(2021-02-28) Outlier Ventures Open-Metaverse OS Whitepaper

Outlier Ventures has an Open-Metaverse-OS Whitepaper.


Science fiction like Ready Player One have described ‘the Metaverse’ both as a destination and dystopic process of capture and control.

The parallels in the first virtual worlds we experience in gaming today and The Web more generally are striking: centralised, closed, proprietary and extractive, with shareholder supremacy over user centricity. Where giving away your time and data in return for ‘free’ access to platforms has become normalised.

Defining The Metaverse

it’s important to acknowledge the beginnings of the Metaverse are already here, ‘’we are just experiencing it in 2D’’. This is critical to understand because if we think of the Metaverse as a far off destination we will almost definitely sleep walk into not addressing some fundamental design choices about the principles of how we want it to operate

some games platforms are so big they are closed micro-economies, with their own currencies which they control centrally and value systems, like experience points systems, in-game items (skins) and marketplaces, where significant amounts of the wealth are held and traded. This is even more substantial when you think of that as a proportion of a person’s wealth, when seen in younger generations

It is because of this I propose perhaps the defining characteristic of a true Metaverse is that it needs its own economy and currencies native to it, where value can be earnt, spent, lent, borrowed or invested interchangeably in both a physical or virtual sense and most importantly without the need for a government.

Competing Multiverses

there are at least two versions of the Metaverse we observe emerging: one dominated by closed platforms and Big Tech like Facebook / Oculus and the other built on open protocols leveraging blockchains like Decentraland.

there is also another technical and philosophical distinction between visions and emergent actualities of metaverses which could be described as: lo-fi to hi-fi.

axes which allow for a crude classification of metaverse platforms and virtual worlds to emerge. We believe these two axes are the most important to consider because when combined they represent the cost to enter the economic system and the ability to off-set that cost by earning value for different demographics

Web 3, a stack for an Open Metaverse

there are several technology trends that are beginning to converge. This started with a trend we outlined back in 2016 which we termed The Convergence Thesis which saw how amongst other things IoT, VR and AR and AI would begin to interplay

going through several iterations; the second being The Convergence Ecosystem in 2018 and then The Convergence Stack in 2019.

this is now more generally thought of as Web 3

decentralised and based on user centricity and the sovereignty of their data and wealth. In effect where ‘the user is the platform

ultimately based on blockchains and their atomic units of account becoming the means that value is ‘minted'

But digital wealth that can be programmable and represent an increasingly complex range of assets from in-game items and virtual land, to loan agreements or futures contracts. In aggregate representing an entirely new financial system often referred to as DeFi (Decentralised Finance).

The Web 3 Toolbox

Web 3 consists of several principles, protocols and standards which could be said to form a stack that will inform and can and is being leveraged by the entrepreneurs and architects in The Metaverse.

The Web 3 Toolbox brings a number of core innovations and building blocks, located in the middle of the diagram

Internet Money:

Decentralised Finance (DeFi): Ethereum

Sovereign Virtual Goods



Virtual goods are ultimately easier to sell than physical goods, and will have significant and increasing value.

Digital to Physical redemption

Boson Protocol

Decentralized governance


Several mature building blocks for DAOs have emerged, including Aragon and DAOStack

Distributed Compute & Storage aka Cloud 2.0

Filecoin or CUDOs

Self Sovereign Identity & Verifiable Claims:

critical to avoid the role of a government or platform as the sole arbiters of our online identities, deplatforming or even state violence. And being applied to gaming and the metaverse by teams such as Crucible

Self Custody Crypto Wallets and Applications

Agent based Web:

such as AEAs (Autonomous Economic Agents) via Fetch.ai.

Web 3 is built upon foundational elements

Peer-to-Peer (p2p) networks

Transaction layer: Blockchains and other forms of distributed ledger

Programmability layer: Building on the transactional capabilities, some blockchains offer rich, generic programmability

there are now dozens of competitive and collaborative ecosystems besides Ethereum, many of which are highly mature, and also enabling some combination of DeFi, NFTs, Decentralized Governance, Decentralized Cloud Services and Self Sovereign Identity

Building in the Metaverse

set of design decisions and trade-offs at several levels of your stack between open / shared or closed / gated and proprietary.

A way to approach this is to look at the anatomy of any given instance of the Metaverse as a platform at its various levels of the stack as we have outlined below

Anatomy of a Virtual World

Each of these elements can exist in any virtual world, in some form or another, open or closed. Many centralized virtual worlds have in-game currencies, some have forms of in-game financial instruments, for example mortgages in Animal Crossing.

The Open Metaverse OS

Web 3 technology has instead optimised primarily for high degrees of decentralisation and transaction security rather than and sometimes at the expense of enabling smooth, real-time interactions, and its applications for more 2D web based experiences on desktops and mobiles.

But this is changing

As it stands The Open Metaverse OS is concentrated on the critical lower layers of the stack

An Openness Framework

This way of thinking about an Open Metaverse OS also allows a framework through which to assess the openness or otherwise, design choices and trade-offs made by a given instance of the metaverse including; is the code open source, are the assets portabile, is the data platform proprietary or user controlled, who can create value, and the degree of UGC vs platform made and how can it be monetized.

It is important to stress however it is unlikely openness is absolute and it’s choices binary but rather on a spectrum

For example it seems Decentraland is the only metaverse project which has a fully open source approach but still takes a more restrictive approach to avatars and wearables. E.g. like Cryptovoxels it doesn’t store avatar files on-chain, nor is their system available to outside avatar models and wearable minting is curated

So why build in the Open Metaverse?

