Meta is also Zuckerberg’s jumpstart to the Metaverse, which has been the latest buzzword around the internet. The metaverse is a digital landscape where people can interact socially and economically using digital goods. But what technology will run the metaverse? Many have opted and signalled for blockchain technology, and its usefulness has been proved in projects such as Decentraland, Axie Infinity, and Sandbox.
These three projects have their own token — MANA, AXS, and SAND, all of them soared after Zuckerberg announced the company’s transition to Meta. The advent of metaverses in blockchain videogames and Second Life type of products taking advantage of virtual realities have caused intrigue in social media, leading to massive inflows of traffic on these platforms, and subsequently increasing token prices.
Will Ethereum Run the Metaverse?
Vitalik Buterin has previously demonstrated his interest in running the metaverse in the future. Moreover, the metaverse must count with three key elements: an effective economic system, governance, and social activity.
“As far as I know, people use the term to refer to the Internet with a super immersive virtual reality, or Internet with shared state (so things can move between platforms). In the latter case, Ethereum will become an incredible core component.”
—Vitalik Buterin on Twitter.
The problem with internet giants and traditional tech corporations is the lack of understanding of human nature. These enterprises have operated in the same old model for years now, and they seem to be incapable of changing their business logic. The reason why metaverses like Sandbox, Decentraland, Axie Infinity, and Zed Run have succeeded is because the introduction to a new decentralised model using blockchain technology and tokenomics.
So far, tech corporations haven’t detailed what technology will ultimately run the metaverse, and this is where Buterin believes they will fail.
“They will have to create their own blockchain and use it to run it,”
said Ethereum’s co-founder. Adopting Ethereum could significantly be more cost-effective, as it’s a secure and efficient ecosystem with thousands of DeFi applications running atop of its blockchain.
Ethereum and its Metaverse
Ethereum is already a metaverse in itself —without the cool graphics we see in video games. There, millions of developers across the globe are building decentralised applications using its powerful mainnet and set of smart contracts. Throughout its creation, Ethereum has created a base economic layer to host giant projects that, together, form the Ethereum ecosystem.
We talked about the importance of an efficient economic system and the importance of governance. Here, Ethereum is the example of a successful metaverse: Chainlink provides data feed from real-world assets to AMM (automated market makers); Maker is a decentralised protocol that issues DAI Stablecoin, AMMs such as Uniswap and SushiSwap record billions of dollars in trading volumes, and many other protocols are being developed to assess further challenges on the ecosystem. This creates a virtual economy that’s now worth hundreds of billions of dollars.
We can’t skip the part of DAOs —Decentralised Autonomous Organizations. DAOs have always been an important part of the DeFi sector. They are a type of governance system managed and powered by its own community. The first DAO served as an investor-directed capital fund in 2016, but quickly failed due to bugs and coding errors.
However, DAOs have evolved through time, and it’s now an alternative governance system for DeFi protocols, such as Ethereum, Solana, and Polkadot. Even Maker has adopted a business model fully managed by its community.
If Mark Zuckerberg decides to adopt Ethereum as their underlying technology, it could catapult ETH to new heights. Many internet giants are already exploring the idea of launching a metaverse, but it’s just not mapping the real world and showcasing products to generate profits. It’s about creating an engaging service where users can feel they’re entering a new dimension, with technological advantages and an efficient economic and governance model.