a16z: 7 essential elements for building the Metaverse

There’s been a lot of talk about the Metaverse since it was created in the ’90s, but especially during the pandemic (given the surge in online activity), and even more so after Facebook changed its name to Meta.

Is this just an opaque marketing claim? What is the Metaverse? How does one define the term and where does one draw the line between the Metaverse and another virtual world? These are common questions people ask about the Metaverse, so we thought we should outline how we see it and how the Metaverse is intertwined with Web3.

In many ways, the Metaverse is just another name for the development of the Internet: more social, immersive, and more economically complex than what exists today. Broadly speaking, there are two competing visions for how to make this happen: one that is decentralized, generous with property rights and new boundaries, interoperable, open, and owned by the community that builds and maintains it; The other is centralized, closed, subject to the rise of corporations, and often extracting painful economic rents from its creators, contributors, and residents.

The key dimension to compare these two visions is open versus closed, and the difference between them can be conceptualized as follows:

a16z: 7 essential elements for building the Metaverse

An open Metaverse is decentralized, allowing users to control identities, enforce property rights, adjust incentives, and ensure that users (not platforms) get value. Among other criteria, an open Metaverse is transparent, permissionless, interoperable, and composable (others can freely build within and across the Metaverse).



a16z: 7 essential elements for building the Metaverse

Decentralization is the general governing principle of a proper Metaverse, and many of the features that follow depend on or derive from this primary concept.

Decentralization means not owned or operated by a single entity, nor at the mercy of a few power brokers. Centralized platforms tend to start out friendly to attract users and developers, but once growth slows, their relationship becomes competitive, extractive, and zero-sum. These powerful intermediaries often abuse user rights and de-platform, and they host captive economies at aggressive interest rates. On the other hand, decentralized systems exhibit fairer ownership, less censorship, and greater diversity among stakeholders.

Decentralization is important. Without it, anyone can become {clumsy} at any time – a precarious situation that prevents people from building on it, thus hindering innovation. Because centralized platforms cannot make the same strong commitments controlled by code as blockchains, their commitments can be revoked or changed whenever leaders or organizations have a whim about some arrangement. The most powerful way to prevent such abuse and protect the Metaverse is to ensure that control is decentralized.



Most successful video games today make money by selling in-game items such as {skins}, {emotes} and other digital goods.But the people who currently buy in-game items aren’t actually buying the items – they’re renting them. Once someone leaves to play a different game – or the game in question unilaterally decides to close or change the rules – the player loses access.

People are so used to renting from Web2’s centralized services that the idea of ​​actually owning something (a digital object you can sell, trade, or carry elsewhere) often feels weird. But the digital world should follow the same logic as the physical world: when you buy something, you own it. Just as courts uphold these rights in the real world, code should also be enforced online. As it happens, true digital property rights were impossible until related innovations such as cryptography, blockchain technology, and NFTs emerged. In short, the Metaverse turned digital serfs into homesteaders.

self-sovereign identity

self-sovereign identity

Identity is closely related to property rights. You can’t own anything if you don’t own yourself. Like the real world, people’s identities must be able to persist across the Metaverse without relying entirely on a small set of centralized identity providers.

Authentication is about identity: proving who a person is, what they have access to, and what information they share. On today’s web, this requires doing so on behalf of a man-in-the-middle through popular one-click login methods such as social login or single sign-on (SSO). Today’s biggest tech platforms, like Meta and Google, use this method to collect data to build their businesses: to police people’s behavior to develop models that deliver more relevant ads. Furthermore, since these platforms have complete control, experimenting with innovation in the certification process relies on the honesty and willingness of the companies behind the platforms.

The cryptography at the core of Web3 enables people to authenticate without relying on these intermediaries, so people can control their identities directly or with the help of a service of their choice. Wallets such as Metamask and Phantom provide a way for people to verify themselves. Standards such as EIP-4361 (using Ethereum to log in) and ENS (Ethereum Name Service) allow projects to coordinate around open source protocols and independently contribute to a richer, more secure and evolving concept of digital identity.



Composability is a system design principle, especially the ability to mix and match software components such as Lego bricks. Each piece of software only needs to be written once and can be simply reused afterwards. It’s akin to a revival of interest in finance or Moore’s Law in computing — some of the most powerful known economic forces — in that it can unleash exponential power.

In order to have composability—a concept closely related to interoperability—the Metaverse must provide high-quality, open technical standards as a foundation. In games like Minecraft and Roblox, you can build digital goods and new experiences using basic components provided by the system, but it’s hard to remove them from the environment or modify its inner workings. Companies that offer embedded services, like Stripe for payments or Twilio for communications, can work across websites and apps — but they don’t allow outside developers to change or remix their black-box code.

