You have 4 summaries left

The Scoop

Web3 may help AI scale beyond what it is today, says Outlier Ventures CEO

Mon Jun 05 2023

The Open Metaverse Thesis and Web3

  • The term "metaverse" has been around for a couple of decades and remains relevant as it frames where web 3 is going.
  • The metaverse is not just about a more immersive web but also about thinking about what that economy looks like.
  • Web3 can have real impact from a financial inclusion perspective by extending all primitives into the universe of fungible, non-fungible use cases.
  • The mainstream has moved on from the hype around the metaverse and is now focused on AI.
  • However, AI needs something like Web3 to scale beyond its current capabilities.
  • The Open Metaverse thesis has changed since it was first published in 2021 due to struggles with token economics and regulatory limitations.
  • The sequel to the Open Metaverse paper, "The Open Metabus Under Attack: The Fight Back," discusses events that have occurred over the last couple of years that are undermining the potential for the open metaverse.
  • Founders are crossing over into Web3 to build startups that can raise money, find product market fit, and scale the product to 10,000, 100,000 million plus users.
  • These founders may not necessarily be as dogmatic about Web3 and just want to ship a product with some Web3 characteristics for it to survive for a decade.
  • The trade-offs in aggregate create what is called web 2.5 - web 3 but not quite yet.
  • This creates a halfway house where digital property rights exist but cannot leverage all the brilliant DeFi stuff to translate that into wealth.
  • There is an increased push by regulators towards big state control which impacts the development of an open metaverse.

Centralization and Censorship in Web3

  • Stablecoins can be censored through court injunction and order.
  • Core Order can freeze and reverse transactions.
  • Algorithmic stablecoins may be banned with recent legislation in Europe.
  • Censorship of code is becoming more prevalent, with examples like tornado cache being removed from GitHub through court order.
  • Increased centralization in web 3 leads to more censorship-prone entities and networks.
  • More M&A and market consolidation is expected as teams run out of money.
  • Equity entities are being acquired before achieving decentralization, leading to a more centralized open metaverse.
  • It is unclear if there is a way around this trend towards centralization and censorship, but principles of web 3 could be entrained into existing human rights frameworks.

Digital Property Rights and Decentralized Identity

  • The idea of digital property rights for everyone should be pushed forward.
  • Platforms should make it easy for users to exit and switch to other platforms, similar to how banks in the UK were mandated to make switching easy.
  • There should be universal rights for people on the web linked to existing law, and the industry can educate policymakers on this.
  • Cryptography defended itself as freedom of speech when it was commercialized from military-grade hardware.
  • Lens Protocol is an example of a reimagining of the social graph in the context of the open metaverse.
  • Decentralized identity has not been solved yet in Web3, and most people's identity is still their wallet which is public by default.
  • Decentralized identifiers and verifiable credentials have not taken off due to the lack of financial incentives for businesses to adopt them.
  • Tokenization could incentivize entities that verify somebody's identity or something true about a person to participate in the system.
  • Creating a secondary market for verifying things about people could offset the cost of identifying themselves and turn it into a revenue line for businesses.
  • A form of decentralized identifier (did) and verifiable credential (VC) will interplay with things like Soulbound tokens, on-chain non-transferable attestations, and NFTs.

AI and Web3

  • Zero-knowledge technology can enable a decentralized form of identity and new forms of social media.
  • AI is integral to the vision for Web3 and can extend what AI is today, making new things possible and more transformative for certain industries like creative industries.
  • Web3 can solve trust issues that AI will create, but it requires imagination to see how Web3 can extend AI from what it is today.
  • Conversational AI is limited in completing actions because it lacks agency, which agent-based systems can solve by having specialists.
  • AI needs hyper-specialized data to achieve generalized AI
  • Specialist agents are needed to outsource work and bid on jobs
  • Trillions of specialist agents are required for generalized AI
  • Web3 infrastructure is necessary for economic agency and uncoordinated bottom-up markets
  • Composability is the direction of travel for AI, particularly in creative industries
  • Web3 can provide the infrastructure for creative composability in media production
  • The industrial process of media production takes too long compared to the possibilities of AI-generated content

The Future of Media Production in the Open Metaverse

  • The idea is to make every element of a scene an NFT and create a universal library for media creators to borrow from.
  • This would dramatically reduce the time it takes to produce a movie or game.
  • AI can be used to create content within days that could be equivalent to a blockbuster movie, with multiple derivatives possible.
  • Personalized prompts could lead to the end of mass media, where every bit of media is generated based on personal data without revealing it.


  • The updated thesis is a framework for founders to make decisions with
  • Every decision has a trade off
  • Aggregate decisions determine the future of the open meta
  • Politicians' opinions do not determine the future of the open meta
  • The updated thesis can be found on their website at