MetaFi: The Rise of Metaverse Financial

Note: What penalties will occur when Metaverse encounters DeFi? Outlier Ventures' full analysis and interpretation of this new MetaFi concept was compiled and compiled by the TechFlow volunteer community of Deep Wave, a TechFlow Friends organization.

Since 2018, improving the power of financial management (DeFi) in the cryptocurrency community has gotten better and better. Although DeFi has received a lot of attention in the cryptocurrency space, its adoption rate is still low, with less than 5% of all cryptocurrency assets used for trading purposes.

This passage indicates that DeFi's future growth will not be driven by CeFi, but by what we call “MetaFi” to release rates. Metaphi, a financial division of the Metaverse.

What is a meta-universe? What is it worth? How will DeFi integrate the new cryptocurrency extension to support the growth of MetaFi?

Together, the metaverse can be understood as an interconnected layer that connects the physical and virtual worlds, and includes a new mix of hardware and software, but most importantly, business equals financial law. In this case, it is necessary to consider financial accounting.

The meta-universe needs crypto

As mentioned above, the global meta is the number one industry,A meta-business that can have a bigger impact than any other digital, virtual, or gaming industry., and these should be viewed as examples of the meta-world or one of its ribs (Verse).

In fact, if the meta-economy's total GDP exceeds the country's GDP, it would be better compared to the fiat-based economy. We believe that at least the open meta-world is an open, unlicensed version of the meta-industry that can be seen from what we collectively call crypto. Although there are no other industrial meta-industries today, our arguments are as follows:The meta-world requires Crypto, and Crypto is the meta-universe.

In all three senses of the metacosm, people can understand it from two main points.

interface layer.End users can access meta-worlds through a desktop browser, mobile app, or various hardware and software technologies such as virtual reality (XR), virtual reality (VR), and augmented reality (AR).

financial calculation.Where metaspatial computing takes place, a decentralized, transparent and independent basis can be designed to determine the business model that end users will use to exchange products, services and the outcome, which designers can create their own meta. -universe. . Ethereum is a good example, it's a process developers use to create smart contracts for business applications, and it's also a list of Metaverse user companies lastly.

In the context of the first context above, the first layer interface can be used in a variety of formats and files, and it is important to keep it open when technology output and ideas change. So when we talk about the early days of meta-world development, we often refer to current experiences such as games or the virtual world, be it browser-based 2D, immersive VR, or the RA.

Accounting system refers to the technology that supports the global meta. As described in the free document on the Open Meta Universe operating system,We believe that the basis (or foundation) of financial processes will be based on technologies which can be subdivided into Web3.

we also believeAll digital meta-world names are to be web3-based to provide valuable assets, interactions, and permissions at no cost to multiple sectors (or verticals) of the meta-universe.This technology supports rich and comprehensive applications and samples based on Web3.

In this way, Metaverse provides integrated business intelligence with distributed data, which is global, transparent and cryptographically unique. This laid the foundation for digital business first and we have seen the growth of non-fungible tokens (NFTs) and commercial industries (such as Play-to-Earn from Axie Infinity).

Its decentralized and unpretentious nature makes it unmatched at the pace of innovation and elusive for existing systems. Therefore, especially in terms of DeFi,The metaverse may be outside the rule of national regulators, or at least thrive before national regulators take over.

Additionally, as seen in the last 12 months of 2021, DeFi has been criticized and evaluated by regulators in many countries. While the level of supervision can have a positive impact on the business, poor management often delays innovation and significant profits in the financial system. When it comes to DeFi, there are some similarities between the DeFi product market and traditional financial tools.

We also believe that Metaverse represents a legitimate business and its products are generally digital products that may or may not exist in a traditional business. Just as humans cannot control all aspects of the global economy, the same can happen in the meta world. Given the industry's growth potential in VR, AR, and XR environments, capitalizing on personalization can become increasingly difficult over time, regardless of how it is implemented in the metaverse (governance policy). .

We strongly believe that the DeFi component supporting the development of the Metaverse will reach unprecedented reach for global financial institutions.We also believe that the economic development of the Metaverse will facilitate the exchange of wealth for many generations, benefit the next generation, and be able to meet the needs of local populations, digital platforms, digital actors, gamers and musicians. with numeric value. These advantages are not recognized in the traditional financial system.

State of the digital economy

Today, millions of dollars are deposited with online merchants such as social networks (Facebook, Instagram or TikTok) or games (Fortnite and Roblox).

