From True Ownership to Mass Exodus
Introducing concepts of Decentralized Intellectual Property, or #DeIP
There’s an exceptionally pervasive theme within the blockchain gaming and NFT community that if (A) we begin to tokenize digital assets in our virtual worlds, like video games, then (B) somehow it will lead to a future that looks something like Ready Player One’s “The Oasis.” The problem is: there is a major gap between these two ideas, and nobody has provided a roadmap for how, why, or if this could actually happen (let alone if blockchain should even be involved).
This post is an attempt to outline such a roadmap.
Mass Exodus
If we are creating a roadmap, then it is important to understand the destination we are headed to…
What’s Our Current Frame of Reference?
It’s abstract at best, but there are a number of terms we currently use to describe this all-consuming “virtual reality future.” Some of these include The Oasis, The Metaverse, and (Video Game) Interoperability. Each term serves a different purpose. The Oasis is good for storytelling — especially of dystopian or utopian social reformation. The Metaverse invokes more philosophical themes — mostly of human experience. And Interoperability dives into the technical details to illustrate how virtual worlds could fluidly interact with each other.
While all these terms are fair and appropriate, none of them actually justify the need for blockchain in a “virtual reality future.” Nor do they describe this future as an inevitability — something that’s bound to happen — which we believe it to be at Hoard. If we could use better language to understand this future as an inevitability and in terms of it requiring blockchain, then we could collectively have a stronger grasp on the scope of exactly what needs to be built and why — and we’d be able to design incentive models accordingly.
Adjusting Our Lens of Focus
Future forecasting and technological consumption patterns fall into a specific field of study: economics. If we want to know how people might behave and if blockchain will be involved, it may, therefore, be highly beneficial for us to explore an economic lens by which to understand this totally immersive “virtual reality future.” Fortunately, there is a succinct economic term already used by virtual economist, Edward Castranova, in his book Exodus to the Virtual World , called “Mass Exodus.”
Professor Castronova describes Mass Exodus as being analogous to something like early settlers discovering the New World. In this analogy, however, the old world (which people are leaving) is the real world, and the new world (which people are flocking to) are synthetic or virtual worlds.
He estimates that if people begin spending more of their time in these synthetic worlds than in the real world — and if they manage more of their resources in them — then the economic impact could scale to the extent that GDP is literally drained from some nation states altogether. Such a scenario would qualify as a Mass Exodus.
Why would this happen?
In order to understand why Mass Exodus might occur, it is important to consider some of the economic forces involved, which might drive people from the real world to these synthetic ones. The primary reason discussed by Professor Castronova in his book is simply: virtual reality might be more fun than the real world. Game developers are acclimated to competing for people’s attention by providing them with progressively more fun experiences. Why would that level of competition one day not directly oppose reality itself?
While “fun” is certainly a strong force, there are many other economic reasons for people to turn to synthetic worlds en masse. Job displacement, due to automation and artificial intelligence, is one such force — and it’s the primary one Hoard has built its thesis upon.
Virtual jobs in synthetic worlds may become a safe haven for low-skilled workers — workers whose jobs can be fully replaced by machines. In a whitepaper by Professor Castronova, titled Players for Hire: Games and the Future of Low-Skill Work, Ed explains that playing games could, in fact, be a human-specialized service, resistant to AI. Multiplayer games of the future might hire low-skill workers to play the game and advertise “real life player communities” to big in-game spenders in much the same way grocery stores advertise “fresh, organic produce” to health conscious consumers. Having a thriving human community bears a premium.
Even without the economic pressures of automation and artificial intelligence, it is still quite possible to imagine a person in a developing nation or community turning to virtual jobs as an alternative means of generating wealth. A person who normally sells fruit on an impoverished neighborhood street corner could probably make more money if they provided a comparable virtual service to more affluent players in a popular video game. And, in fact, we already see this type of behavior happening with Chinese gold mining farms in World of Warcraft.
