How the Metaverse Flywheel impacts Identity

By Patrick Johnson and Jonas Jetschni

Identity is inseparably intertwined with the development of the open Metaverse

Today’s primitive version of the Metaverse is disconnected and incomplete. It consists primarily of self-contained, isolated worlds with standalone experiences such as socializing and gaming.

We are a long way from the future vision of the Metaverse. A Metaverse that is the evolution of the internet. A Metaverse that consists of interconnected spaces in which humans interact with a sense of presence, and have the ability to build genuine societies across worlds, with social, economic and political interactions that replicate those we have in our physical lives today.

In this future vision of the Metaverse, it is easy to picture the need for Identity across different aspects

• We will want to stand out within the online communities we form (creating a need for avatars)
• We will want to transact and have privileges and permissions (creating a need for credentials)
• We will want to make our lives as easy as possible (creating a need for personal data)

When this future open Metaverse arrives, we need to be ready with the core Identity infrastructure in place. However, the path to building this Identity infrastructure is inseparably intertwined with the path to building the open Metaverse.

This leads to the question: How do we get from today to the open Metaverse, and what implications does this have for building the Identity infrastructure it requires?

Challenges in bridging the gap to the open Metaverse

The challenges in reaching the future open Metaverse are not small. We place them in three buckets.

1. Building the Technology to make it possible
2. Creating Experiences to onboard the population of users and creators
3. Making the Metaverse fluid

Challenge 1: Building the Technology to make it possible

There are many challenges in building the technology to enable a massively scaled and connected Metaverse. We need technology that allows millions of people to be in a virtual world, in parallel, communicating with photorealistic avatars, displaying human-detailed micro facial expressions. And we need AR/VR hardware that is high performance (realistic) as well as comfortable for us to wear.

While this technology challenge is complex, many organizations are investing in the required R&D, therefore, we believe it is a matter of time to develop it and we dedicate our remaining words to other challenges.

Challenge 2: Creating Experiences to onboard the population of users and creators

We cannot have a Metaverse that replicates our society without the majority of the population engaged within it. In a classic ‘chicken-and-egg’ or ‘cold start’ problem, today’s population is largely unenthused by the Metaverse because there is “nothing to do”, while creators and developers are not incentivized to design for the Metaverse if the disengaged wider population is not there waiting for their products. If we cannot shift this status quo the open Metaverse never develops.

We believe that this problem is solvable by a conceptual flywheel. A flywheel instigated by a ‘novel experience’, as suggested by Alex Reeve (Head of Identity at Coinbase). A novel experience enables a user to do something fun and nonessential that they couldn’t do before. The effect of the novelty of the experience is that imperfections in the technology and the experience are accepted by the user while the technology is still being refined.

Novel experiences attract initial users. The concentration of initial users around this experience creates community for the users, as well as economic opportunities for creators and developers. Community and creators lead to higher quality (non-novel) experiences that entice additional users to the Metaverse, spinning the user growth flywheel ever faster.

Due to their fun and nonessential nature, novel experiences often take the form of games. For example, games like Atari’s Pacman and Battlezone were novel experiences that helped the PC become more commonplace in our houses and daily lives. Angry Birds was a novel experience that helped the touchscreen iPhone take off.

For the Metaverse, some of these gaming-based novel experiences are beginning to take form. Half-Life Alyx demonstrates the possibility of VR/AR to create an immersive experience. Fortnite has created an addictive social experience on top of a game with avatars, emojis, friends lists, and voice chats. Investors are showing an increasing appetite to invest in gaming and this will only accelerate the journey towards the open Metaverse (e.g. the new $600m gaming fund by a16z).

Challenge 3: Making the Metaverse fluid

Today’s Metaverse is not interoperable — there is no fluid experience. The things we do in one world have no impact in another world. A skin purchased in Fortnite cannot be used in Decentraland. In contrast, a Yankees baseball cap we buy in the physical world can be worn at work as well as at the park; in fact, in all our physical spaces. Our physical world is completely fluid. Without a fluid Metaverse, we will not come close to replicating our physical society.

The challenge in creating a fluid Metaverse is not creating the open standards and models for interoperability, but rather gaining acceptance and usage of these standards and models by the major builders of spaces and experiences (such as Epic Games, Decentraland etc.). There is no incentive today for these large builders to adopt interoperability; it only helps to provide their smaller competitors with a level playing field.

