Metaverses already have implemented several of these embedded DeFi.
Metaverses will be the next phase of the internet, inspired by Web3. Web3 will power virtual economic systems in the Metaverse, just as it does now with the internet. Financial services, gaming, and social media, among others, may all coexist in the Metaverse. Despite their distinct origins, these systems will continuously interconnect and cooperate with each other as a result of their coexistence.
According to theWeb3 vision, we see DeFi, GameFi, and SocialFi as three distinct sectors. We believe that these three subclusters will come together as a Metaverse experience as the space advances and the Metaverse concept matures. However, these three sectors were created at different times in the last few years.
Most of the DeFi, GameFi, and SocialFi implementations are still in their infancy, and all rely on crypto to support their economies. Metaverse becoming a part of the household, that is set to change.
It is important to recognise the distinctions between verticals and horizontals. When we look at a GameFi application in a metaverse, we see that it is a dedicated gaming world that attracts users. They play the game and then leave satisfied.
In addition to serving as a platform for decentralized finance transactions, DeFi and SocialFi apps can also function as verticals. Users looking to interact with their friends through Twitter or Instagram-like experiences can utilise the apps as verticals. They provide an experience distinct from the rest of the platform.
Metaverses aren’t simply collections of applications; they are a bundle of user experiences across a scalable economic model. Vertical experiences are conscious, while horizontal ones are unconscious.
It’s crucial to comprehend the distinction between conscious and unconscious experiences in order to see how these applications interplay in the Metaverse. Should they blend in or stand out?
Conscious and unconscious experiences can be identified by considering a few examples. If a passenger went to the ticket counter, picked up £10 from their wallet, and bought a train ticket to London, it would be an example of a conscious user experience. When a person walks into a station and uses near field communication (NFC) on their phone to tap and walk through the barrier to take a train, it is an example of an unconscious user experience.
Achieving a seamless, frictionless, and unconscious financial transaction experience is one of the objectives of traditional fintech applications. You don’t have to compete with your friend or colleague in a ‘Call of Duty’ experience in ‘Call of Duty’ competitive spirit can be gamified through likes and views on Instagram.
There are three types of Metaverse experiences in the Metaverse—DeFi, GameFi, and SocialFi. We will not have metaverses like the Otherside, where people come to play. Many of these paradigms will be unconscious, making the paradigms more horizontal (embedded) than vertical (stand out from unconscious actions).
In the future, value creation and exchange will occur across ecosystem boundaries and jurisdictions. Therefore, all use cases must be ecosystem-specific.
An ecosystem well-oiled enough to embed DeFi, GameFi, and SocialFi into the Metaverse is required to realise this future. These user functionalities will be mingled together into an environment that includes experiential, utilitarian, and gamification elements.
A metaverse where DeFi can be applied will require a microtransaction economy. A metaverse where SocialFi can be embedded will require an ecosystem in which creators and consumers contribute, are compensated, and are acknowledged for doing so.
Metaverses have already implemented many of these embedded DeFi systems.
The concept of DeFi has been embedded into other financial applications.
In future, we see a lot of new functionalities in Metaverse economy, including microtransactions, token-based loans, token exchange markets, micro token economies, token exchanges, and so on. These functions are required to build a scalable economy in the Metaverse.
Several metaverse ecosystems are already experimenting with ecommerce. Suppose a user has a nice bag of NFTs and goes to an art gallery. The art is expensive, and the user is short on cash. If NFT-lending has been implemented, the user might borrow USDC via their Ape or Punk to buy the art.
In the circumstance depicted previously, the user interface is critical to making the transaction seamless. If the ecosystem had a native NFT instead of an Ape, it would be more easily used. Leveling up these NFTs will make them more valuable as the user spends more time with them, especially if there are mechanisms by which they can do so.
Users will be able to utilize DeFi elements such as NFTs, land, and in-game assets as these assets become increasingly valuable as a result of the users investing more time and effort in upgrading them.
GameFi is embedded.
Large play-to-earn platforms like Axie Infinity frequently use the phrase GameFi. GameFi, however, is not the only strategy for gamifying an experience. These features are frequently used to gamify experiences in addition to GameFi. Casual video games, leaderboards, loot boxes, battle passes, and raffles, for instance, may be used to gamify an experience. These experiences do not necessarily have to be Fortnite-style gaming experiences.
GameFi components, like DeFi components, are important to maintaining user engagement and commitment to the platform. They help increase user retention.
GameFi depends on both DeFi and SocialFi to function. For instance, those who want to take part in a leaderboard can use or rent an NFT. Similarly, the leaderboards will only be effective if the SocialFi elements are built with gamers and creators in mind.
A link to an embedded video of a dog dancing is social media.
Lastly, SocialFi keeps the creator’s economy intact in a metaverse implementation. When a metaverse is created, there are often multiple parties involved: asset creators, asset holders, gamers, and/or users. All of the stakeholders or economic actors must be incentivized in proportion to the value they add, in order to create a sustainable economy.
Gamifying the experience often connects with SocialFi principles. A gamer, for example, will accumulate experience points if he wins and plays consistently. Similarly, an ecosystem creator whose content performs well will be rated highly.
When transacting on the Metaverse, economic participants can take advantage of social swag. Social scores or experience points are integral to DeFi components. In addition to accumulating value within the ecosystem faster, more social swag allows participants to accrue value within the ecosystem.
There are many on-chain activities within the Metaverse, and concepts such as soul-bound tokens can be used to build credibility within an economy.
In order to create a Metaverse experience that is comprehensive, we need GameFi, DeFi, and SocialFi. Even metaverses focused on one purpose require these elements to ensure viability and scale.
A metaverse, in theory, can only scale if DeFi, GameFi, and SocialFi function together seamlessly. DeFi would address economic matters, GameFi would address experiential elements, and SocialFi would address credibility issues for economic actors, in essence.
Without the DeFi components, a metaverse would be devoid of commercial scalability. Without the GameFi facets, there would be no incentive for users to keep returning. Finally, without the SocialFi angle, the ecosystem would have no credibility. SocialFi elements certify the value of users and creators.
Metaverses focused on football, Hollywood, or art will certainly exist, but there will still be mini-games, microtransactions, and ecosystem rankings. We can already see multiple SAAS platforms providing these extras so that teams can focus on the fundamental purpose of their metaverses. All of these must coalesce to create a thriving ecosystem, a sticky platform, and an exciting experience for Metaverse users and creators.