Physical limitations in the real world could also trigger such an event as a mass exodus. When an environment no longer serves a population, they will no doubt go in search of alternatives “worlds” to inhabit. On a micro scale, this decision could be based on an individual’s physical abilities — a person confined to a wheelchair may find they experience a wider breadth of life in VR than in the real world. On a macro scale, an entire cosmic climate could force people to retreat into virtual worlds. Imagine the day when people spend half a year traveling to Mars. Why would they not immerse themselves in virtual reality en route? Or how about once they get to Mars — where harsh surface conditions would dramatically restrict their physical boundaries.
What Keeps Us in Virtual Worlds?
If we understand some of the economic forces that might drive people to leave the real world (above), then it is also important to recognize what requirements would be necessary in a synthetic world for people to stay and fully immerse themselves in it. Maslow’s Hierarchy of Needs serves as a perfect template.
Regardless of technological dependency, people have basic needs. They require physiological security and a certain threshold of safety. Humans all want a sense of belonging and to feel loved. We thrive when we hold ourselves with a high self-esteem. And, ideally, we strive to become self-actualized, whereby we can express and experience ourselves in honest, authentic ways.
What’s interesting is many of these needs have already been partially outsourced to synthetic worlds and commoditized as virtual assets — most notably by social media and video games. In a mass exodus, synthetic worlds which satisfy our human needs the most— and there will be many synthetic worlds competing— will likely be the ones that “win” the attention and time of the population majority.
The problem with synthetic worlds today — in games and social media — is we don’t own any of our virtual assets. They are someone else’s intellectual property. If you want to extract any value from them as digital resources, you are confined to access them only on their respective platform.
Furthermore, you can only extract “approved” value from these resources. This is enforced either programmatically — by which limited features are available on the platform— or by human/AI intervention, resulting in the demonetization, deplatforming, or shadowbanning of individuals. Imagine a scenario where you get deplatformed from Twitter for saying something controversial. You would lose all your followers — virtual relationships, valuable digital assets. These relationships would be expensive and difficult to replace.
This type of forced behavior control is costly to users and antithetical to the type of opt-in future we’re describing in a successful mass exodus. In a thriving, competitive marketplace of synthetic worlds, people will no doubt demand human-value-based experiences to fulfill their hierarchy of needs. Corporate interests will be secondary, just as they are for a majority of individuals currently in the real world — for most people, human experiences come before business.
True Ownership
Because a lack of true ownership of virtual assets leaves people in vulnerable positions subject to platform manipulation and corporate interests, it seems creating true ownership of virtual assets is the first step towards ensuring a safe and successful mass exodus is possible.
What is True Ownership Anyway?
To be perfectly honest, there is no good definition. We use one at Hoard to describe the experience of true ownership in video games:
True ownership is enabled when players have full control of the content of their gaming experience, including their avatars, XP & skills, in-game items, maps, and other customizations. If a player has true ownership of these items, they are free to conduct all types of commerce with them — buy, sell, share, rent, trade, etc on both primary and secondary markets. Player should even be free to import their items from one game into another.
Admittedly, this definition is limited in describing the full scope of true ownership, especially in the larger context of decentralized intellectual property and mass exodus. Specifically, it neglects the infrastructural requirements which make the above experience possible for a user. Most notably, that of sufficient decentralization. At Hoard, we believe the more decentralized a network, the more true ownership a user is granted. And it’s always important to remember: just because a project uses blockchain does not mean it’s decentralized — nor that it enables true ownership.
Plasma Dog
At Hoard, we created a proof-of-concept to demonstrate the degree of true ownership we are committed to providing in video games. This proof-of-concept is a game called Plasma Dog. Plasma Dog premiered at DevCon 4 and was redeployed to Rinkeby as the first More Viable Plasma application ever during ETHDenver II.
