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12 April 2022

How to Create Metaverse with NFT and DeFi Integration?

Are you looking to do the metaverse with nft and defi integration?
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Metaverses are one of the most popular conceptions today. It was a part of science-fiction not long ago, but it will soon become a standard part of our daily lives. A new reality will combine the physical world and digital space to create its economics on non-fungible tokens (NFTs) and decentralized finances (DeFi). 

This article will tell you how to become a part of the new economy by creating a metaverse and integrating NFT and DeFi.

What are metaverses?

Firstly, let’s see what the developers and experts mean when employing the ‘metaverse’ notion. It is essential since most people understand a metaverse as a VR open-world video game offering freedom in actions (e.g., OASIS from the movie ‘Ready Player One’).

The professionals define metaverses differently. Mark Zuckerberg and Meta (former Facebook) developers understand it as an online environment of connected virtual spaces (social networks, VR messengers, video games, marketplaces, and other IT products). The users employ IT instruments like VR/AR, neural networks, blockchain, etc., to create avatars, move from one space to another, and interact with the world and other users (communicate, play, learn, work, etc.). 

This metaverse will have several basic principles:

Some features of the metaverse are already on the market. For example, you can hold an online meeting in the Horizon Workroom digital space by Meta, using an Oculus VR, or create an avatar in the Second Life game to socialize with other users and earn money there. 

These are decent examples of what a metaverse is. However, there is no complete metaverse yet developed. 

NFTs and their purpose in a metaverse

Metaverse (on the left) and  NFTs (on the right) markets growth forecast by PwC and Grand View Research, Inc.

Metaverses employ NFTs as a digital certificate proves that ownership rights. To put it another way, the NFT proves that the holder possesses a particular digital asset: avatar, virtual property, game items, etc. Furthermore, NFTs can prove the rights for physical assets if there are appropriate mechanics and integrations in the metaverses. 

A simple example is tokenized money: if you receive 10 dollars in a metaverse, you will have 10 dollars in the real world. A more advanced example is a tokenized computer; namely, your actions on a virtual computer in a metaverse will automatically repeat on the actual computer. If you create a text file and type something, this file and text will appear on your real computer. 

The first example shows that your avatar is a complex NFT 2.0 that can hold other assets and connect/synchronize with the computer in the real world. In the second example, the NFT avatar possesses the NFT of the computer, which is represented in the metaverse as a  virtual computer synchronized with the natural world computer.

As you can see, it might be troublesome to integrate NFTs into a metaverse, especially if you create something unique and fascinating.

Why does your metaverse require DeFi?

Five most popular sectors in DeFi on Ethereum. 20th of January 2022. Source

Decentralized finances (DeFi) is a system functioning on blockchain that provides financial solutions without intermediaries like banks, brokers, or exchanges. DeFi employs smart contracts, self-fulfilling applications that act according to preprogrammed algorithms if certain conditions are valid (e.g., if A is true, then do B).

In a metaverse, decentralized finances might become the ground of the economy since they can significantly reduce the transaction cost and increase speed. It will influence typical currency exchange and even loans and insurance. Furthermore, decentralized finances have several other advantages:

How to develop a metaverse on NFT and DeFi?

Searching and defining the goal. It is likened to launching any other IT product. Creating a metaverse and integrating NFTs, DeFi, and other linked applications and protocols start with the idea. It requires a clear understanding of what kind of metaverse you want to develop, beginning with designing and integrating third-party applications and services.

Many metaverse startups currently are gaming projects like Star Atlas (ATLAS), Gala Games (GALA), Decentraland (MANA), and The Sandbox (SAND) that employ Pay-to-Earn (P2E) monetization model on NFT. Meta (former Facebook) wants to create something global: a new internet. Websites and applications will be three-dimensional spaces, visualized via virtual and augmented reality (like 3D levels in video games).

While launching your metaverse with NFT and DeFi integrations, you can go through one of these two options or create something new.

The map of the metaverse ecosystem and the projects. Source.

Furthermore,  instead of creating a whole system, you can think of creating just certain parts of the metaverse that can be later used for other metaverses, as NVIDIA does.

Elements/instruments that can be used for developing a metaverse. Source.

