Dr. Xinxin Fan is the Head of Cryptography at IoTeX, a startup empowering the future machine economy with blockchain and IoT.

The metaverse has attracted significant attention from business leaders working across various fields, with organizations of all sizes entering the metaverse in different ways. Citi recently said this concept of extended reality could represent an opportunity worth up to $13 trillion by 2030. By combining the physical and virtual worlds persistently and immersively, the metaverse is becoming the next iteration of the internet, known as Web3.

Such an open version of the metaverse would likely be owned by internet communities, instrumented by crypto tokens and governed by community-led entities known as decentralized autonomous organizations (DAOs). The open metaverse enables people to expand their social interactions significantly, including entertainment, commerce, advertising, education, social media, manufacturing, virtual communities and enterprise in general.

An open metaverse application is orchestrated by blockchains and built upon an evolving suite of highly composable technologies covering key services such as identity, computation, communication, storage and asset exchange. In particular, data generated in the physical and virtual world could be utilized for building data-rich metaverse applications, creating more authentic and natural user experiences.

In practice, the realization of a seamless convergence of our physical and digital lives in the metaverse has posed notable challenges for tech leaders. What are the two key technical aspects of connecting the physical world and the metaverse?

Transferring Trusted Data

A data-rich metaverse application is built upon on-chain data directly accessible from blockchains and off-chain data obtained from the physical world. While the decentralized blockchain network secures the on-chain data, the off-chain data is usually provided by third-party services or collected by IoT devices in the physical world. As a result, the trustworthiness of off-chain data becomes critical for building data-rich metaverse applications.

Blockchain oracles provide a practical solution for feeding off-chain data to the metaverse. By querying the APIs exposed by third-party services and IoT platform providers, a decentralized oracle network can retrieve a wide range of real-world data, including digital asset prices, lending rates, climate reports, traffic status and more. Since third-party services and IoT platform providers serve as data aggregators, the data trustworthiness relies on those centralized services.

With respect to IoT data, blockchain oracles can also directly resort to a group of community-driven, globally dispersed smart devices in lieu of querying a centralized IoT platform. While increasing the architectural complexity of blockchain oracles, such an approach eliminates the need for trusted data intermediaries and places trust in IoT devices.

Provided that IoT devices are equipped with state-of-the-art secure hardware and built by following IoT security best practices in the industry, a trusted data collection process can be well ensured. A decentralized oracle network can then feed the trusted IoT data to the specific metaverse application.

The Metaverse And Real-Life Utility

If you think that bringing trusted data from the physical world to the metaverse facilitates developers to create data-rich applications, programming the material world from the metaverse will unleash everyone’s imagination. The robust blockchain and cryptocurrency techniques such as DeFi, NFTs and DAOs enable developers to build metaverse applications that can incentivize real-world entities to complete specific tasks in a transparent and trustworthy manner.

Cryptocurrencies coupled with well-designed token economies provide strong financial incentives for physical world entities participating in metaverse applications. They enable faster growth of an application’s user base and sustainable ecosystem development. Moreover, the token rewards users receive by participating in the metaverse applications can be further invested in a wide range of DeFi products to earn passive income.

In addition, real-world assets and data have recently become some of the most promising tokenized NFTs. Those NFTs represent a novel way of managing assets and data in the physical world. Finally, DAOs have the great potential to revolutionize governance for the metaverse applications by distributing the decision-making power to all participants and minimizing the administration overhead.

Building Your Open Metaverse Strategy

The open metaverse unlocks a whole new realm of possibilities to engage with internet communities and is expected to stimulate business model innovation and create new services in the upcoming years.

The open metaverse is still in early development, and it is difficult to create a comprehensive business strategy in such a dynamic space. For now, business leaders could start exploring this new fast-moving digital landscape by considering the following key business questions.

• Business model: Organizations need to carefully evaluate the impact of building a community-driven, open metaverse application on their existing business models. The application should align well with their business goals.

• Technology readiness: Organizations should understand the technology for building metaverse applications and determine if existing software, hardware and other decentralized components can meet their technical requirements with respect to security, privacy and usability.

• Ecosystem partnership: Organizations should clearly identify the potential partners and collaborators based on the analysis of required technologies and gradually establish business relationships with other ecosystem participants.

• User engagement: The organizations should determine the best approach (e.g., DeFi, NFTs, DAOs or their combination) for incentivizing community members to join their open metaverse applications and achieving long-term and sustainable business growth through new digital services and experiences.

• Market feedback: The organizations should build minimal viable products (MVPs) for their open metaverse applications with a reasonable initial investment and quickly test whether such applications are able to achieve their business goals.

The above approach should help business leaders build their open metaverse strategy effectively without incurring significant costs and risks.

Looking Into The Future

The infrastructure and applications of the open metaverse continue to evolve at a staggering pace and interactively and cyclically towards the ultimate goal of a full-fledged, universal economic system that provides a fair economy for all participants in the value chain.

The open metaverse is a rather complex system. Many technical challenges have yet to be resolved to build a smarter, trustworthy and data-rich open metaverse. Let’s work together to make the vision of it a reality.


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