Well firstly there is a general direction of travel towards open standards

Metaverse Web Browsers: There are increasing in-browser capabilities being developed from Google Gaming Browser and Mozilla-VR, with WebGL now widely supported and WebXR on the verge of enabling generic support to VR and AR devices, as well as crypto-currency browser wallets like Metamask. Although we are not quite there with seamless in-world transactions.

there will be both top down and bottom up reasons

Let’s start with bottom up because we believe this will be the primary driver for innovation in its early stages... user centricity... virtual worlds become the interface to create, trade or experience virtual goods and services which are portable and not restricted to a single (walled garden) platform.

When creations, wealth and assets can have a life ‘off platform’ and be exchanged and become infinitely interchangeable with one another, freely in open markets, they grow in liquidity and consequently value

Many creators like artists are experiencing this for the first time where assets with NFTs (Non Fungible Tokens) are sold for more off-platform in secondary markets than in their primary sale (where they are minted).

This brings powerful network effects not experienced in closed systems

And we are already seeing early but increasing forms of integrations of The Open Metaverse OS into established social channels like Discord including crypto wallets and NFT marketplaces and exchanges

Its important to remember Discord’s rise coincided with the growth of e-sports, through games like League of Legends, Overwatch and Fortnite which all initially had limited communication tools for streaming, which Discord elegantly solved outside of those closed worlds in an open environment

So cross world social, and increasingly economic layers, will run in parallel to virtual worlds initially until they become embedded with them.But even once these limitations are resolved in these new virtual worlds discord is likely to continue being the social layer around and between worlds and likely to play host to the convergence of Web 3 & gaming communities.

We can also regard different virtual worlds, open or closed, as slices of a larger whole. Users can and will by design interact with and be part of one or more of these worlds.

one of the powerful things about blockchains as we have seen with Bitcoin, Ethereum and its various DeFi protocols is you can hardcode economic incentives for early adopters to join a network into the system itself

many early virtual worlds both creating their own crypto currency or selling virtual land, or offering NFTs as rewards all of which is easily tradable off platform with and for other crypto currencies

Therefore it is more likely virtual worlds in The Open Metaverse are increasingly interoperable and interconnected to the point it will be hard to distinguish them as separate but rather different instances of a whole.

The Empty World Problem

The Open Metaverse, especially when compared to the Closed Metaverse, is one full of empty worlds. The number of daily active users across all platforms is still estimated to be in the low thousands

If we look at the High Tech end of the closed spectrum the time and cost to develop and launch a AAA game on average is between $60-80 million

This makes creating content extremely expensive and therefore the industry highly concentrated

However, if we look at the explosive growth in user-generated content (UGC) as a trend in gaming and virtual worlds generally through platforms like Roblox, which based on our earlier definition would still be classified as part of the closed metaverse, you can see the power of letting independent creators build games

making their world builder kit Roblox Studio available for free but, importantly, you can not clone and fork the entire platform where it still serves as a closed ecosystem. And even then Roblox still has 850 full time staff to operate and recently needed to raise $530 million of capital at a $30bn valuation to grow.

It seems obvious that the creatively excluded will be more than willing to experiment in open and permissionless economic systems especially when they can derive a greater return on their time not just in the creation of work but in perpetuity through secondary sales through ‘on-chain royalties’.

As a new channel this is also beginning to be leveraged by global franchises such as the NBA and the Top Shot NFTs. And as NFTs become less about things to just passively store in a wallet and more about things to experience socially in open virtual worlds.

even more important to mass adoption of The Open Metaverse as a creator economy is the hip hop industry, which has already shown a keen interest in Bitcoin and represents ⅓ of global music streaming as a genre and culture could be the killer app for NFTs.

Where in the closed virtual worlds of platforms like Fortnite, because of their sheer reach they have become powerful channels for entertainers like Travis Scott to reach new audiences, very quickly artists, as content creators, will realise rather than just being paid to play in someone else’s virtual world they can build and monetize their own virtual communities through NFTs where they retain direct and full creative and financial control

with LiDAR technology now available to anybody with the latest iPhone, the physical world can be mass rendered, translated into machine readable 3D models and converted into tradable NFTs to be uploaded into open virtual worlds very quickly populating them with avatars, wearables, furniture, and even whole buildings and streets

When combined with promising innovations like GPT-3... will begin to power virtual beings and stories we can interact with.

This means we can expect to dramatically reduce the time and cost to produce games or whole virtual worlds.

Humanity’s greatest economic experiment

For example a project like Axie Infinity by design makes sure you can not derive value in the system through pure speculation only by buying and holding Axies (playing cards). To earn a yield or at the very least not see your investment decay you must put them to use regularly in play. If you don’t want to or lack the skill to do that yourself you must create jobs by lending your NFTs to players to put them to work.

This means you can participate in the system by productive capital or through the work itself (play-to-earn). The consequence is there are whole villages in south east asian countries like the Philippines doing just that (gold farmer).

This doesn’t just replace the economy proper, it creates entirely new wealth in a purely virtual sense but which puts bread on the table and roofs over people’s heads.

Top down... increasing top down mandate by governments to limit the power of social platforms like Facebook and other various Web 2 platform monopolies from an antitrust perspective but also from a Data Trade and abuse motive.


it is a seismic societal shift that will cause immense disruption including, and perhaps most especially, in the context of the nation state and fiat-money based economies of today. We can not assume it is both a panacea for the world’s ills nor a utopia without its problems. But perhaps its saving grace is everyone can finally have the ability to directly contribute to it and control their personal destiny as a user, creator and consumer in the first truly universal and permissionless economy humankind has ever known.

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