The infrastructural stack powering Plasma Dog is currently as follows:
- Transactions are processed on a plasma childchain operated by OmiseGO
- This childchain is rooted to the Ethereum Rinkeby network
- Hoard acts as the service provider for this game
- Players make all in-game asset transactions directly on the plasma chain
Because the plasma chain is secured at the same level as the Ethereum public network, the assets in Plasma Dog are effectively secured by Ethereum (Rinkeby). At Hoard, we are comfortable stating that the assets in this game, therefore, qualify as true ownership. Players can opt-in to using these assets in whatever way they’d like.
New Models for Decentralized Intellectual Property
Synthetic worlds are not going to build themselves. People and organizations need to get paid. However, rent seeking models which hold users’ virtual assets hostage seem to only scale in favor of corporate interests. A population would likely never successfully exodus en masse into corporate containers. Therefore, it’s reasonable to state that we need new incentive models which generate revenue for organizations while still retaining true ownership for users. These types of models can be categorized as being part of Decentralized Intellectual Property, or #DeIP.
The Relayer Model
One exemplary model that is worth studying on a deeper level — because it already generates profits for private entities while retaining true ownership for users — is the “relayer” model. The relayer model is used in standard practice throughout the Decentralized Finance (#DeFi) community and can be best understood in its demonstration by the 0x Protocol.
The 0x Protocol is designed so decentralized exchanges (DEXes) can share liquidity with one another. Shared liquidity helps solve a number of problems, including monopolistic practices by exchanges and price arbitrage across different marketplaces. At a high level, it organizes an ecosystem like so:
- Tokens are minted on the Ethereum blockchain
- Users want to exchange tokens for each other
- Users ask a relayer (DEX) to make trades on their behalf
- The DEX goes to a pool of shared token liquidity (via the 0x protocol) and initiates the trade
Decentralized exchanges never hold or maintain custody of any tokens. They simply act as a user interface for the 0x protocol. The way DEXes generate revenue is by supplying traders with the best user experience. The better a DEX’s user experience, the more they will generate and can justify charging in trading fees.
The key thing to recognize here is that the minting of tokens and the exchange of tokens are two completely different behaviors, carried out by two completely different entities. Tokens are minted by their respective projects, and decentralized exchanges are built by third party businesses (relayers).
Video Games are Relayers, too
At Hoard, we see many parallels between the DEX relayer model and video games of the future. Namely, that games and gaming assets are two completely separate gestalts. While the two may be managed by the same entity in the short-term (ie, a gaming studio), we feel it is very likely that these two will begin to diverge in the long-term. The player experience might look something like:
- Video game assets are minted with the free & open source Hoard SDK
- Players want to experience these in-game assets in meaningful ways
- Players ask games to create worlds and storylines to satisfy these needs
- Games relay items from a player’s wallet into a virtual world for the player to experience
Similar to DEXes, games compete with each other on the basis of user experience. The more enjoyable a game, the more players it will have. The difference, however, between games with true ownership (relayers) and games without, is that that games with true ownership enable players to generate real value from their assets. Games are therefore justified, like DEXes, to design models which generate value for themselves at the same point as players. They can do this by offering players premium tools and experiences which make virtual asset value extraction easier and more fulfilling.
At Hoard, the first value proposition for virtual asset value extraction in games, which we’ve identified and plan to target, is in-game exchange. Players trade items with each other all the time. So we’re building a decentralized exchange that can be whitelabeled and customized using the Hoard SDK — developers can easily design and install item marketplaces in their games as a way to generate revenue. This would be especially useful if the game never mints any items themselves, but instead only relays assets which already exist.
While many more models can be imagined, they exceed the scope of this blog post. Briefly, though, some other points of value generation might come during guild formations, eSport competitions, and user-generated content production. Every time a player engages in one of these types of behavior (where they generate value for themselves) a game can justify charging a fee or installing some other creative way to earn revenue.