What we call Web2 is all about securing these accounts and users for as long as possible by setting a “gap” as intended to deduct as much “life value” as possible and provide benefits to sellers.

usually,The working principle of Web2 is that sellers are the best products, especially among satisfied customers.In media or free games, these fees are usually paid for by advertising and the revenues are usually not disclosed directly to the users themselves. Roblox, a company based on the principle that "developers can benefit from user content concentration (UGC), also has around 25% of users, for example its music streaming format and its YouTube program."

The total value of the global digital economy is currently estimated at $ 11.5 trillion, or 15.5% of global GDP. Over the past 15 years, global GDP has grown 2.5 times, almost double (since 2000), and more and more people depend on the Internet for their livelihoods.

Focusing on the creator of the digital industry, part of the digital industry, is now only a small part of the digital industry, but the main area has grown. This includes advertising, sports (skin care), digital art, streaming media, music, movies and more.

Among the materials, there are currently 50 million content developers in this field, including amateurs (46.7 million) and around 2 million professionals. In the field of digital creators, professionals can easily make $ 100,000 per month. However, most people earn less than that, and their income is not fixed, and they will not be paid for their work by the system for many months.We believe that most of today's developers will not be considered part of the global meta as the value cannot be traded independently across all platforms and much of it relates to the cost of assets. the platform.

It further breaks down the limitations of the Web2 digital platform.

Limited inclusivity:As a digital business developer for example, most developers in theory always exclude the level of marketing. Because the cost they create is negligible and is not under the control of the Web2 platform, they get away with it. Income is not required. In short, unlike employees in centralized companies receiving fiat payments, traditional financial systems cannot assess the risks associated with lending to the rich in digital business.

Dynamic Terms of Service:Participants in the digital design industry cannot believe that key support services are trustworthy and neutral, increasing the risk of monetization and de-platform for two people creating content.For example, Only Fans quickly banned content creators, and platforms like Facebook and Twitter continued to suppress developers and APIs.In practice, the rules for participating in these platforms are fuzzy, inconsistent, unverifiable and change at any time (due to the drawbacks of smart contracts).

Design isolé:As I've already said,The platforms make it difficult, if not impossible, for people to change prices directly through the platform or by withdrawing money and then opting out of closed digital commerce.This has led to the emergence of monopolies, which means that users have no choice but to go back in time.

Web 3. NFT and global meta

In contrast, in the Web3 world of cryptocurrencies, DeFi and NFTs, the whole paradigm revolves around users and sovereignty.themselves, information and wealth.

in the web 3Information itself can also be a form of wealth and income.This means that while the platforms that support the design, discovery, or management process are still available, users have full control over the product, changing the value of the application platform and reselling, borrowing and lending illegally.Simply put, a barter is the first "product".

Unsurprisingly, we see in Web3's early successes that once the moat is removed and replaced, people will be spending more time and money on their favorite platform like the Axie Infinity blockchain game. We have already mentioned this in a previous article. Long-term,Metaverse and its platforms (like most of Web2) will incorporate the technology and principles of Web3. Not because it's philosophically true, but because it's a good deal.

NFT, recently launched by TikTok, has proven the truth of this prediction. But the good news is that it can happen if you disagree or don't accept Web3 on a closed platform. In contrast, NFT derivatives can in principle be freely represented and traded in the unlicensed business of Web3 in parallel with a closed platform through innovation in a decentralized corporate infrastructure such as the Boson protocol.

What is metaphy?

For us, MetaFi is a hat.Represents contracts, products and / or services that make up a variety of different and homogeneous tokens (and derivatives) to achieve difficult financial impact.For example, with MetaFi, people can now use their NFT failure as a liability for their DeFi lending platform.

To understand MetaFi, we must first mention two key concepts of using DeFi.1) Unstoppability, 2) Composability: As one of the “lego currency” for manufacturers, these two principles can be combined to create a similar financial process.

Manufacturers around the world can advertise their partnership and compete to deliver the highest quality returns and eliminate gaps in the ordering process. Equally important is that while fiat-based systems run by controllers may restrict their interaction with DeFi, this does not necessarily have to happen with DeFi itself (only the plan and the groups themselves are completely fair. ).

MetaFi brings these DeFi principles to the global meta-large level through a combination of inhomogeneous and homogeneous tokens combined with new forms of community governance such as Decentralized Autonomous Organizations (DAO). The combination of various cryptocurrency primitives has led to a booming industry, bringing hundreds or thousands of users into the cryptocurrency space over the next ten years. We believe four key MetaFi factors will speed up this process.

