The Future of Web3 - The Metaverse as a Catalyst and its Fundamental Barriers

So where are we now with the Metaverse?

Every stage of technological evolution throughout modern history has had its specific algorithm. It starts with formulating the needs that should be addressed and ends with delivering the tools that help achieve this goal. If we look at the recent decade, with the digitalization of all aspects of human life, people have transferred the concept of virtual life from science fiction to realistic needs that can be addressed in the virtual world. The Metaverse, at its core, is not just an alternative to how people spend time; it's a new way of interacting with the environment through digital tools.

The existing collective image of the Metaverse is, in a way, a fundamental milestone in the technological development of how humans interact. At this point, we are standing at a crossroads with the question of whether the Metaverse will be the key to a full-fledged virtual life or if it will remain in its current gaming-only state.

Some tech experts argue that the development of the Metaverse in the short term will bring us not just new ways of communication but also innovative approaches to personal development. The rise of this possibility might be considered a core indicator of the transition from simple gaming to actual reality in a virtual environment.

To support this transition, several technological aspects have been in development for the last decade and could be considered pillars for the Metaverse in its end state:

1. VR technology lies at the very foundation of the Metaverse. Even in its current state, AR/VR devices provide a possibility to dive into the virtual world and interact with different subjects in it. However, the full-fledged deep dive into the virtual world is still limited due to technological limitations that are yet to be solved.
2. Blockchain technology, with its core principles of transaction transparency, is considered an optimal tool to serve the digital economy. The end applications are still to be discovered, but current trends in society lead us to the conclusion that blockchain has a direct connection to how new generations interact with each other.
3. Data storage and its security are some of the controversial topics that are currently discussed across different communities. The current model that, at some level, is very monopolized becomes an opportunity for some Metaverse by introducing a decentralizing opportunity to store users' data. This could lead to a new trust level between users and the virtual environment.

By analyzing dozens of Metaverse projects and being part of creating several of them, the core conclusion we have made is that gamification of leisure time is just a minor part of what the virtual world can offer. In its current development flow, Metaverses focus on either enriching users' real experience or creating an entirely new experience.

Is metaverse purely a short-term hype, or is this something with much bigger potential?

“This is certainly something bigger, but it will take time to become fully realized. What we saw in 2020-2021 was the initial excitement and exuberance of what the metaverse could bring, but once the hype dissipates and speculators leave due to down markets, it will be up to the true believers to build and invest in bringing this industry past the hype phase. It’s nothing new, and we’ve seen this time and again with new technology industries like crypto. Truthfully, investing during down markets has worked best for us as it has given us the time to get to know founders at a deeper, more meaningful level. I think metaverse legends will be made this next cycle, and I'm excited to meet and support founders that are dedicating their professional lives to this space. It feels like the early days of cryptocurrency in 2013-2014.” - James Park, partner at Valhalla Capital venture fund.

Metaverse can be a much-needed trigger to change the way personal data is stored and used.

Major corporations and brands play a huge role in the evolution of the Metaverse, which leads to the question: Will they introduce the same privacy and data-protection problems that plague the current internet? Web3 technology is helping address the privacy and data protection problems that any centralized platform inevitably has. Several decentralized Metaverse projects are already taking advantage of elements of web3 technology to deliver user-owned experiences that are resistant to censorship and interoperable with one another.

The overall issue with data centralization that users have didn’t appear out of nowhere. Every year, we hear huge stories about how corporations have massive data leaks or how other corporations use personal data in unethical ways to boost revenues. For example, over 500 million phone numbers of Facebook users leaked in 2021, or a lawsuit against Google, which was facing a $5 billion fine for tracking users in private browsing. These issues we face as a society are potentially a final trigger to close the door on Web 2.0 with its “personal data for free content” unspoken rule and start being responsible for our personal data in the Web 3.0 world. The Metaverse is a direct product of Web 3.0, and at its core concept, there is a decentralized approach to data control and asset management.

But let’s address a wider picture first. The Metaverse is a collection of several technological solutions, including DLT (Distributed Ledger Technology) systems, that is an unconscious probing of society's readiness for the arrival of a new technological paradigm that web3 has. At this point, the public readiness to take control and responsibility for personal data is still questionable. Web 2.0 created a habit that there is always something that will recover the password, set a new pin, or revert the transaction. And those things will be very different when the full shift to Web 3.0 happens. As I see it now, it is the main barrier to adapting to the technology.

This leads us to the idea that the metaverse, as a concept, is a demonstration model of how the web3 paradigm can become our everyday life. At the same time, the adoption of Metaverse increases the adoption of web3 in the future and vice versa - the more users value the web3 concept, the more people will use metaverses.

Existing metaverses are on the path to following the principles of web3; even those created by Web 2.0 companies, like Meta and Microsoft, lean toward the decentralization concept. Let’s focus on why decentralizing personal information is crucial for the Metaverse. We’re talking about parallel virtual reality in which people will potentially spend a large portion of their time. Some might argue that people will eventually spend more time in a virtual environment than real. This means a lot of time will be invested in this personal data, so its security becomes one of the most important things. Users won’t truly consider the Metaverse something more than a game if their assets and personal data can be stolen, deleted, or blocked. The development of the Metaverse to become a place where people study, earn money, and spend their free time will only happen after personal data is only accessible by the owner, and only the owner decides how to share it.