To incentivize acceptance of interoperability, users and creators must irrepressibly demand it, and to achieve this, interoperability has to itself offer a unique experience that allows users and creators to do things that were not possible before.

We distinguish three potential ways to address this challenge of building a fluid Metaverse.

(1) Bottom Up. Community-led open source development. Community-created open source tools and open standards are used by small organizations to create spaces and experiences that compete with, threaten, and potentially overtake existing self-contained spaces, forcing the global adoption of these open standards and approaches by organizations both small and large.

We believe a Bottom Up approach is unlikely to be successful due to the power that today’s large creators of spaces and experiences have over how users engage in their worlds, and their financial incentives to maintain this control.

(2) Top Down. A big bet from a big player with an ‘open’ strategy. Large organizations with resources (e.g. Meta, Microsoft, the US Government) have the ability to create a large ecosystem by themselves. They have the ingredients needed for success: resources, and strong, centralized leadership that can drive rapid innovation. In building their ecosystem, these big organizations will create infrastructure and operating standards that could be designed for openness and interoperability. Equally, they could be designed for closed and controlled spaces.

A past example of Top Down working is the big bet investments made by the US Government (U.S. Defense Advanced Research Projects Agency in the 1970s and the U.S. National Science Foundation in the 1980s) creating and setting the standards and early processes that led to the open web we have today.

We believe Top Down has strong potential to work, however, it requires the companies making big bets (such as Meta and Microsoft) to design for interoperability, for example, open-sourcing their code and system to allow others to build on top.

Early indications voiced by Meta CEO Mark Zuckerberg show promise for an open approach.

“The question is: How do we get these things [Metaverse spaces] to be as interoperable as possible? We want as much of the software as possible to run on our systems. We want avatars and commerce to build to be interoperable.”
Meta CEO, Mark Zuckerberg, interview with Protocol, May 13, 2022

(3) Hybrid. Ecosystem-led coordination. The leader of one ecosystem could influence its entire community of developers to accept one set of standards and tools when building, and in exchange ensure the creators of those standards and tools design for interoperability. This ecosystem could be built around either a blockchain (e.g. the Solana blockchain ecosystem), or an engine (e.g. Epic’s gaming engine).

For example, using Solana as a blockchain ecosystem to build around, Solana could coordinate for all Metaverse and game projects to leverage one common way to manage identity, store avatars, and exchange items.

We believe the Hybrid model has potential, however, requires coordination rarely seen in multi-party open ecosystems, and may be challenging to grow beyond the single ecosystem and into the wider Metaverse.

Building Identity in the Metaverse

For those seeking to build Identity in the Metaverse, we derive four implications from the open Metaverse growth pathway we have outlined above.

1. Start with gaming and the social aspects of Identity.
   Given the onboarding of users and creators will start with novel experiences such as games, the initial experiences requiring Identity will be social, rather than economic, transactional or political. Given most social Identity is about how we look, the initial focus in building Identity infrastructure should be around the Avatar aspect of Identity, and related tooling that supports individuals to differentiate themselves within their social communities.
2. Build in the open.
   Develop in the open to promote awareness and collaboration from other organizations. In particular, build an open-source codebase, speak openly and frequently about the vision, and participate in developer communities to promote efforts.
3. Seek out ecosystem partnerships.
   Adopt the Hybrid Ecosystem-led model of making the Metaverse interoperable. Find ecosystems with leaders that have the ability and appetite to coordinate their developer community. Seek out partnerships with the ecosystem leaders to become the interoperable Identity solution for that ecosystem.
4. Watch Big Tech closely, and follow.
   Watch Meta, Microsoft, Epic Games and other major organizations closely to understand the directions they are taking in their investments. Are they open or closed? Look for opportunities to build around and on top of their ecosystem to take advantage of their increased chance of success.

Identity is the key building block in connecting the open Metaverse and building something that closely resembles our physical world. Building it from where we are today requires some guesses, making clues such as these invaluable.

Note: This is the second installment of a series of thought pieces on Identity in the Metaverse. Please see The Role of Identity in Connecting the Metaverse for the first article, and Follow to stay updated as we release more.

Patrick Johnson is a Masters student at Stanford’s Graduate School of Business.

Jonas Jetschni works at Protocol Labs and focuses on Metaverse & Identity.