At this point, we really shouldn’t be surprised when Mark Zuckerberg courts controversy. But on July 28, he actually told investors on an earnings call that Facebook would become a metaverse company in the future. Huh?
Maybe Zuckerberg was just tossing off the latest buzzword to goose Facebook’s stock. Or maybe he truly believes that in the years to come Facebook will “transition from a social media company to a metaverse company.”
You can imagine the reaction at Web 3.0 powerhouses like Aave, Sushiswap, and Yearn Finance. They’ve been assiduously constructing a decentralized, virtual experience utilizing the Ethereum blockchain. DAOs, those digital cooperatives that are a hallmark of the Ethereum community, are instrumental in developing the Web 3.0 metaverse. So to learn that Facebook, the epitome of corporate hierarchy and control, is now casting its eye on the multiverse, well, that drew swift reaction from Defiers.
“Let’s kill Facebook’s metaverse before it even begins,” tweeted Anthony Sassano, the influential writer of The Daily Gwei newsletter. Still others piled on, vowing that DAOs will battle Facebook and the “rent-seeking platform businesses of Web 2.0.”
Meanwhile, Aave CEO Stani Kulechov said Facebook’s walled garden was the antithesis of the open source DeFi landscape. “Instead of Facebook building the gated metaverse lets just build an open-source metaverse that is owned and governed by its users,” Kulechov tweeted .
No surprise, Kulechov believes a Web 3.0 open-source culture will fulfill Ethereum’s egalitarian ideals. “The issue currently with Web 2.0 is that most of the value is completely owned by the companies that are operating the platform,” Kulechov said, citing Twitter and Facebook as examples. “They own the user data and content which they monetize without giving any upside for their users. Additionally if you are not aligned with these platforms, you can’t walk away with your follower audience to somewhere else, you’re locked in.”
Kulechov envisions future social networks, and by extension the metaverse, as having a decentralized social graph. “Users would own their own audience on the protocol level,” he says. “Anyone [in] any part of the world can build a new front-end or application on top of the protocol.” To be fair, Twitter does offer up its data to app developers to build with, though has had controversies in the past with caps on usage.
While Web 3.0 players like Aave may already be well on their way, Facebook and its fellow Web 2.0 juggernauts shouldn’t be underestimated by any stretch. Some leading figures in DeFi actually welcome Zuckerberg’s proposed entry. “I think it validates the entire space and thesis,” says Soban Saqib, the co-founder of Ex Populus,, a metaverse-focused game publisher.
The key will be if Zuckerberg will embrace core Defi values such as interoperability and privacy. The ability for protocols to interact and build on one another is crucial for innovation. Facebook would have to cede a lot of control in its metaverse to match Web 3.0’s standards.
Questions of openness and user-control are not only limited to software too — the hardware needed for the immersive augmented reality (AR) and virtual reality (VR) metaversal experiences will also play a role. Crypto has remained staunchly virtual thus far, while Facebook has made inroads into metaversal-enabling hardware with its Oculus VR headset. A Web 3.0 metaverse may find uneasy footing on hardware built with Web 2.0.
Money Lego Effect
“The concept of a digital world that resembles the Oasis in Ready Player One, we’re pretty far away from that,” says Saqib. “But interoperable digital assets from these worlds being used, I think we’re getting close to that.”
Interoperability also produces the “money lego” effect which allows protocols like Alchemix to facilitate self-paying loans by plugging into Yearn Finance’s yield-generating vaults. All using MakerDAO’s DAI.
Facebook, of course, doesn’t exactly have a reputation for playing well with others or protecting the privacy of its customers. Yet Zuckerberg acknowledged the importance of interoperability in his comments on July 28. “Being able to basically have your digital goods and your inventory and bring them from place to place, I think that’s going to be a big investment that people make,” the CEO said.
Saqib, for one, was willing to give Zuckerberg the benefit of the doubt.“I think he might be aligned with everyone else as long as he’s willing to focus on interoperability and privacy, I don’t think we’ll have a clash.”
Shreyansh Singh, Polygon’s head of gaming and NFTs, believes the old and the new can co-exist. “We may have various interoperability protocols and tools that can provide seamless passage between the web3 and FB’s metaverse,” Singh said, pointing out that Web 3.0-based projects have embraced centralized entities like Apple’s App Store.
Even so, Facebook is an aggressively competitive company and if it takes the metaverse plunge you can bet it will leverage its unprecedented scale — four out of every 10 people on Earth are FB users — to dominate the space.
Zuckerberg needs only look at the Web to see how DeFi is rapidly changing the digital world. NFTs have become a cultural phenomenon and are exploding in value. Ethereum is about to undergo a historic upgrade that could radically improve its economics and speed adoption. And Web 3.0 trailblazers like Polygon are poised to lead revolutionary changes in media, which is why it raised $100M recently to set up a production studio.
Once upon a time, Bill Gates made the near-catastrophic mistake of underestimating the world-changing nature of the internet and Microsoft had to scramble like mad to catch up. Maybe the brash Facebook king is intent on not making the same error.
“The defining quality of the metaverse is presence, which is this feeling that you’re really there with another person or in another place,” Zuckerberg said on the earnings call. “Creation, avatars, and digital objects are going to be central to how we express ourselves, and this is going to lead to entirely new experiences and economic opportunities.”