Development of financial products:In the past, DeFi storage teams have only been successful by a small fraction of the community's cryptocurrency developers due to its technology. However, the NFT platform makes it easier for developers and communities to create businesses to exchange ideas with users, from ongoing costs to issuing their own community tokens. Fans and communities can also talk directly about the commercial success of their favorite cultural products and campaigns.

All refinancing:A lot of people don't care about the concept of cryptocurrency, but just don't know that it's unique, not empty. With MetaFi technology, digital devices can capture the value and flow of everything, and opening up free trade can create lasting benefits. Found on the Internet.

CAD Services Development Team:A mature DAO group authorizes the management of the integration of digital services of digital and financial channels without the help of companies and intermediaries (eg: real estate bank). The main feature of DAO members is that they can join and withdraw depending on specific circumstances.

Risk interaction:History has shown that financial companies are often unable to measure risk in emerging markets, whether it is financial services or insurance. This led to the impact of the community risk farming community on the export industry. From farming communities to the shipping industry, partnerships have always posed the risk of collaborations. DeFi provides users with community assurance features, especially when combined with DAO teams.

Financial competition:Generation Z prides itself on being smarter financially than its leaders. As a result, many new banks are coming up with innovative and exciting ways to help people manage their finances and provide education that makes it easier to learn finance. This allows young people to access financial products more easily than their parents or grandparents.Additionally, we recognize that the realm of memes and financial products, such as Dogecoin cryptocurrency and various “memes stocks” provided by Robinhood, is hazy, allowing people to unleash the business culture and internet of business. .

Thorough understanding of NFT as a commitment

In order to truly understand how a digital agent can be used as a real financial instrument for lending, it is important to understand NFTs as per the contractual arrangement in DeFi. As we mentioned at the end of 2020, most NFTs have less liquid than homogenized tokens and can be used more in DeFi protocol.

However, it's important to note that this was before the explosion of NFT art in early 2021, before the emergence of top-notch NFTs like Crypto Punks and Bored Apes, and before the success of the gaming category. Play-to-Earn blockchain. . (Directed by Axie Infinity). Estimates of the mix between DeFi and NFT are now starting to play a role in MetaFi on a daily basis.

All wETH loans from NFTfi as of December 13, 2021

HAI full loan to NFTfi on December 13, 2021

It is also interesting that the interplay of homogenized and non-homogeneous tokens created for classes designed and developed by manufacturers has reduced the demand for middlemen. The future costs they create. The total value of social tokens is currently around $ 1.1 billion and continues to grow.

metaphy frame

To understand metaphi in the meta-world, we first look at the main points of the meta-world (visualized as a figure). It uses the previous Metaverse open operating system which focuses on the application level of Metaverse Web 3 categories.

The meta world (photo below). This image is divided into three main sections.According to 1) Layer 0, Layer 1 and Layer 2 2) DeFi, 3) Edge (application) (Verse).

Base

This includes key processes (or procedures) registered as Layer 0, Layer 1, and Layer 2, such as Polkadot, Ethereum, and Polygon.

These key guidelines address application and security requirements, allowing applications to be built on top of it. , thus realizing the horizontal value change. The horizontal axis and associated objects are marked as open meta-worlds to be included in the app in order to provide internal knowledge of the meta-world. If the application does not fit into this important process, the application is isolated, the economic and creative benefits of the application stagnate, then gradually disappear, and eventually the application can no longer understand financial.

We are witnessing a similar situation in the traditional world, where services that are not integrated into the general process gradually disappear because they do not remain for the end user. .

DeFi

This includes small financial apps that can be used in the key processes mentioned above, which can be referred to as “currency legos” and are seen as voluntary non-performing apps, resulting in difficult financial impact through smart contracts.

edge

These sections are made up of domains, or groups of equal worlds, which make up the whole metacosm. Vertical fields, such as the virtual world, should be connected to the base layer as relationships and free exchange of values.

DeFi (MetaFi) of the meta edge appears between the intersection of vertical and horizontal. This is where a company's assets (usually NFTs) interact with their common assets (core and financial). There are many kinds of vertical fields in the meta-world, and the number is innumerable, and the meaning of each vertical field can be very good, so it is necessary to prove the points on the vertical line, but in fact, MetaFi is . a phenomenon of qualitative interaction of homogeneity and non-uniformity.

Horizontal support base

As described above, internal processes include major processes (or protocols) registered as Layer 0, Layer 1, and Layer 2 (e.g. Polkadot, Ethereum, and Polygon). These agreements can often promote change. This means that everything (L0, L1 and L2) supports each other for a certain purpose.

