JPMorgan - Opportunities in the Metaverse

Question 1

What opportunities does the metaverse offer?

Answer 1

1. Transact -
2. Socialize
3. Create
4. Own
5. Experience

Question 2

What are key stats for transacting in the metaverse?

Answer 2

Every year, $54 billion is spent on
virtual goods, almost double the
amount spent buying music

Question 3

What are key stats for socializing in the metaverse?

Answer 3

Approximately 60 billion messages
are sent daily on Roblox

Question 4

What are key stats for creating in the metaverse?

Answer 4

GDP for Second Life was about
$650M in 2021 with nearly $80M
USD paid to creators

Question 5

What are key stats for owning in the metaverse?

Answer 5

Non-fungible tokens (NFTs) currently
have a market cap of $41 billion

Question 6

What are key stats for experiencing in the metaverse?

Answer 6

200 strategic partnerships to
date with The Sandbox, including
Warner Music Group to launch a
music-themed virtual world

Question 7

What is the metaverse?

Answer 7

The metaverse is a seamless convergence of our physical and digital lives, creating a unified, virtual community where we can work, play, relax, transact and socialize. A key point is that there is no one virtual world but many worlds, which are taking shape to enable people to deepen and extend social interactions digitally.

Question 8

What are examples of web 2 virtual worlds?

Answer 8

Second Life
Roblox
Fortnite
World of Warcraft

Question 9

What are examples of web 3 virtual worlds?

Answer 9

Decentraland
The Sandbox
Somnium Space
CryptoVoxel

Question 10

Web 2.0 vs Web 3.0 approach to the metaverse

Organizational struture

Answer 10

Web 2
* Centrally owned
* Decisions are based on adding shareholder value

Web 3
* Community governed, generally through a foundation DAO
* Native tokens are issued and enable participation in governance
* Decisions are based on user consensus

Question 11

Web 2.0 vs Web 3.0 approach to the metaverse

Data storage

Answer 11

Web 2: centralized
Web 3: decentralized (game assets)

Question 12

Web 2.0 vs Web 3.0 approach to the metaverse

Platform storage

Answer 12

Web 2:
* PC/console
* VR/ AR
* Mobile / app

Web 3:
* PC
* Virtual reality / AR
* Mobile / app coming soon

Question 13

Web 2.0 vs Web 3.0 approach to the metaverse

Payments infrastructure

Answer 13

Web 2: Traditional payments (e.g., credit/debit card)

Web3: Crypto wallets

Question 14

What is J.P. Morgan’s thesis on how the metaverse is beneficial?

Answer 14

From a social perspective, the development of more immersive virtual experiences is helping people to build communities based on shared values, and to express themselves in more authentic ways

Question 15

When was Second Life released?

Answer 15

Second Life was released in June 23, 2003

Question 16

When did Runescape reach 1M users?

Answer 16

May 4, 2007

Question 17

When did Facebook change its name to Meta?

Answer 17

October 28, 2021 Facebook changes company name to Meta

Question 18

What areas need to be further developed and mature in order for the metaverse to achieve its full potential?

Answer 18

1. Technology
2. Commercial Infrastructure
3. Privacy and Identity
4. Workforce of the future
5. Regulation, tax, accounting and social infrastructure

Question 19

From a technological perspective, some key imperatives for the growth of the metaverse are:
(9)

Answer 19

1. Improved performance in avatar movement and environment rendering
2. Reduction of environment ‘sharding’ so all participants can interact with each other live in the
   same location
3. More capacity to support complexity in design and interactions
4. Reduction of local hardware requirements for complex interactions with 3D rendering
5. Expanded accessibility across devices (including mobile)
6. Development of interoperability or cross-virtual world interactions, and ways to manage engagement and digital assets across these platforms (think of it like being able to seamlessly change channels on the television)
7. Definition of standards for digital assets (wearables, objects, brands) and virtual/ cryptocurrencies, so they can be transferable across various virtual worlds (with potentially different manifestations in each world, e.g., the same NFT manifests as a special edition t-shirt in a virtual world but is a uniquely designed vehicle in a race car video game)
8. Advanced discovery mechanisms such as the ability to find friends or recommendations on things to do, places to visit, and customized virtual goods to shop
9. Expanded data analytics and reporting for virtual spaces. These will be specifically designated for commercial and marketing usage and will track business key performance indicators (this already exists in some worlds, such as Cryptovoxels)

Question 20

Some key elements to support commerce and the meta-economy still need to be determined and scaled, including: (7)

Answer 20

1) Web 3.0 virtual world integrations with legacy traditional finance payment rails (e.g., credit cards, pay by bank, debit, automated clearing house/wires)
2) Web 2.0 virtual world integrations with crypto payments and NFT/digital assets marketplace commerce
3) Single wallet user experience
4) Evolution of virtual/cryptocurrencies and digital asset backed financing and mortgages through using lending models, or leveraging decentralized finance
(e.g., NFT-collateral backed virtual world mortgages)
5) Creation of cross-border and cross-metaverse foreign exchange and liquidity solutions
6) Improved user experience for mainstream adoptions of non-crypto/Web 3.0
natives
7) Expansion of solutions and services to support DAO community-based
projects, business ventures and investments

Question 21

What will the future of work in the metaverse look like? Some key areas to consider include:

Answer 21

1) Training new designers and developers with specialization in 3D modelling of avatars, wearables, objects, architecture and interiors, leveraging virtual
world-specific software development kits (SDKs)
2) Evolution of content creators and storytellers that can span across virtual
worlds, virtual goods, NFTs, token gates, (varying manifestations of NFTs
across platforms), commerce and communities
3) Redeployment of event producers that specialize in metaverse experiences
(concerts, parties, art showings, community meetings, sports events,
sightseeing and travel)
4) Creation of community managers focused on creating robust online and
offline relationship-building and interactions to strengthen platform
engagement and stickiness

Question 22

When it comes to the regulatory framework that will govern the metaverse,
there are many open questions that need
to be addressed, including:

Answer 22

1) Paved paths on regulatory, tax and
accounting treatment of Web 3.0 digital real estate/property, and virtual world commercial transactions
2) Adept navigation of regulatory, tax
and accounting treatment of primarily Web 2.0 virtual worlds with Web 3.0 digital assets
3) Solutions and services to support virtual worlds that are globally accessible, but may be required to adhere to local jurisdictional requirements and rules in commerce and payments
4) Evolution of community governance (e.g., Who sets rules in the virtual worlds? Who governs?)

Question 23

What’s your ‘metaverse strategy’? (enterprise)

Answer 23

1. Learn - There are many different interpretations of the metaverse, and various angles to learn
2. Assess - While the metaverse will scale across many industry verticals, evaluate if there are relevant opportunities for your business
3. Create - Gain experience through internal development. Take the opportunity to explore creative consumer engagement through new channels, services, experiences, digital goods and assets. Start small and move fast. Test and learn.
4. Connect - Start building a network of metaverse ecosystem participants. The world is still small, so high quality collaborations and partnerships are still available at a reasonable level of investment.
5. Establish - Get your business out there and position yourself to capture the hearts and minds of tech-forward sub-communities