We’ve already seen that crypto, having decentralization at its foundation, became the backbone of the Metaverse economy. In a way, crypto was the very first decentralized product that users had, as it gives a possibility to truly own your assets. The utilization of crypto in the Metaverse creates a trust that everything a user spends and earns in the virtual world is in their own custody, and nothing can be done with it without prior approval. And web3 technology ensures this trust in the digital-first world. All these ideas lead us to the conclusion that companies need to understand how users value their data and that the need to control it will only grow. The trust in the integrity of personal data is the core factor that will influence the rise of the Metaverse.

Can we actually dive full-time into the metaverse right now?

Metaverse undoubtedly has the potential to scale phenomenally in different parts of human life, and we have everything needed for the early adoption of the virtual world, but to access advanced functionality that will give the metaverse a chance for unlimited growth, the VR technology should be in a very different state.

The Metaverse industry has set a high bar for itself - to become a place where people spend at least a third of their time. To achieve this, it should have the tools that allow users to dive deep into the ecosystem and gain true value from it. Today, virtual reality devices are on the path of technological development, which has bottlenecks that affect the pace of advancement. In recent years, the cost of VR headsets and the quality of content have been balanced and reached an adequate ratio. This is evidenced by the cost, which has decreased significantly from the first devices released to the market, and the content becoming more interactive and colorful.

If you ask yourself whether the current possibilities of VR can meet the technical needs of the metaverse, the answer would most probably be no, and here’s why.

We can split the problems of VR advancement into two sides:

• The hardware and software side provides the actual means for VR operation.
• The conceptual side provides the content and perception of it.

The technological issues of the hardware-software side are clear, although it doesn’t mean they are easy to solve.

1. There is a demand for low latency (high responsiveness) of the content. This is the primary reason for motion sickness, psychological and physical discomfort, as well as falling out of the effect of presence. At the moment, delays associated with a display frequency of at least 75 fps (frames per second) are considered minimally comfortable, which corresponds to about 13 ms. Unlike regular 3D content on PC, where there may be delays in the reaction of the environment without motion sickness and other troubles, in VR, this is very critical. The industry is now aiming for a delay of about 7ms, which corresponds approximately to 140fps.

2. High-quality requirements (displaying resolution and detailing objects). The famous mosquito net is on many devices. Limited viewing angles and different overlay effects are associated with the shortcomings of VR optical systems.

3. Weight and size limitations. The age-old dilemma of wearable devices is still not solved - the ratio of computing power and power consumption (battery size and weight, cooling system size and weight).

4. High requirements for the computing power of wearable devices. Ensuring low response delay and high-quality content requires relatively large computing power.

5. Limited to a couple of hours of autonomous work - at this point, the technology used in batteries is advancing slowly.

   
   

The core issue, as we see it from the conceptual side, is that there is a misconception. Going from a standard entry point to the digital world, like a personal computer or game console, to a deep dive using advanced technologies like VR headsets is associated with a more immersive experience that influences the central nervous system.

With the transition of VR devices to a new level of technological development, overcoming today's main bottlenecks, the industry will be able to get a functional mechanism that will allow them to move away from simply repeating the experience of the real world to forming an experience that has no analogs.

The current development trends of VR look similar to the transition from simple mobile terminals to smartphones. There have been many attempts to link existing and experimental concepts in an effort to satisfy the user and bring new experiences. VR is a key marker, the advancement of which will naturally influence the penetration of the Metaverse into our daily lives.

The current state of VR and metaverse capabilities is at the stage of testing the potential and forming a market position for anyone who wants to transfer or integrate their services/products from the real world into a parallel virtual world. With each bottleneck solved from the above, metaverse products will gain a significant boost, with further expansion of their user base.

What should happen with VR technology to truly experience virtual reality?

“VR technology is comprised of multiple components where the final result of them working together is always video. Visual data is 90%+ of both global internet traffic and what your brain processes as a whole. Creating, Analyzing, and Transporting visual data acts as a bottleneck in every system, whether you are streaming Netflix or a Self Driving car. VR is yet to resolve the same bottleneck. For VR to become the new reality, you would need small, wireless goggles processing dual 8K video signals instantaneously. The gaming and metaverse industries, specifically Unreal Engine 5 and Omniverse from Nvidia, combined with new GPU tech, proved that we are very close to running life-like interactive simulations. Therefore the only limiting factor of VR in the coming future is the bandwidth of video transfer and the compute power needed to compress and decompress video to get it to the device. Since we are at the edge of Moore’s Law, we can’t rely on brute forcing through this problem with computation power, which will lead to immense price, power draw, and devices far from what we call mobile. Therefore a radical solution for processing video would help VR make its final step into reality.” - Daniel Korogodksi, CEO and co-founder at POLAR.

Metaverse is a fundamental element of the future of web3 in the post-hype period.

The metaverse industry has undoubtedly experienced significant growth in 2021 and 2022, with heavy investment from big tech companies and an influx of well-funded startups. However, as we approach the midpoint of 2023, it appears that the initial buzz surrounding the metaverse has subsided, and the projected 1 trillion dollar industry has yet to materialize. This does not mean that the metaverse is not a valuable and necessary technology for society, but rather that it is simply not yet ready to deliver the quality and experience that users expect.

In light of this, it is important to recognize that the development of the metaverse depends on addressing the fundamental bottlenecks that are hindering its advancement. So I think it’s not up to the Metaverse at this point to gain people’s engagement, but rather up to those fundamental bottlenecks that should step up and reach new development levels before we can truly see a future where the Metaverse plays a central role in our daily lives.