A simple and well-known example is Ethereum, a one-tier process that offers smart performance. This means that the framework provides custom logic that can be used to design programs on other computers and run them in a distributed environment. Similar to Bitcoin's decentralization approach, but in addition to the decentralization aspect, Ethereum offers what we call programmable smart currencies or currencies through smart contracts.

For easy conceptualization, we are focusing only on Layer 1. Ethereum has proven to be the base that can provide new services to the financial world as it provides an integrated process that can be used to build a wide range of applications through smart contracts and smart results (as DeFi has proven).

The idea behind this integration means that every smart contract on the Ethereum network can interact with each other as long as they are configured, and it works perfectly for the integration at the intersection of Ethereum services and games.

The horizontal axis of the figure is also the horizontal development of the meta major ridge. This means that Layer 0, Layer 1, and Layer 2 will continue to be the base of all vertical regions (or parallel edges) that make up Meta-Earth. Applications classified as DeFi will generally focus on this level, supporting difficult financial applications, allowing people to borrow, borrow, and trade in the cryptocurrency ecosystem.

MetaFi Event Collection

As the situation in the figure above shows, the number of vertical titles and their content also change as the meta-world changes. However, we would like to define a new set of key functions as described below.

virtual reality:The virtual world is a digital space for social, business or leisure activities, which may not be as realistic as the real world and physical phenomena. It contains low-resolution content, typically represented by NFTs when switched, and can be free, redeemed, and configured. The most important examples are Sandbox or Decentraland.

In the context of NFT, virtual real estate is associated with in-game currency and / or management tokens in the virtual world. This means that users can use their tokens to buy virtual world assets and vote for upgrades.

At the start of 2021, significant strides were made in the adoption of the virtual world, with only 12 people interacting with the virtual world on a daily basis. Over the past 30 days, 65,000 specialist locations have been affected by smart contracts from Somnium Space, Decentraland, Sandbox and Crypto Voxels, which have quadrupled since early November. Of these, Sandbox has supported the highest number of monthly users (4,100) or the total cost of land sales to date (112,000 ETH or $ 450 million).

Games:Games can be defined as the digital activities most often used for entertainment. The difference between meta edge games is that they usually have points that you play and earn. In other words, users or players are rewarded with tokens for their contribution to the game.This creates a business model in which capital and operations are linked to create value.

Axie Infinity is perhaps the most famous meta-world game and one of the pioneers in this genre. Both users (roughly 2 million monthly users) and contract revenue ($ 2.5 billion per year). Blockchain games have also gained wide acceptance since the start of this year. Almost half of current blockchain active wallets are connected to gaming, with a total of 4 million monthly users in the top 10 blockchain games.

avatar:Avatar is specially designed to allow users to create unique digital characters, including interactive 3D avatars in multiple meta-spaces, and most are designed as Digital Graphics (PFP).

PFPs, which can be considered well-known, often use tokens that are homogenized as a draft to support NFTs with features like regulatory rights or other benefits. Popular projects such as CyberKongz and SupDucks distribute ethnic tokens to certain sub-groups (NFTs). In the CyberKongz project, Genesis kong will provide 10 banana tokens every 24 hours. These tokens can be sold on Sushiswap or used for modifications, name changes, purchases, etc.

Stationery:The hardware is a digital device that can be seen in the meta edge and is currently the most important in the game, but will expand to other meta edge groups in the future. A large number of designers are using NFTs to reach the global market of 2.7 billion players. Players can now share their tastes with millions of people online with unique skins created by the most famous brands. For example, Balenciaga worked with Fortnite to create four sets of virtual costumes, and Burberry worked with Mythical Games to create fashion pieces representative of the NFT.

Marlet:Marketplace is a digital space where products and needs match, so you can discover more of NFT and promote the search for better value. Applications such as OpenSea, Superrare and Rarible allow consumers to market NFTs independently and directly. In this way, these NFTs can be used as financial assets. The segmentation function allows high performance NFTs to be divided into homogenized tokens and then kept in equilibrium. The integration and linking functions are particularly popular and can create great results for certain types of NFTs, such as the NFTX platform and Beeple's B20 index. The success of NFTs has led to an increase in market capitalization. The OpenSea market volume as of January 30, 2021 was only $ 1 million, and as of November 2021, it exceeded $ 2 million.

TVNs that generate income:TVNs can be financed in two ways: indirectly or indirectly. Income generation directly involves using NFTs as a commodity for loans, then repurchasing loans at higher interest rates, and NFTfi can use NFTs as cash.

