All Things Web
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All Things Web

How we think about the Metaverse

By Jonas Jetschni and HQ Han

The Metaverse is all the rage these days. Everyone seems to be talking about it. Nearly every day now, an established brand announces a collaboration (e.g. Nike buys a virtual shoe company), or a virtual land makes headlines after being sold for astronomical sums — 2021 had $500m in virtual real estate sales. Metaverse companies receive billions in investments (e.g. $450m in Yuga Labs, $2bn in Epic Games) and big tech companies like Microsoft are buying virtual worlds created by gaming studios (e.g. $7.5bn for Bethesda, Activision-Blizzard for almost $69bn) in a bid to be part of the Metaverse. On the other hand, as with many nascent ideas, the “Metaverse” is also met with a healthy amount of scepticism — it is still undefined and roughly mocked.

At Protocol Labs, we build protocols, tools, and services to improve the internet (IPFS, Filecoin, libp2p, et al.). Our mission and our work in driving NFT infrastructure, mainly storage guided us naturally to explore the next evolution of the web — the Metaverse. Last year, we started a team to focus on the Metaverse. We set out to develop a perspective on how we can help drive the upward trajectory of the space. In line with our core values, we very much believe that the Metaverse should be open and interoperable. We detail some of our thoughts drawn from several discussions below.

Understanding the Metaverse

To us, the Metaverse is an evolution of the internet. We believe people will say “I am in the Metaverse” when they spend a significant amount of time and money in a digital space, and may even have a job that pays them to do things in the digital space.

Core elements of the Metaverse are the ability to meet and interact with others, participate in an open digital economy, and move fluently between interconnected experiences and applications. The Metaverse will be immersive which allows people to experience a sense of presence.

What is intellectually exciting is recognising that the Metaverse combines technologies like web technologies, 3D engines, digital identity, social networking, cloud computing, online games, VR/AR, and crypto-assets. All of which have been moving along relatively siloed development paths — until now. The Metaverse will be built on technologies of web1, web2, and web3.

We believe the Metaverse will consist of interconnected spaces in which humans interact with a sense of presence, and will enjoy experiences and applications.

It must be an open, composable stack and run on a massively-scaled, resilient infrastructure that enables real-time interactions.

Layers of the Metaverse

There are some good frameworks and models that exist today to describe the Metaverse. Here are some that we like and have guided our thinking: OV Open Metaverse OS, Coinbase Metaverse Stack, Matthew Ball’s Metaverse Primer, or our community-driven technical capability framework).

We suggest a simple model with four interconnected layers to describe the elements required for the Metaverse, which is the way we like to talk about it at Protocol Labs.

Figure 1: Four layers of the Metaverse

The infrastructure layer is the foundation of the Metaverse. It consists of compute, storage and other core components like networking.

To actively engage with others, interactions are required. The ability to own and control an identity, to prove who I am (e.g. credentials), express myself (e.g. Avatars), show what I own (e.g. profile), transact with others (e.g. wallet), and communicate with others (voice, chat) is important. User control is critical to this layer. For more on this topic, see a previous article we published, on The Role of Identity in Connecting the Metaverse)

Spaces are built on top of interaction and the underlying infrastructure where we can engage and interact with each other. It is a place to be. Spaces can be 2D or 3D and rendered on a screen, VR and or AR headset.

On top of spaces and interactions layer, creators will build experiences for people to enjoy and applications that help to fulfil tasks. These things will be the activities of the Metaverse like gaming, social interactions, or work.

The importance of Infrastructure & Interactions (I²)

We asked ourselves the question: what is necessary to keep the Metaverse open?

It has to be grounded in equality and freedom and implement eight criteria shown in Figure 2.

Figure 2: Eight Criteria for the open Metaverse

The Infrastructure and Interactions layers (we call them I²) are important. While spaces and experiences may remain discrete or gated (some may say “closed”), what’s perhaps more important is that one can interact freely from space to space, and developers can build a variety of spaces and applications freely. A parallel in the physical world would be this: while I may not be able to enter each venue that exists on this planet (“space”), I can bring my cloth, identity, backpack, etc. (“digital assets”) wherever I go. If I wish to create an event (“experience”), such as holding my 21st birthday party, I have easy, composable tools to do so. If we can do all this without relying on central intermediaries, we will ensure user empowerment in the Metaverse, just like we would expect in the physical world.

How we as a community shape I² will determine the future.

Infrastructure, as the foundation, should be guided by the following principles:

  • Decoupled: Infrastructure operates independently from a Metaverse space or experience
  • Composable: Infrastructure components, such as Shared Compute, Storage, Caching, and Interfaces, should be built in “modules” which can be built by multiple teams and put together easily. This is opposed to the strong monopolistic platform model established by Web2
  • Resilient: Free from outages or censorship, infrastructure can resist external influences

It is crucial to remember that while Infrastructure is “invisible” to the end-user, how something is built makes a lot of difference in the long run. For instance, if a developer decides to shut down its services user achievements, digital items, social contacts etc., are gone. This happened recently when Ubisoft announced to stop the online services for 90 games. If digital items are stored independently from a project (e.g. using IPFS/ Filecoin), this simply couldn’t happen.

Secondly, here are some principles we think are relevant for the Interactions layer:

  • User-centricity: Users own and control all digital elements about them like Avatars, Credentials or Communication
  • Portability: Digital items are not stuck in one experience, users are able to take it wherever they want
  • Interoperable Interactions: Interactions are built on open standards which enable interoperability and prevent lock-ins
  • Privacy: Interactions are only known to the involved parties

The beauty of the Web3 movement thus far is that it has shown that it is possible to recreate core functions of financial markets like market-making, lending & borrowing, asset management, and payments processing, using composable components. This can lead to new financial services by combining DApps. For instance, Yearn, as an auto-investment product, utilises other lending protocols like Compound, Curve etc., to generate yield for its users. In the NFT space, new economic opportunities have been unlocked for creators and gamers. Digital creations can be stored verifiably and persistently via decentralised storage, and combined with DeFi platforms to be used as collateral for loans.

Where Protocol Labs comes in

Protocol Labs has the mission to drive breakthroughs in computing to push humanity forward. Already today, different protocols, infrastructure and tools exist that power the decentralised web:

  • IPFS is a distributed system for storing and accessing files, data assets, applications, and data. IPFS knows how to find what you ask for, by using its content address rather than its location — regardless of where the content is stored.
  • Filecoin, built on top of IPFS, is the world’s largest distributed storage network powered by robust crypto-economic incentives and enforced via zero-knowledge proofs. Filecoin guarantees data persistence and complements IPFS. The Filecoin network is powered by Storage Providers around the world. This global infrastructure will help to support the future needs of the Metaverse.
  • Libp2p is a modular system of protocols, specifications, and libraries that enable the development of peer-to-peer network applications. It is used across web3, for example, by Polkadot and Ethereum 2.0.

IPFS and Filecoin can be used today in the infrastructure and interaction layer, a few use cases are shown below:

Figure 3: Use cases for IPFS & Filecoin in the Metaverse

Conclusion: Time to build

We want to build together.
Things are a constant work in progress.
A rising tide lifts all boats.
There is no such thing as building alone.

The Metaverse is a vision, an anchor point that allows us to get together and build the internet of tomorrow.

Please reach out to join forces if this resonates with you.

Talking about the Metaverse is like talking about the internet in the ’80s. We can only guess how the Metaverse will evolve, which will be the novel experience or new business models. Our thinking will change, and if so, we will publish an updated version!



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Jonas Jetschni

Metaverse @ Protocol Labs | Building the web of tomorrow #Metaverse #Identity #Web3.