All Synthetic Worlds can be Relayers for the Mass Exodus
It is quite possible to extrapolate this relayer model further for all types of decentralized intellectual property. Virtual assets of all kinds should be available for relay throughout a vast network of synthetic worlds. This is because decentralization isn’t just about power; it’s also about experience. The online experience should look more like:
- Virtual assets are given to users
- Users want to generate value from these virtual assets
- Users ask platforms to relay their assets — and the permitted assets of others — in the most meaningful ways possible
- Platforms relay assets to users, and users extract value from them
Again, we see a strong distinction between the provenance of the assets and the actual platform. A major benefit with this design would be that just like how 0x prevents DEXes from behaving in a monopolistic manner (they cannot accumulate “too much” of the total network’s liquidity), a relayer model for social media platforms (and other synthetic worlds) would prevent a similar monopolistic consolidation of power on any single platform.
As an example, imagine if tweets were not pieces of IP owned by Twitter, but they were instead pieces of DeIP owned by users. Twitter would just be one of many service providers competing to relay tweets to you in the most meaningful way possible. Recently, Evan Van Ness, author of the Week in Ethereum Newsletter, stated that he has a desire to detox from social media and would like to quit Twitter. He professed that he cannot do this, however, because he is dependent upon Twitter as a primary source to research newsletter topics.
If microblogging was organized in a DeIP construct, then Evan would have the ability to select an alternative service provider to Twitter that would shield him from undesirable network effects, while still providing him a high degree of content value. Twitter could even adopt a DeIP compliant model internally which might allow users to select from a marketplace of custom algorithms. Evan could select a “Research Mode” algorithm, which would allow him specific options for bookmarking, filtering, and discovering content, conducive to his particular research style. He might even build one himself.
All people should have this sort of freedom and flexibility online in all their synthetic experiences. And legacy platforms, like Twitter, should want to offer it. If Twitter, the company, was solely responsibly for only a select set of algorithms and codes of conduct, then they would be relieved of a massive burden and could actually open their platform to everybody — no one would ever be banned globally. People could opt into relays with more diverse content at any time. And when everybody can opt-in to being included in whatever virtual experiences they desire, then — and only then — can there be a successful, human-centric mass exodus into the virtual world.
Concluding Thoughts
The basic roadmap above can be summarized as follows:
- Create true ownership of virtual assets
- Construct #DeIP models — like relayers — to incentivize the development of synthetic worlds, which still retain true ownership for users
- Migrate into synthetic worlds which are safe to opt-in to (without fear of corporate manipulation) and successfully make a mass exodus
If DeFi is just the tip of the decentralized iceberg, then DeIP is everything beneath the surface. How many hours per day the does the average person spend on their Bank of America mobile app? Nearly none. What are they actually doing on their phones? …when they’re waiting for their Uber, procrastinating at work, killing time while dinner cooks? They are in IP prisons: Instagram, Facebook, Snapchat, etc. In the long term, DeIP will impact the average person far more than they will ever realize DeFi did.
DeIP Minimalism
At first it will be difficult to create sustainable DeIP models. Just look how much trial and error has already occurred in an effort to build DeFi. Not all projects should feel compelled at this stage to take on such a challenge of that magnitude. What will be most effective in the near term is simply creating an abundant supply of virtual assets with true ownership.
Why? Because the most interesting content in video games is typically user generated content — institutions in the game that the developers never considered but players designed on their own. These ad-hoc institutions are generally created with a high level of dependency on in-game items. We feel a similar process of virtual institutional emergence will occur throughout all virtual worlds if we just begin giving users the opt-in ability to control their virtual assets. They will likely come up with clever methods of value extraction on their own. These methods will begin as small, localized solutions, but the most valuable and sustainable will evolve organically into more complex DeIP models as time goes on.
At this point, the name of the game is “create true ownership.” Be wary of anyone who doesn’t.
Related Blog Posts
- Hoard deploys Plasma Dog to MoreVP Plasma on Rinkey at ETHDenver — 🔮 contains all the awesome details for how Hoard turned a game into a relayer for True Ownership 🔮
- January 2019 Hoard Tech Update — 📢 where we provided some new details for the upcoming year’s roadmap 📢
- DevCon Rewind — 🙌 where we debriefed the awesome results of launching Plasma Dog. We reached peak activity at 1500 players! 🙌
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