In their most powerful form, composability and interoperability are possible across a wide range of software stacks.Decentralized finance or DeFi is an example of this powerful form. Anyone can tweak, recycle, change or import existing code. Not only that, but developers can build real-time programs side-by-side in the memory of a shared virtual computer (Ethereum) at their leisure — such as Compound’s lending protocol or Uniswap’s automated market-making transactions.By combining powerful new elements of property, identity, and ownership, builders can create entirely new experiences.

Open/Open Source

Open/Open Source

True composability is impossible without open source, which is the practice of making code freely available and capable of being redistributed and modified at will. Regardless of the degree or kind, open source as a principle is so important to the development of the Metaverse that we break it down as a separate component, albeit overlapping with composability above.

So what does open source mean in a Metaverse development environment? The best programmers and creators—not platforms—need full control to fully innovate. Open source and openness help ensure this. When codebases, algorithms, marketplaces, and protocols become transparent public goods, builders can pursue their vision and ambition to build more complex and reliable experiences.

Openness leads to safer software, better understanding of economic terms among all parties, and elimination of information asymmetries. These properties can create a fairer system, actually aligning network participants. They could even eliminate the need for outdated U.S. securities laws designed decades ago to reconcile long-standing principal-agent problems and information asymmetries in business.

The power of composability in Web3 is largely due to its open source spirit.

community ownership

Community ownership

In the Metaverse, all stakeholders should have a say in the governance of the system proportional to their participation.People shouldn’t just follow orders from a group of product managers at a tech company. If any one entity owns or controls this virtual world, like Disney World, it may offer some form of escapism but never reach its true potential.

Community ownership is one piece of the puzzle that unites network participants—builders, creators, investors, and users—to collaborate and fight for the common good. This miracle of coordination — previously unwieldy or impossible without the advent of cryptocurrencies and blockchains — is achieved through the ownership of tokens, the network’s native asset.

In addition to the technological advancements that decentralization brings, the philosophical implication of community-owned space is critical to the success of the Metaverse. In Web3, participants in Decentralized Autonomous Organizations or DAOs have taken this principle to heart. They are eschewing the formal rigidity of corporate structures in favor of more flexible and diverse experiments in democracy and informal governance. This allows communities to be managed, built and driven by their users rather than by a single entity.

social immersion

Social immersion

Big tech would have you believe that high-performance virtual reality or augmented reality (VR/AR) hardware is an essential—perhaps even the most important—ingredient of the Metaverse. This is because these devices are Trojan horses.Companies see them as a way to become the main provider of computing interfaces for 3D virtual worlds, and thus become a bottleneck for people’s cross-border experience.

The Metaverse doesn’t have to exist in VR/AR. All that is required for a virtual world to exist is social immersion in the broadest sense. Even more important than the hardware is the type of activity the Metaverse enables. They’ll let people hang out remotely, work together, connect with friends, and have fun, just like they do today with Discord, Twitter Spaces, or Clubhouse.

With the surge in the use of other remote meeting and telepresence tools such as Zoom, the pandemic has highlighted the need for more immersive experiences beyond traditional text-based communication platforms such as email.Furthermore, thanks to the economic elements outlined earlier—property rights, self-sovereignty, community ownership—the Metaverse enables people to earn a living, engage in business, and gain status. In the typical knowledge worker workplace, people use tools like Slack to collaborate, while outside the traditional corporate world, Discord and Telegram are prevalent in the DAO’s bottom-up organizing movement.

The Metaverse has nothing to do with {View} mode (a tool for viewing the Metaverse), it’s a handy meme for those who control manufacturing hardware.


While many companies have started building different parts of the whole, if a virtual world lacks any of the above, it doesn’t count as a fully formed Metaverse in our opinion. We believe – as is evident in this framework – that the Metaverse cannot exist without the fundamental foundations of Web3 technology.

Openness and decentralization are the backbone of the entire edifice, and property rights depend on decentralization—and they must endure despite the influence of powerful adversaries. Community ownership prevents unilateral control of the system, and the approach also supports open standards, which facilitate decentralization and composability, attributes that are closely related downstream of interoperability.

The development of an ideal multi-dimensional virtual world will gradually take shape, and many questions remain to be resolved, lest we get a dystopian analogue like the IOI-controlled oasis in Ready Player One. However, if builders adhere to these axioms, this outcome is less likely.

When the Metaverse arrives, it should fully embody these principles — with decentralization at its core.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/a16z-7-essential-elements-for-building-the-metaverse-2/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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