Searching for a development company. When you define the type of metaverse you require, you will need to find a development company that would be capable of implementing your idea. The technical partner must have successful experience developing projects in the niche you want to focus your metaverse on. If you're going to develop a gaming metaverse, you require a company that has launched several successful video games. If you're going to integrate NFTs and DeFi into the metaverse, you will need a developer with experience launching blockchain projects on NFT and DeFi like Merehead.

We gave a detailed description of finding a technical partner and what features to pay attention to in the article: "How to choose a development company?".

Launching phase (business analysis). The next step is for you and your chosen development company to decide on the economics of your future project: to analyze the market, the target audience, and the competitors. This is necessary to understand in advance the prospects of your project and how to implement NFT and DeFi - what these solutions should be.

And if with NFT, everything is usually simple - you implement game characters, lands, and unique items in the form of NFT and allow players to trade these NFTs on the open market (marketplace). Then in the case of DeFi, there can be variations in terms of the approach to integration and what kind of DeFi services it should be.

For example, DeFi integration into the meta-universe can be implemented:

Select the technological stack. Next, you need to decide on the tools to develop your metaverse. It's not just programming languages, databases, IDEs, SDKs, etc., but also a blockchain, game engine, and AI solutions. In addition, you can also think about using a specialized platform to run a meta-universe, such as Facebook Meta, which can help save a lot of time and money. Indeed, today, all the meta platforms available on the market for launching meta-events are in their early stages, so they have fundamental features and functions.

The choice of blockchain, game engine, and other development tools depends on what kind of meta-universe you want to create and on the preferences of the development company - their knowledge, skills, and experience. Here is an example of the technology stack that Microsoft uses to create a meta-universe:

The technologies Microsoft employed to develop the metaverse. Source.

What's interesting about the Microsoft metaverse is that it's largely modeled after the real world. There are no fantasy avatars - leave them to Roblox or Fortnite (or Second Life!). It doesn't currently have NFT and DeFi, so Microsoft's technology stack isn't appropriate for our project. The technology stack used in blockchain startups, such as this one, is more suitable for this:

But this list is not complete either. It doesn't have a Game engine, the software tool that developers use to create (and run) video games. You can create/load 3D objects on these platforms, apply rules for moving these objects, create 3D spaces, add sounds, etc. Such an engine is needed to create virtual spaces in the meta-universe. 

This kind of game engine can be created by yourself (long, expensive, and not always efficient), or you can use one of the open-source game engines such as Unity (the most popular) or Unreal Engine (the most technologically advanced). 

In addition, you should not forget about other tools: artificial intelligence, cloud technologies, visualization tools, etc.

The map of infrastructure needed to develop a metaverse. Source

Develop a digital metaverse. Once you've decided on the concept of your platform, you can move on to the next step: creating a metaverse. A metaverse can be any virtual ecosystem that fits your idea. For example, suppose you create a platform for communication like a virtual social network. In that case, metaverse could include an app, a private room, a virtual conference room, private rooms, and other 3D spaces within which users will communicate.

The development of game metaverses stands out because, unlike the same platforms for communication and social networks, a lot of time is spent on preproduction. It usually includes the following three stages: 

And these stages do not always alternate linearly. Everything happens in parallel; many developments, which took a lot of time and resources, are discarded and forgotten. It's also widespread for game developers to start over five or sometimes 50 times until they find a genuine game concept.

Creating a layer of meta-universe interaction. The next step in developing a meta-universe is to create a layer of user interaction. User controls, navigation controls, access criteria, and communication protocols must be defined in this step. The interaction layer is also responsible for integrating third-party tools and interacting with the metaverse platform. 

Testing of the developed product. Almost as soon as the development process (i.e., coding) starts, QA experts work; they test the code for bugs and errors and the system's usability, functionality, load, and stability. Additionally, testing of smart contracts and DeFi is performed internally by the development team and with the help of independent external auditors, such as Techrate and Certik teams.

Deployment and Release. The created meta-universe is deployed in the cloud or local servers when the software product is completed and thoroughly tested. If your platform has mobile apps, they are added to the App Store, Google Play, Microsoft Store, Amazon App Store, etc. In addition, you also need to add your native token to the listings of cryptocurrency exchanges and make the first NFT seals on your own and external marketplaces.
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