Why DeFi, GameFi and SocialFi are horizontal in the Metaverse

The future of value creation and exchange will know no borders or national jurisdictions. They will all be specific to an ecosystem. Therefore, all use cases must be specific to the ecosystem.

The future of DeFi, GameFi and SocialFi could be integrated. But, this integration can only be implemented in a well-oiled ecosystem. The metaverse that brings together these user functions will not only have experiential elements but also utility and gamification elements.

For example, a metaverse in which DeFi may be applicable will need to have microtransaction opportunities. A metaverse into which SocialFi can be integrated will need to have an ecosystem in which creators and consumers will contribute, and will be compensated and recognized for those contributions.

Now let's look at what we might see as integrated DeFi. Many of them have already been implemented in several metaverses.

Built-in DeFi

As this space evolves, we see microtransactions, non-fungible token (NFT) based lending, leasing mechanisms, NFT marketplaces, micro token economies, token swaps and many other bells and whistles that will support the metaverse economy. Each of these features aims to establish a scalable business model within the metaverse.

For example, e-commerce within the metaverse is already being tested in several ecosystems. Imagine a user with a good bag of NFTs, entering an art gallery. Art is expensive and the user lacks cash. If NFT lending was integrated, the user could use their Ape or Punk to borrow USDC to purchase the art.

In the scenario described above, the user interface is extremely important to make the transaction smooth. In the example above, instead of an Ape, if the ecosystem has a native NFT, that could be used more seamlessly. These NFTs will be more valuable the longer the user spends in the ecosystem – especially if there are mechanisms by which they can be upgraded.

As users invest more time and effort in improving the value of their ecosystem assets such as NFTs, land or game assets, these assets will play an important role in DeFi elements, that the user can exploit.

Built-in GameFi

The term GameFi is often used in the context of big game-to-win platforms like Axie Infinity. Yet, in many cases, gamification of an experience is as important as GameFi. Often these features don't have to be intense Fortnite-style gameplay experiences. They can use casual games, leaderboards, loot boxes, battle passes, and raffles to provide playful experiences.

Like DeFi components that add value to the business model, GameFi components are not only useful for increasing user retention, but also essential for maintaining user engagement and investment in the platform .

GameFi components rely on both DeFi and SocialFi to succeed. For example, those who want to be part of a leaderboard can borrow or rent an NFT to participate. Along the same lines, leaderboards are only effective if SocialFi elements are designed for gamers and creators.

Built-in SocialFi

Finally, SocialFi keeps the soul of the creator economy intact in a metaverse implementation. A metaverse often involves various stakeholders: asset creators, asset owners, players, and/or users. A sustainable model is achieved when all these stakeholders or economic actors are incentivized in proportion to the value they add.

This is often where the gamification of the experience interacts with the principles of SocialFi. For example, players who consistently play and win move up the ranks within the ecosystem. As a result, they will accumulate experience points. Similarly, creators whose items perform well in the ecosystem will be rated highly.

This form of “social swag” is also essential in DeFi transactions. Creators and players with social scores or experience points can get better deals when mining the DeFi components of the Metaverse. More social swag allows economic actors to accumulate value more quickly within the ecosystem.

Most of these activities within the metaverse are on-chain, and concepts such as soulbound tokens can also be used to build credibility within a metaverse economy.