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

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.

Conclusion

• 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 liveinches.io