Business

The Metaverse puts the interoperability challenge for digital assets on steroids

In his monthly crypto tech column, Israeli serial entrepreneur Ariel Shapira covers emerging technologies in crypto, decentralized finance, and blockchain, and their role in shaping the 21st century economy.

In 2022, we won’t have to worry about how many stars there are in the sky — Yale astronomer Dorrit Hoffleit has already determined that humans can see about 9,096 from Earth with the naked eye. Now that we’re over that, we might as well start thinking about how many metaverses there are on the internet, and oh boy, are they plentiful.

By renaming itself Meta, the company formerly known as Facebook opened up the floodgates and threw the spotlight squarely on the concept of the Metaverse, a shared digital experience using virtual reality (VR) and augmented reality (AR). Where Meta went, others followed. According to Sentieo, the word “metaverse” only appeared seven times in investor pitches in 2020. In 2021, the year of the turning point, entrepreneurs mentioned it about 128 times when pitching.

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You might think that spreading metaverse can only be a good thing from a consumer perspective. Of course, as more and more metaverses take up users’ time and attention, they have to compete with each other. Ideally, they would try to outdo each other by offering better user experience, more functionality, and other consumer-friendly practices.

Related: In 2022 there is room for the metaverse, but the virtual space is far from perfect

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In reality, however, the metaverse propagation through the roof may very well violate its own core principles. A divided Experience means anyone can join if they want, but this is where we hit the first hurdle. To meet up with your friends in Meta’s Horizon Worlds, the best Metaverse builder, you’d better make sure you have all the Oculus Quest VR sets. However, to experience something like OVER’s AR-driven metaverse with NFT-based land holdings, all you need is a more or less modern smartphone. This is in itself an accessibility issue, which in the case of Meta also comes with the temptation to lock users in through dedicated exclusive hardware. Giving in to this temptation means isolating your entire metaverse.

Transferring the user’s assets from one metaverse to the other is also not an easy task. We’ve already heard praise from non-fungible token (NFT) advocates for how NFTs will usher in a whole new era of revolutionary interoperability in video games. So far, however, that has not happened and there are more than just technological constraints. Business considerations also play a role, as NFT game developers are more interested in selling their own NFTs than adding value to those created by others.

A constellation of VR or AR based metaverses can hypothetically operate on a similar logic. If a user wants their Metaverse 1 avatar to wear the Gucci shirt they bought in Metaverse 2, that means the Metaverse 1 economics are lost in a sale. Additionally, if Metaverse 1 supports Metaverse 2 wearables, it means it adds value to the assets sold by another vendor without benefiting you, if not at the expense of your own offering.

At the business level, projects can find workarounds to this problem. There could be fees for selling interoperable items that would give each supporting metaverse a cut in the transaction. Alternatively, metaverses can cross-promote deals and explore other avenues to create shared value.

Related: The Metaverse will change the paradigm of content creation

Even a bilateral interoperability agreement between Metaverse projects pushes the situation away from what the zero-sum game might look like. Metaverse 1 can add value to assets offered in another ecosystem, but it also adds value to its own assets. If their respective ecosystems bring in user bases of comparable size and roughly the same transaction volume, the arrangement looks pretty fair.

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However, here we have to deal with the technological challenge. Even if the two hypothetical metaverses are built on the same engine, you still can’t just import objects from one into the other. Metaverse 1 may strive for a realistic look and support cloth physics so the shirt actually behaves like a real one in this world. Metaverse 2 could aim for the pixelated retro style, with a simpler take on physics and blocky 3D humanoid bodies for avatars. Bringing these two designs together is actually quite a difficult task.

In this particular case, Gucci would be better off making two shirts from scratch, one for each metaverse, than trying to make a single interoperable. In terms of ownership, both shirts could be linked to their respective NFTs, which in turn would nest within a top-level NFT representing ownership of the entire stack of shirts.

Initiatives like this could still leverage a wealth of supporting frameworks. Pre-packaged libraries and SDKs make it easy for Metaverse developers to handle interoperability within larger cross-platform ecosystems. They’re already in the works, with projects like Univers building a backbone for Metaverse creators to push their creations on-chain and into a larger network of connected services and decentralized applications. It’s not hard to imagine similar initiatives that smooth interactions between different engines as well as metaverse-specific SDKs and frameworks. We might even see algorithms based on machine learning turning the realistic-style wearables into their pixelated counterparts on their own, or vice versa.

Later, interoperability could become a major selling point for projects looking to attract more users. Metaverse developers should work to address the business and technology challenges involved. They should look to the future and build a metaverse of metaverses, not isolated technology and hardware stacks. Without a holistic and seamless online universe bringing everyone together, we’ll end up scattered across its many shards – much the same as we are now, but with chunkier headsets to wear.

This article does not contain any investment advice or recommendation. Every investment and trading move involves risk and readers should do their own research when making a decision.

The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Ariel Shapira is a father, entrepreneur, speaker and cyclist, and serves as the founder and CEO of Social-Wisdom, a consulting agency that works with Israeli startups and helps them connect to international markets.