Introduction

What does it take to build the Metaverse? What technological components must exist to have a Metaverse that garners a critical mass in today’s economy as we know it?

This report aims to address those questions, and unearth a roadmap that unpacks how we go from early Metaverse use cases that exist today, to tangible use cases across all industries. This process will involve significant technological advancement, the early signs of which we have already seen in select industries like gaming, web3, and media/entertainment. In this report, we build on the foundational concepts from our Metaverse Primer, and introduce the technological building blocks of the Metaverse across the following four sections:

Infrastructure: network, compute, and storage capacities to power the Metaverse

Hardware: technology gateways to experience the Metaverse

Monetization: concepts of ownership and currency essential to Metaverse commerce

Experiences: categories and examples of experiences, and where we’re headed

All four of these building blocks are (1) exhaustive (all technologies relevant to the Metaverse fall within these four building blocks), (2) necessary (each building block must exist to achieve a Metaverse) and (3) insufficient alone (no one building block can define the Metaverse on its own; all four are required).

These four building blocks were previously covered in our Metaverse Primer. This report will dive deeper into each of the four sections, including expanded definitions, the role each building block has in the Metaverse, and examples of industry use cases.

Building Block 1 | Infrastructure

The Metaverse is judged based on how consumers experience the technology and hardware. However, in order to have a Metaverse that is real-time rendered, with unlimited users and synchronous experiences, it will require unprecedented advancements in global infrastructure, much of which is unseen to consumers. The same infrastructural assets that have enabled the widespread adoption of the internet are required for the Metaverse — but they must become more advanced and efficient in powering immersive UI/UX and high-level data exchange. In the sections below, we will unpack three elements of infrastructure that are crucial to a high functioning Metaverse: network, compute, and storage.

Network

Put simply, a network in its most basic form consists of two or more computers that are linked in order to share resources, exchange files, or allow electronic communications. Computers in modern day networks are commonly linked through cables, radio waves, satellites, or infrared light beams.

The Metaverse will demand advanced network capabilities due to the large amounts of data required to power it. VR and AR applications today already require a high degree of network capability given the intensity of the data exchange required for immersive UI/UX. This will only increase with additional layers of Metaverse technology, such as commerce, payments, digital asset ownership, and social engagement. The two network conditions that will be required to achieve advanced Metaverse engagement are high bandwidth and low latency:

A. High Bandwidth

Bandwidth is the maximum capacity of data transmission that can occur within a network over a specific period of time — it’s therefore measured in the amount of data (typically in bits) transmitted from one node in a network to another over some amount of time (typically in a second).

Data transmission in high bandwidth activities today (such as gaming) is done through a hybrid model of (1) accessing data that has been previously stored on the console or computer, and (2) streaming data from a storage network in real-time. In gaming, much of the streamed data is information about other players or unforeseen occurrences — the rest comes from data stored on the console.

This fact is relevant to the Metaverse because the streaming requirements will be far greater than any game that has ever existed. Therefore, network bandwidth is a major bottleneck to achieving real-time rendering of synchronous experiences. 5G is a major development in the path towards Metaverse-ready, high bandwidth data transmission. To offer some perspective, 4G today exists across most developed countries, and was a significant step forward with regard to streaming capabilities. With 4G, consumers could stream high definition video content from the likes of YouTube, Netflix, and Zoom, and enjoyed better reliability relative to 3G and 2G before it. In theory, the highest bandwidth capability for 4G is 1Gbps (gigabit per second). 5G networks come in at up to 10 times that rate, at around 10 Gbps. While 5G will be a critical enabler for the Metaverse, infrastructure will require even further tech advancement and investment in order to support Metaverse experiences.

B. Low Latency

Latency is the time it takes for data to be sent from one node in the network to another and then be received back again. The duration between clicking the pause button on a YouTube video and seeing the content pause is one example of latency.

Most internet activities today do not prioritize latency, given that they often only require a one-way stream of information. With the exception of video calling and gaming, most consumers have a relatively high tolerance for latency. In the Metaverse however, having the virtual environment react to peoples’ actions is essential for most use cases. Most consumers’ thresholds for video latency is at around 170ms; if it’s any slower, people begin to notice a lag. For gamers, it is quite a bit lower at around 50ms. High latency in VR is also a primary cause for nausea, where the optimal latency threshold to avoid this is at around 50ms or less. With more data-laden experiences, synchronized engagement, and far more users, latency times will need to decrease significantly in order to achieve wide-scale Metaverse adoption.

