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 liveinches.io