DeFi and Metaverse: Blockchain Could Play a Big Role in the Virtual Worlds of the Future

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What is the “metaverse”? Perhaps you’ve heard the term floating around tech spheres for the last several months. After all, “metaverse” has become a bit of a buzzword when it comes to discussion about virtual reality, the internet, and the future. This article will explain the relation between DeFi and Metaverse.

The word itself is a portmanteau of the prefix “meta” and the word “universe,” and at a basic level, it describes the virtual spaces that we spend time in online. A more futuristic understanding of the term describes these spaces as a series of linked interactive and three-dimensional environments: online offices, nightclubs, parks, beaches, and art galleries; virtual neighborhoods of virtual homes filled with virtual furniture and appliances. 

Even though the concept of the Metaverse has become a bit of a fad, our current fascination with it seems to be coming from a very real shift toward online life. People work, play, and socialize online; they fall in love, create art, and build careers on the internet. However, many agree that If the fundamental infrastructure of the Metaverse isn’t decentralized, it won’t be possible to realize it. Here’s what that means on a practical level.

How the Infrastructure of the Internet Could Affect the Metaverse of the Future:

Currently, the online world is extremely fragmented. The internet landscape consists of a number of closed, centralized platforms such as Facebook, Google, Twitter, and others. 

Each of these platforms is a” walled garden”: enclosed environments in which all operations go through and stay in a single ecosystem. For example, The majority of Facebook content is only accessible to those who have a Facebook account.

Of course, signing up for such an account means relinquishing personal information to a privately owned company. And it’s no secret that Facebook has an unsavory reputation when it comes to personal data: as people know that Facebook collects and monetize its users’ information, often without their consent. 

On top of that, the walled garden infrastructure of the internet means that users must create separate identities for each of the platforms they use: one account for Facebook, one for Google, one for Twitter, et cetera. To access each of these platforms, we have to log in to each one of them separately. 

This results in a fragmented online identity. A single person–let’s call him James–may own multiple accounts across different platforms, but James is effectively a separate person to each of these platforms.

There’s Facebook James; there’s Google James, Twitter James. But there’s no easy way for James himself to port his identity from one platform to the next. Each time he signs up for a new service, he must effectively start from scratch.

This also includes things that James may have created or purchased on each platform: Facebook James may have bought access to a workshop, uploaded photos, and developed a game for his friends to play, but Google James doesn’t know anything about that. There is no effective way for people to own things across several platforms in today’s internet landscape. 

Information and data vulnerability: DeFi and metaverse

This fragmented infrastructure also means that we must hand over our personal data to multiple private companies at once. Each of these companies stores our information on centralized servers and can use it as they see fit; the more services we create accounts on, the more points of vulnerability we expose ourselves to. 

Some of these companies offer keychain services that allow you to use the identity you’ve created with them to log in to other third-party sites (i.e., “log in with Facebook”). In a way, this does eliminate some personal data risks. After all, sharing data with one company is better than sharing it with many.

On the other hand, using these keychain login services places more power in the hands of single entities. For example, if someone uses Facebook to log in to their email, home security system, and a payments application. What will happen if someone decides to hack into Facebook’s servers? What would happen if Facebook decided to revoke their login privileges? 

And what does this mean for the Metaverse? 

Centralization Leads to a Fragmented Sense of Digital Identity: DeFi and metaverse

If someone was to build the three-dimensional Metaverse on today’s internet infrastructure, our identities would stay just as fragmented as they are today. The “Facebook James” vs. “Google James” paradigm would hit a whole new level.

For example, Google James may not have access to a virtual home that Facebook James built-in Facebook’s corner of the Metaverse. And if Facebook’s servers–or James’s ability to access them–was compromised. He would have no way to access the home nor any of the value located inside it. 

DeFi ecosystem can help to repair the Metaverse fractured and centralized appearance. With blockchain technology, we can recreate the internet as a free and open environment. And using crypto-assets, we can create a secure means of both identity and ownership. Blockchain technology allows people to autonomously own their information without relying on any company or centralized entity. Users uphold public blockchain networks; there is no central authority and no single point of failure.

Take the Ethereum network, for example. A community of users that mines ETH tokens uphold the Ethereum public blockchain network. Computers that solve complex equations complete the mining process; soon,  users who stake their tokens will uphold the network. While Ethereum does have a core group of developers, no “Ethereum, Inc.” or “Ethereum, LLC” has special privileges over the network. 

Building A Decentralized Metaverse with Blockchain Technology: DeFi and metaverse

Through smart contracts, Ethereum can support the development of decentralized applications (dApps) and different kinds of digital assets. When someone creates assets on the network, these assets are valid in any Ethereum-based environment. For example,(NFTs) developed for use in a gaming dApp on Ethereum can easily be bought, sold, or used in other Ethereum-based dApps. Similarly, fungible currencies like ETH and ERC-20 standard tokens issued on Ethereum can also be used across the network. 

One can use NFTs containing personal identity information to mint and prove identity through interacting with smart contracts when necessary. In other words, when an Ethereum-based dApp would ask you to “log in,” you could present the required token to a smart contact without having to sign away any of your personal information to any third party. 

Using this underlying architecture, we could build a metaverse in which all of our digital belongings and identities would be valid in any digital environment. If the Ethereum dApp ecosystem were to be realized as a three-dimensional metaverse today, each of its inhabitants would be able to independently retain ownership of all of their assets in each Ethereum-based environment. They could transmit freely through different virtual spaces and other settings while maintaining their identity and assets. 

While we’re still at least a few years away from the realization of the Metaverse as a completely virtual world. Until then, we can continue to see how decentralization transforms the world around us.

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