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What is a metaverse? The Beginner’s Guide

What’s a metaverse?  It is a broad concept that often refers to virtual worlds. This article is a beginner’s guide to the metaverse. We’ll go through the philosophical and technical sides of this concept.

What is a metaverse?

Metaverse is built on Web 3.0, which is commonly described as the next stage of the Internet. The Internet of the 90s (Web 1.0) made it possible to read the information on web pages. The Internet of the 21st century (Web 2.0) gave users the freedom to produce content and express themselves socially.

Decentralized ownership on blockchains can be considered as the next step in the evolution of the Internet. It is also one of the key concepts of the metaverse.

Here’s the development of the internet summed up:

  • Web 1.0 = Reading
  • Web 2.0 = Reading and writing
  • Web 3.0 = Reading, writing, and ownership

If you are don’t yet familiar with Web 3.0, check our in-depth beginner’s guide first! Note. We have used the term Web3 instead of Web 3.0 in this article. Web3, web3, and Web 3.0 are all used in the media.

The basic concepts of decentralized ownership are the freedom to buy and sell certificates of authenticity (NFTs, Non-Fungible Tokens). In practice, this means that anyone can create a Web3 wallet and purchase blockchain-based assets on marketplaces like OpenSea.

NFTs (certificates of authenticity) ensure that the purchased asset is authentic. Everyone can verify the related transactions on the blockchain. Such assets can be virtual plots of land, objects, avatars & their accessories, membership cards, or artwork.

One of the special features of Web3 is communality and co-owning. Many NFT projects have a co-owned collection or account, and the use of it is usually decided by members according to the DAO model.

The four stages of the metaverse

When we add flexible transitions between reality, augmented reality (AR), and virtual reality (VR) to the aforementioned Web3 principles, we are close to the metaverse.

The image below shows different starting points to start the journey towards metaverse. It is divided into four blocks: Web2 vs. Web3 and non-VR vs. VR. metaverse

Next, we’ll dive deeper into each starting point (block).

Block A: Web2 + no VR

Block A is the one in the bottom left corner.

Traditional (and centralized) Web2 services face two major challenges: how to support decentralized ownership and new ways of using services (AR/VR). Is it worthwhile to start modifying existing services, or is it better to get new skills?

Nike made an example of this when they bought RTFKT studio that develops NFT avatars and virtual accessories.

The advantage of Web2 as a starting point is the massive amount of users. Compared to this, the blockchain and especially the VR sectors are still at their infancy. But, developing the old system is usually harder than building a new one, so we’ll probably see more acquisitions and collaborations with existing NFT communities.

Block B: Web2 + VR

Block B is the one in the bottom right corner.

VR technology has been developed for a long time. Native VR games and apps provide an amazing experience. As early as 2014, Meta (ex-Facebook) acquired a company that develops Oculus glasses. The company aims to get to the heart of the metaverse this way.

At the moment it is unclear how open Meta will be and how it will support NFT ownership. The question is fundamental: open and decentralized or closed and centralized?

Many of Meta’s features and goals, such as sociability and the use of VR technology, are the same as in other metaverses. Oculus marketplace has a long list of great Web2 VR games and applications.

Another good example of the Web2 VR application is Sansar VR. But where are the NFTs?


The video above: Meta Oculus Quest 2 is a quite affordable option to introduce yourself to VR.

Block C: Web3 + no VR

Block C is the one in the top left corner.

Game worlds based on blockchains and NFT’s often use the term metaverse in their marketing. Many roadmaps also include AR/VR support.

Different types of metaverses can be divided into so-called platform metaverses such as Sandbox, Decentraland, and Pavia as well as independent game worlds such as Axie Infinity, Illuvium, Aavegotchi, Gala Games, and so-on.

NFTs are at the core of all metaverses. The main functions of the game and player earnings leverage the native token of the game. For example, Sandbox has the SAND token, Decentraland has MANA, and so on.

Virtual NFT land plots are available in many metaverses. Examples below are map views of Sandbox, Pavia, Ember Sword, and Gotchiverse.


In some NFT projects, augmented reality (AR) components are introduced into the real world. See for example OVR in the image below.


For example, NFT can be collected in the real world the same way as in Pokemon Go. These are usually implemented using a smartphone application. In collectible applications (such as VeVe), it is usually possible to import NFT as an AR addition to photos and videos taken with the camera.

Block D: Web3 + VR

Block D is the one in the top right corner.

In popular visions of metaverse (Ready Player One and Matrix), the user jumps seamlessly between the real world and the virtual world, changes the avatar, and collects tokens from different sources. Block D of the four-staged system describes the goals set for the metaverse, such as flexible transitions between reality, augmented reality, and virtual reality, as well as supporting decentralized ownership, earning, and payment based on cryptocurrencies.

