Ready Player Everyone

0xe5E4
August 24th, 2021

Or, an introduction to Verse

The internet is filled with games - and I'm not talking about ones that are streamed on Twitch. The best internet games are the ones that are hidden in plain sight.

Framing the internet as a collection of games, or even as a giant infinite game in itself, isn't a new idea. Numerous people have discussed the implications of internet games and how winning strategies can produce outstanding real-life rewards. Social media stands out as perhaps the most analyzed sector of internet game theory. These games are well understood and exhibit a mature set of players, strategies, modes, and outcomes.

Many of our behaviors around media and, more broadly, information platforms, however, are constrained by one game mode. The hyper-centralization of media has effectively created a single-player experience defined by two problematic features:

  1. Monopolistic platforms wield unilateral control over determining the information that we see
  2. While users are responsible for creating and curating information on these networks, they share none of the value generated from their work

Thus, single-player information networks suffer from incentive misalignment between the platform and its users. The platform is motivated to aggressively grow a single "global water cooler" network in order to maximize the amount of attention generated. However, users share none of the upside in the network's growth. Instead, individuals are incentivized to compete with each other to capture a fraction of the network's attention and bankroll that attention into downstream benefits. The result is a zero-sum, single-player game in which the platform is the only guaranteed beneficiary.

Image credit: Chris Dixon, "Why Decentralization Matters"
Image credit: Chris Dixon, "Why Decentralization Matters"

In the last year alone, advertising revenues for every major media and search platform increased between 56-74%. The participants on these networks natively earned what amounts to a rounding error on the platform's balance sheet.

The incentive misalignment between centralized platforms and its users results in an environment in which information becomes a commodity, and valuable information comes at a premium. When there’s infinite upside and zero downside to creating, networks become saturated as noise overtakes signal. Structurally, it's impossible for users to coordinate and produce legitimately valuable information which benefits both individuals and the network simultaneously.

As Vitalik argues, legitimacy is the most important scarce resource. The net result of the fundamental problem - the value of centralized information networks is not shared by the participants - is this: centralized information is legitimacy-constrained.

Thus, it is necessary to build a better system for universal media which enables individual participants to share in the collective upside of the network and coordinate to produce legitimately valuable information.

This is the Verse protocol.

Verse is a protocol for multiplayer cryptomedia on Ethereum. What is cryptomedia? As Jacob Horne explains, cryptomedia can be thought of as hypermedia with built-in property rights. ERC-721 NFTs are the canonical manifestation of cryptomedia. Each NFT consists of a media component (traditionally, a single URI), and an ownership component by which a single owner holds provenance over the token.

Traditional NFTs conforming to this standard provide an extremely valuable system for facilitating artistry, patronage, and exchange around singular goods. However, they aren’t designed for solving legitimacy constraints around creating and curating valuable information.

Verse introduces a new standard for multiplayer cryptomedia markets specifically designed for high-signal information discovery and communication. Through Verse, anyone can create a cryptomedia contract. Each contract consists of:

  1. A continuous feed of media URIs
  2. A tokenized market following a continuous bonding curve

Token-holders are given the ability to add a piece of media to the contract’s feed. The price of each token is programmatically correlated with demand, so token-holders are incentivized to add media which increases the value of the feed and attracts new buyers who want to participate.

Verse thus differentiates from traditional cryptomedia in two important ways:

  1. Instead of a single piece of media, each Verse cryptomedia object holds a feed with multiple pieces of media
  2. Instead of a single owner, each Verse cryptomedia object enables tokenized, fractional ownership with an unlimited number of participants

Why are these innovations important?

Crypto mechanisms, particularly tokenization and automated market makers, have enabled coordination games that could never practically exist before. What is a coordination game? I'm going to once again borrow one of Vitalik's definitions here, because it's extremely straightforward. In a coordination game, if you act in a certain way alone, you are likely to get nowhere (or worse), but if everyone acts together a desired result can be achieved.

Image credit: Vitalik Buterin, "The Most Important Scarce Resource is Legitimacy"
Image credit: Vitalik Buterin, "The Most Important Scarce Resource is Legitimacy"

Legitimacy is a natural byproduct of a coordination game. In any coordination game, if a mechanism incentivizes participants to cooperate and act together to achieve a goal instead of acting alone, that mechanism has legitimacy. Verse is designed for individuals to coordinate around creating and curating the most valuable information around any arbitrary topic. If token holders can coordinate to build a valuable, popular feed of media, the value of their tokens should increase as more people demand the token and want their own pieces of media included in the feed. In contrast, it's expensive for any one individual to add or curate irrelevant information in a market, because doing so decreases the token's value. Currently, web2 platforms produce more noise than signal as their networks grow, and it becomes extremely difficult for consumers to find the highest-quality information in an increasingly cluttered feed. Verse incentivizes perpetual creation and curation of the best information on any topic, enabling efficient and credible discovery.

As an example, consider the topic of DAOs. As it's such a nascent and trending topic, I want to find the best resources for learning about DAOs and how they operate. Where do I go? General web searches just throw me in an SEO'd hellscape. Trying to sift through social media to find the best thought leaders and posts they've written or recommended is too much work.

With a #DAOs cryptomedia object, participants are incentivized to produce a feed of high-quality posts on DAOs. I can trust the legitimacy of the information because I know that the market participants are financially motivated to build the most relevant feed possible. In this way, Verse cryptomedia creates a positive-sum ecosystem for generating the highest-quality information on any subject.

So what is the long-term goal for Verse? At its core, I think of Verse as a search protocol - one that produces information based on legitimized signals from incentivized participants. Information signaling is one of the most important building blocks we use for decision making. As Fred Ehrsam points out, a lot of life comes down to effective information processing: picking the best option among a bevy of alternatives. In an age of information saturation, on-chain signaling, uniquely enabled by crypto mechanisms, is the new search. Rather than centralized algorithms indexing the entirety of the open web to produce results, signals stored on-chain enable anyone to create an algorithm that surfaces results among specific cryptomedia objects. Searchers will pick the algorithm that comes up with the best results in their market(s) of interest.

Algorithms in the web2 era - such as recommender systems - are highly centralized, opaque and monolithic. In contrast, the Verse protocol enables a free-market for more meritocratic, transparent, and multiplayer algorithms that can be built and implemented by anyone to consume the data in Verse’s cryptomedia contracts. Search becomes not only multiplayer and curated, but also personally-signaled to the searcher. Thus, Verse enables a new permissionless, truly multiplayer standard for information legitimacy.

Making information games more multiplayer and open is imperative on a societal and individual level. Driven by the acceleration of an automated, machine-learning based world, open data and legitimate information are becoming critically scarce resources. It is critical to break the data oligopoly and control over information that monolithic platforms currently possess. Our game needs an update.

Ready Player Everyone.

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