Compute

The ability for computers and servers to improve their computing ability is essential to having a consumer-ready Metaverse. Put simply, computing refers to the ability for computers and servers in a network to process raw data with the goal of producing a more usable output. As Matthew Ball puts it, computing allows for “physics calculation, rendering, data reconciliation and synchronization, artificial intelligence, projection, motion capture and translation”.

Computing is a key enabler for the Metaverse due to the sheer number of data inputs required to provide complex immersive services. Even basic consumer Metaverse experiences that exist today, such as those provided by the operating system in the Meta Quest 2, require inputs from a variety of sources including positional audio, hand tracking, hand-held controllers, and haptic feedback.

Advancements in both hardware and software across IoT, sensors, and cameras will continue to expand the supply of data. This, in turn, will build pressure to improve the demand for computing power. After all, no amount of data is of any use if it can’t be used. Two advancements within computing that have shown promise as Metaverse infrastructure enablers are edge computing and decentralized computing:

A. Edge Computing

Edge computing involves the deployment of supercomputers at key network nodes in-between consumers and farther-away central servers. This network makes up a distributed computing framework that has the power to connect enterprises and data sources through proximity. Currently, around 10% of enterprise-generated data is created and processed outside a traditional centralized data center or cloud. By 2025, Gartner predicts this figure will reach 75%.

B. Decentralized Computing

Decentralized computing is a type of computing in which users that are part of a network make up the computing power; this is in contrast to centralized computing where it is typically one or multiple enterprises. Blockchain has revolutionized the way in which information and data are processed in a decentralized fashion. With Ethereum, for example, data is computed by users who pay for the execution using Ethereum tokens. In this way, the network can act autonomously, without a centralized owner. The computing landscape today is widely centralized, but decentralization will continue to become more relevant as the demand for computing grows.

Storage

The Metaverse will require an unprecedented amount of data storage, multiples of what is required for the internet today. Data storage options for the Metaverse will include centralized storage (cloud storage), decentralized storage or some hybrid model in which both are utilized.

A. Centralized Storage

Centralized storage is a model in which the data is stored on one centralized server. This model meets the demands of most enterprises today, given the high degree of stability that comes with managing a single server. Low latency is another advantage of centralized storage, given the standardized data retrieval process. The Metaverse will likely put pressure on this model, however, due to the limited storage capacity of data centers and limited speed of expansion. The data in this model is also controlled by a small cohort of large tech entities such as Amazon, Microsoft, and Google, raising concerns about true ownership and management of personal data.

B. Decentralized Storage

Decentralized storage involves a distributed network of storage devices that can house Metaverse data, such as hard drives or personal computers. In this model, each node in the network operates through its own server, meaning data can be retrieved from various nodes in the network. Blockchain-enabled storage can also offer improvements on security given that one breach doesn’t compromise the data stored on other servers in the network.

One major concern with decentralized blockchain-enabled storage is the availability of miners: the network is only as reliable as the miners that actively contribute to processing data on that blockchain. Several emerging players like Storj, Sia, and Filecoin have explored various incentive structures that continually compensate miners to provide ease of storage and data retrieval. As the need for data storage grows, decentralized storage models will likely improve and become more relevant as a core part of the Metaverse infrastructure.

Infrastructure Broadly

Over the last few decades, the primary challenge for network providers and telecom leaders has been to support billions of people with a mobile-first internet infrastructure. The next big challenge in connectivity, as Meta puts it, will be to build Metaverse-ready networks. Most developed countries today have the infrastructure to support 4G internet services, and have already looked on to expanding 5G access. SpaceX’s connectivity project, Starlink, has also made substantial advancements in significantly improving bandwidth and latency. One area that will require further advancement is in achieving a more connected infrastructure. The networks, computing, and storage servers of today run mostly independent of one another, and therefore progress continues to depend on further investment (both public and private) into existing infrastructure and
emerging technologies.

Check back in on Thursday (October 6th), when we will discuss the next metaverse building block.

Should you have any questions or would like to discuss more, please don’t hesitate to contact Aaron Farr (aaron@agyaventures.com).