it needs a way to verify digital proof of ownership, accessibility, transfer of value (payment) and governance. Here is how the Blockchain solves these problems:
Digital Proof of Ownership
With Blockchain, your wallet and private keys are the only digital proof of ownership you need to verify your transactions or identity. Therefore, Blockchain offers one of the most robust and secure ways for verifying digital identities.
Accessibility
Blockchain solutions like DeFi, GameFi, and NFTs make it easy for anyone to access the Metaverse. You can carry out transactions without releasing any private information using your wallet.
Digital Collectability
Through NFTs, you can collect valuable digital objects. NFTs are 100% unique and can’t be forged or copied.
Transfer of Value
Users can easily make payments with cryptocurrency or NFTs.
Governance
DAOs (Decentralized Autonomous Organizations) give users control in the Metaverse as they offer a way to provide users with voting rights and contribute to the whole ecosystem.
Benefits of the Metaverse
Addresses Remote Work Challenges
The Metaverse will enhance the remote work experience. Employers can now create a more interactive online work experience for their employees. Virtual office space offers a more engaging remote work experience with 3D virtual reality.
Better E-Learning Space
Just like with remote work, the Metaverse offers a better online e-learning experience for both teachers and students. It is easier for the student to interact and engage during classes with a virtual classroom.
Virtual Businesses and Markets
The Metaverse creates a new marketplace for businesses to expand, helping them to improve their services and offering effectively. Businesses can interact with their customers in a virtual space. Plus, it makes it easier for customers to carry out trading formalities like product inspection and negotiation.
Expansion of Social Media Platforms
The Metaverse aims to provide a more immersive experience for users. By combining virtual reality and augmented reality, the Metaverse can create a realistic experience for social media.
MetaFi: DeFi for the Metaverse
MetaFi is a decentralized financial system that provides advanced and sophisticated DeFi services to the Metaverse and other projects like NFTs, Web 3.0 and GameFi. The idea of MetaFi is to implement a range of blockchain-powered financial systems into a single Meta ecosystem (the Metaverse).
MetaFi aims to build a new ecosystem powered by standardized metadata parameters and based around digital assets. This ecosystem will allow mass adoption of Web 3.0 and blockchain technology by providing users with new use cases.
How MetaFi Works
MetaFi mostly takes advantage of the presence of metadata for assets on blockchains. For instance, an NFT’s metadata will generally link to an associated image. The functionalities of MetaFi depend on two layers of the metaverse:
- Interface layer.
- Financial compute layer.
The interface layer uses hardware and software technologies to enhance the user experience whereas the financial compute layer sets the foundation for executing the Metaverse computation tasks. It forms a decentralized, transparent and democratic foundation for the creator economy that underlines the Metaverse. To depict the structure of MetaFi protocols, let’s have a look at its essential components:
DeFi
Decentralized finance systems include the financial applications available on the MetaFi frameworks. These financial applications use smart contracts on blockchains to enable complex financial dynamics.
Foundations
The MetaFi foundations include the core frameworks that serve as layer zero, one, and two solutions. These core foundations are essential for building applications by leveraging shared application logic and security.
Verses
Verses are a collection of domains or parallel verses that make up the Metaverse. The various virtual worlds on the Metaverse are connected through the verses’ foundational layers.
Benefits of MetaFi
Drives the Metaverse Economy
MetaFi protocols through NFTs and fungible tokens enable creators/communities and businesses to develop a way of exchanging value with users.
Better Governance in the Metaverse
MetaFi through governance models like DAOs creates a better way of providing governance for community-based protocols.
How will NFTs Impact the Metaverse Economy?
Open and Fair Economy
Artists can monetize their work without the fear of piracy or copycats. Since NFTs are based on blockchain technology, they are unique and can only be linked to one item. The play-to-earn gaming model is another way NFTs create an open and fair economy.
Property Ownership
NFTs, enable Metaverse users to have full ownership of their virtual properties – land, building, or anything else. The underlying Blockchain technology offers people a secure and transparent way to prove their ownership. Users can develop or sell their real estate when they want.
Identity, Community, and Social Experiences
Collecting or having certain NFTs can help users convey perspectives about the real and virtual world.
An example of that is the case of NFT avatars. In this case, the avatars serve as an extension of your real-life identities in the Metaverse. Owning an avatar also grants the user some exclusive experience in the Metaverse. Examples of such communities are the Cryptopunk and Bored Ape Yacht club, which grant exclusive rights to their holders.
NFTs and Real Estate in the Metaverse
One of the ways people can use NFTs in the Metaverse is to buy virtual land. An example is The Sandbox’s LAND – a piece of digital real estate in The Sandbox or real estate in Decentraland. These virtual spaces use NFTs to show the ownership of real estate.
If a user owns enough plots of land, they can create an estate by combining them. An example of that is an estate on Decentraland, “The Secrets of Satoshi’s Tea Garden” made up of 64 separate plots of land and surrounded by digital roads.
NFTs and Gaming in the Metaverse
The play-to-earn models offer a way for online gamers to rely on NFTs to take part in the in-game economies and get a reward for their activities. Players get full ownership of their in-game rewards or purchases and can resell them on NFT marketplaces. Unlike traditional gaming, with play-to-earn, in-game assets command real-world value.
How NFTs Can Connect the Virtual Life and Real Life
Due to their uniqueness, NFTs are valuable in virtual life and in the real world. You can sell your NFTs (music, land and much more) to another person for cryptocurrencies or even fiat currency. NFTs act on Metaverses as a means of exchange linking both worlds.
The RSK Ecosystem Approach to the Metaverse and MetaFi
Developers have access to a wide range of RIF services to help build their virtual world and MetaFi applications. Furthermore, thanks to the RSK network, NFT creators can also develop their NFTs on top of Bitcoin´s blockchain. An example of that is Watafan – an NFT marketplace that makes it possible for influencers to create their NFTs and sell them as trading cards or collectibles.