What’s the Metaverse? Web3 Terms for a New Virtual World

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Web3

Web3 is the future of the Internet. The domination of centralized tech platforms is over. Owing to decentralization, users have more control over their data in the virtual world. Hence, the interests of the community are put first. Let us know the meaning of some terms that are pivotal to the growth of the digital economy. 

Metaverse

It refers to a virtual world where people interact through digital avatars. The metaverse is a simulated environment powered by technologies like Augmented Reality, Virtual Reality, Blockchain, 3D, and Artificial Intelligence. From the US Military to the South Korean government, everyone is showing interest in the metaverse. It will change how users work, play, learn, shop, and socialize. As Web3 goes forward, there will not be a single version of the metaverse. It will be a collection of communities and digital identities. Web3 is set for exponential growth as the metaverse economy would be worth a whopping $13 trillion by 2030. 

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NFTs: Powering the creator economy in the Web3 era

Crypto collectibles that are unique, non-interchangeable, scarce, and indivisible are known as Non-Fungible Tokens (NFTs). Generally, they are traded on blockchain-based marketplaces. NFTs can represent artwork, gaming accessories, fashion outfits, domain names, memes, real estate, sports goods, music, trading cards, movie tickets etc. According to CoinMarketCap, 695,342 NFTs were sold for $386.75 million in the past 30 days. Thus, digital collectibles are a revenue-generating opportunity for artists, brands, and celebrities in the Web3 era. 

Decentralized Applications (DApps)

It is a digital app that runs on blockchain technology and smart contracts. DApps are open-source and they execute functions in a virtual environment. They offer several benefits like greater privacy, resistance to censorship, trustlessness, and lack of control by centralized entities. As per DappRadar, 11405 Decentralized Applications are running on 48 protocols in the virtual world. 

Decentralized Finance (DeFi)

It refers to financial services offered to beneficiaries without any intermediaries. DeFi platforms operate on distributed ledger technology (DLT) and remove the need for brokerages, banks, and centralized financial institutions. 

Investors have locked in a mind-boggling $39.52 billion on different Decentralized Finance platforms. They offer various services like Peer-to-Peer (P2P) lending, trading of derivatives, decentralized asset management, flash loans, margin trading, insurance, prediction markets, staking, token swapping, tokenization, yield farming, crowdfunding etc. Some of the popular DeFi platforms are Maker, Aave, Uniswap, Compound, InstaDApp, Balancer etc. 

Play-to-Earn (P2E): Giving more power to gamers in the metaverse

The global gaming industry is being driven by the Play-to-Earn (P2E) phenomenon. Users can take part in contests, complete different levels in the virtual world, win tournaments, and receive digital assets (cryptocurrency and NFTs) as rewards. They can also make a profit by trading the NFTs on different marketplaces. The well-known P2E games are Axie Infinity, Gods Unchained, The Sandbox, Splinterlands, Alien Worlds etc. Players get a good source of passive income as they own the in-game assets. 

Decentralized Autonomous Organization (DAO)

It means a community-led entity where individuals can vote on various proposals. Smart contracts govern the functioning of Decentralized Autonomous Organizations. Users can suggest new features and influence the future of different projects in the metaverse. The voting power varies depending on the number of tokens an individual holds or stakes.  Web3 projects that operate in the form of DAOs are Decentraland, MakerDAO, SushiSwap, Synthetix, Curve Finance etc. Generally, proposals are implemented after a majority of votes are received within a specific timeframe. 

Metadata

It refers to the common attributes of an NFT (name, description, file type (images, audios, videos), and other unique properties). Metadata is of 3 types, Editable, Frozen, and Centralized. Creators can update the properties of their NFT later by classifying the metadata as Editable. The one-of-the-kind content gets stored on decentralized storage systems like IPFS when the artist freezes the metadata. Metadata is centralized when the NFTs are transferred from the creator’s wallet to the buyer’s one. Metadata is discoverable when the smart contract returns the Uniform Resource Identifier (URI). 

Minting 

It is the process by which the unique asset gets converted into a digital collectible. The files are stored in a distributed ledger and cannot be modified by anyone. Creators in the metaverse need to pay gas fees whenever they mint an NFT. Some NFT marketplaces like OpenSea and Rarible offer a lazy minting option for artists. Thus, they need not incur any fees upfront. The NFT gets minted at the moment of purchase and not during the time of creation. The buyer will pay the gas fees while purchasing the NFT. 

Floor Price

It refers to the lowest amount of money spent by an individual to purchase an NFT. The creator of a project or an NFT collection will set the floor price on a marketplace. Investors buy the NFTs and list them on a secondary exchange at a new price to make a profit. The floor price varies depending on the demand from investors, the utility being offered, and the popularity of the artist or project creator. 

Rugpull: Beware of scams in the virtual world

It happens when creators promote an NFT collection aggressively on social media, drive up its price, and disappear all of a sudden after receiving money from investors. Hence, there is a huge dip in the value of the NFT collection. Since the metaverse project was abandoned, rug pulls are similar to pump and dump schemes. Rug pulls can be hard or soft depending on the nature of the financial scam. Investors can protect themselves by checking the background of the team members, analyzing the roadmap of the project, scrutinizing the social media posts, and evaluating the liquidity. 

Eager to be a pioneer in the Web3 space? It’s time to put your first step forward and harness the numerous advantages offered by the virtual world.

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