At the moment, almost everyone is aiming for this block, but so far there are very few companies in this combined NFT+VR area. The closest to the area are a few NFT virtual galleries that support VR, such as SomniumSpace and Spatial. Recently Spatial shifted the strategic focus of the entire company from business applications to NFT VR galleries.

The Wilder World project has also presented visions of the big NFT VR world, but so far the project has progressed ahead of tokens (WILD).

Avatar market is running hot

User identity is one of the key concepts of the metaverse, and it involves several different types of NFTs. These include avatar NFT, accessory/accessories NFT, address NFT, and membership NFT.

So far, almost every metaverse requires a 3D avatar created for the metaverse. In the future, we will see more generic avatars that are compatible with different metaverses. Almost every 2D profile picture project (PFP) also promises to develop its own 3D version of the PFP image for metaverses in its roadmap.

Some examples of various avatar projects:

  • Meebits (Larva Labsin 3D Voxel avatar series)
  • Sandbox (3D Voxel avatar of the Sandbox metaverse)
  • Expandables (Finnish-based Voxel Panda avatar series)
  • Habbo Avatars (Habbo NFT avatar series)
  • MetaKrew (Avatar Series of the Metakey project)
  • Neo Tokyo (Neo Tokyo Identities)
  • Clone X (Avatar series of RTFKT studio purchased by Nike)

Clone X was one of the most successful NFT projects of 2021. Incomprehensible prices have been paid for individual avatars, as can be viewed in the accompanying OpenSea screenshot. The highest deal was 289 Ethers (currently just over $1 million).


Avatars are closely associated with their accessories. In the best (on-chain) case, accessories are connected to the avatar using the ERC-998 NFT standard. In this case, it is managed on the blockchain instead of external servers. For example, the Aavegotchi project has implemented its avatar accessories this way.

A metaverse account is also usually associated with a blockchain address. On an Ethereum network, this address can be replaced with an ENS domain name (so-called web3 username) which is managed as NFT.

As an interesting detail, Ethereum Name Service recently implemented a so-called retroactive airdrop, where every account that had reserved an ENS name by a certain date received a certain number of ENS tokens free of charge.

NFT-based club memberships

Many kinds of memberships and entrance fees have become common in the world of NFTs. This also applies to metaverses. If you want to get into a metaverse clubhouse of a particular NFT community, you need the right avatar or membership for it. The memberships begin to mix live meetings (such as Veecon 2022) and virtual meetings.


Tickets for VR gatherings and events can obviously be sold as NFTs. In addition, the venue itself can be an NFT. For example, Spatial just recently sold the first NFT spaces, where guests can be invited to see their own NFT collection hung on the walls.

Especially with VR glasses, the experience is awesome. These NFT spaces should be compatible with several metaverses in the future.

RKFT recently launched its own Space Pod facilities in collaboration with the Oncyber project in the Clone X project. Metaspace is also heading in the same direction (see screenshot below).

Metaverse potential and future

Grayscale estimated in its report that the business potential of metaverses is trillion dollars over the next few years. Another example of metaverse investing is Yield Guild Games (YGG), which has purchased land and assets from multiple metaverses and invested in Play-to-Earn scholarship farming.

In 2021, almost all metaverse-related tokens have shot up in price. You can see some of the tokes mentioned in this article and their price development in the chart below.

NFT project Token Price 1/1/21 Price 12/27/21 Price change (multiplier)
Gala Games GALA $0.001 $0.54 540x
Axie Infinity AXS $0.59 $110.59 187x
Sandbox SAND $0.04 $6.71 167x
Decentraland MANA $0.08 $3.89 48x
Illuvium ILV $62 $1144.82 18x
Wilder World WILD $0.46 $3.92 8x
Aavegotchi GHST $0.57 $2.42 4x
Yield Guild Games YGG $1.51 $6.07 4x

So, what can we expect from the year 2022 year after such price rises? Based on the Discord signals, exciting developments are expected in the NFT sector in at least the following areas:

  • eSports NFT and tournaments for large audiences. Something is being developed in projects such as Neo Tokyo and More Than Gamers.
  • The transition to Layer-2 blockchains continues (e.g. Immutable X, Polygon). At least Illuvium, Ember Sword, Gary V Book Games, and VeVe are going to Immutable.
  • The big brands will continue to join the NFT market in 2022. Which premium brands aren’t included yet? Pepsi, Nike, and Adidas have already made the first moves.
  • The number of NFT clubs and memberships is growing and the importance of networks is emphasized in finding new projects.
  • AR and VR move forward. Would there be some bigger VR + NFT games?
  • And for sure also in 2022, some completely revolutionary NFT projects will emerge in completely new areas that no one knew to wait for.

Photo by Wilmer Martinez on Unsplash