Also, a few months ago,One addition is that NFT core operations add further income to NFTs by adding local tokens.Ether cards place Dust tokens, which are distributed to all existing Ether cards based on the rarity of the Ether cards. Dust Tokens can be used to earn NFT Blue Chip by participating in the lottery. It overlaps with the avatar. In other words, Cyber ​​Kongz and Seopdeok are also NFTs that generate profit.

Access token:It can be a homogenized token or a non-homogeneous token, and allows holders to benefit from various advantages by accessing a particular community, a specific person, or a token token to be donated in the future. The Bored Ape Yacht Club, home to 10,000 NFT monkeys, is a good example. Having this club will not only give the owner access to the Discord community, but will also factor in the future value of the Bored Ape Yacht Club. .

The above categories do not work alone and in multiple overlaps. This is an extension that allows Game and Get 2.0 features like Axie Infinity to have NFT which can earn money and upgrade to other NFT apps, for example. Likewise, there are well-developed (homogenized token-centric) crypto systems that have introduced NFTs as an additional business, like Gitcoin, which sells NFTs to fund the digital population. We hope to see more mixes of the above categories and create new MetaFi groups in the future.

Current restrictions

There is still a lot of work to be done before MetaFi can begin to realize its true potential. In particular, the status of MetaFi still faces some limitations which must be overcome in order to gain wide recognition.

Test NFT.To buy, sell or lease DTV under a contract, the licensee must know the price of DTV. NFTfi solves this problem: users can list their NFTs under the responsibility of the NFTfi website, and lenders provide loans for the value of these NFTs. The measurement is usually done by the lender, and not by the uninterested third party.

Legal and administrative issues affect the eruption.If you divide the NFT into 100 parts and divide it into different parties, it is not clear who can do what and when and how these rules will be enforced, especially when the NFT has the right to vote or income.

A model through the blockchain.Currently, the metaverse is not created on top of Ethereum, but also on other Layer 1 or Layer 0 blockchains, and blockchains have not yet reached 100% interaction. This means that in the short term, the inability to communicate values ​​is inevitable.

In order to activate the full amount of DeFi in Metaverse, it is necessary to easily integrate the NFTs into the DeFi protocol. Homogenized tokens, but hopefully there will be new ways to connect NFT and DeFi.

Fragmentation of TVN.This means dividing the non-homogeneous token into several homogeneous tokens. You can think of separation as being part of the NFT. For example, memes makers can use design tools to create memes, break them up into highly homogenized tokens, and use DeFi DEXs like Unsiwap for marketing. The main functions of NFT fragmentation include Fractional and DAOfi.

NFTisation of DeFi.This means improving the DeFi protocol to accept NFTs as liability. For example, developers can create assets in the virtual world and use them to create credit applications on a platform such as Centrifuge or Pragmafy.

NFT li derivatives.To develop mobile digital devices, their value depends on the value of the launched product, game products, investment, etc. These digital tools are represented in the form of NFTs and can be linked to: Information that makes sense. For example, digital artists can create artwork, create NFT derivatives, and use them as props to throw real estate like coins, bonds, or the gold market for Synthetix.

Waiting for Meta Pie in 2022

In a sense, MetaFi or Metaverse Financial is the cap for contracts, products and / or services that make it difficult for multiple and homogenized tokens (and derivatives) to create financial transactions. It includes the headquarters of the blockchain space (e.g. base Layer 0, Layer 1, Layer 2), DeFi group, etc.

MetaFi receives two main components of the DeFi protocol.Competition is uneven. Its growth is driven by several key themes: risk correlation, financial performance, development of financial instruments and improvement of DAO service groups.

We want to clarify now that MetaFi is still in its infancy. Some features are unthinkable, but I'm just starting to figure out how to do it in the medium to long term. However, based on what we have seen in the market and detailed research into catalytic factors, we would expect the following in the short to medium term:

Create new groups and connections between multiple MetaFi groups, such as users creating games in the virtual world, having their own business, or creating different products such as devices or avatars.

VR content will be added as user experience / user interaction improves in the MetaFi financial project. For MetaFi to be truly successful, ordinary people must have a broader understanding and fulfillment.

Additional updates in DeFi 2.0 are submitted to MetaFi., similar to the new development seen with Olympus DAO and Alchemix, better solutions are needed to address the problem of cracking in NFTs, especially those associated with NFTs in DeFi, in law and administration.

Improvements to inferior technologies (such as Layer 1), these improvements reduce transaction costs, increase the number of users, increase efficiency and generally make the application of the blockchain protocol more convenient.