Citi research: metaverse market size could increase to $13 trillion by 2030

Industry News 2years go (2022) Dexnav

Citi research: metaverse market size could increase to $13 trillion by 2030


Citi research: metaverse market size could increase to $13 trillion by 2030

Citi released a 184-page research report on Thursday titled "The Meta-Universe and Money - Demystifying the Future. The report details the following ten key points.

1. what will we do in the metaverse?

The metaverse could be the next generation of the Internet.It will combine the physical and digital worlds in an immersive way. Use cases may include everything we use the Internet for today, including gaming, business, art, media, advertising, smart manufacturing, healthcare, virtual communities, and social collaboration (both enterprise and education).

2. How big will the metaverse be?

With the current domain dominated by immersive and multiplayer experiences, gaming is seen as a key use case for the metaverse in the coming years, and eventually, the metaverse will find new and enhanced ways to carry out all current activities, including business, entertainment and media, education and training, manufacturing, and general enterprise use cases.

Analysts estimate thatBy 2030, the potential market size of the metaverse economy (Total Addressable Market: TAM) could be between $8 trillion and $13 trillion.

The expert contributors to the Citi GPS report noted thatThe potential users of the metaverse range up to 5 billion.It depends on whether a broad definition is used (i.e., the number of unique Internet users) or whether it is based only on a more narrowly defined billion users (i.e., the virtual reality/augmented reality device user base).

3. Is metaverse the same as virtual reality?

No, the metaverse is not just about virtual reality. For the foreseeable future, most users will likely access immersive Internet experiences via cell phones, and only a fraction of metaverse participants will use VR devices. However, we expect the availability of virtual reality (VR) and augmented reality (AR) to improve in the coming years as many consumer hardware manufacturers build on the success of the Oculus Quest in the U.S. in 2021.

4. What infrastructure needs to be built?

Latency needs to improve and faster connections are needed. By 2025, only 25% of the global population is expected to have access to 5G, so network bandwidth needs to be increased and delivered. The lag, packet loss and network unreliability witnessed in today's world make the current state of the infrastructure unsuitable for building the envisioned metaverse experience.

5. What does "money" look like in the metaverse?

The future metaverse may contain more digital native tokens, but also traditional forms of currency.Currencies in the metaverse may exist in different forms, namely in-game tokens, stablecoins, Central Bank Digital Currency (CBDC) and cryptocurrencies.Current payment tracks are typically domestic real-time payments and expensive cross-border payments, which makes them unsuitable for a borderless global meta-universe ecosystem where decentralized finance (DeFi) and existing traditional financial systems are expected to be able to coexist.

6. How many meta-universes will there be?

If most users access the metaverse through their cell phones, the operating system (OS) will be the same. Consumer hardware manufacturers will be the gateways and potential gatekeepers to the metaverse. Similar to today, there could be a split between the US/international and China/firewall-based metaverse. There may also be a spectrum based on technology and business models, i.e., metaverse centralization vs. decentralization.

7. How do blockchain and Web3 relate to the metaverse?

Web3 refers to the conceptual third iteration of the Internet, based on ownership and decentralization, facilitated by the blockchain. The so-called "open metaverse" is built on top of blockchains - mainly the ethereum chain - and overlaps with Web3. But it is likely that many Web2 centralized platforms will play an important role in the meta-universe, and even today's Web3 relies on centralized elements.

8. Do users want Web3 or do investors want it?

Web3's goal of a decentralized, democratic Internet is an attractive one for some, but implementation issues remain. Most users want a better user interface (UI)/user experience (UX) and quality content, and current Web3 solutions lag far behind best-in-class Web2 solutions. Many Internet users, including gamers, do not like the financialization of online activities due to the addition of tokens to the business model.

9. What is the role of NFT in the metaverse?

It's not just about cute collectibles and social media bragging rights. Digital assets in the metaverse, such as non-homogeneous tokens (NFTs), offer users/owners a form of sovereign ownership and are tradable, combinable, immutable and mostly interoperable. In recent months, there has been a growing interest in the NFT space from gamers, investors and corporations. NFTs in the metaverse are virtual items stored in a digital wallet that can be carried anywhere within the metaverse.

10. laws and regulations ready for the meta-universe?

We have a lot of work to do. If the Metaverse(s) is the new iteration of the Internet, it will attract intense scrutiny from regulators and policymakers around the world. all of the challenges of the Web2 Internet can be magnified in the Metaverse, including content censorship, freedom of expression, and privacy. In addition, the blockchain-based metaverse will conflict with the still-evolving cryptocurrency and DeFi laws in many jurisdictions around the world.

Citi research: metaverse market size could increase to $13 trillion by 2030

MetaFi: Finance in the Meta-Universe

The research notes that as the meta-universe grows, it will require a range of financial services to support its activities. Meta-universe finance (MetaFi) is likely to be a combination of decentralized finance (DeFi), centralized finance (CeFi) and traditional finance (TradFi), with new products designed to meet the unique needs of the new ecosystem. From initial capital formation to supporting commerce within the meta-universe, financial services can play an important role in the evolution.

Property rights in the metaverse

  • Specific property rights in the metaverse may be recognized in certain jurisdictions, for example, non-homogeneous tokens (NFTs) provide a digital ownership layer.
  • Such property rights will lead to use and commerce, and MetaFi can help support the demand around buying, selling and financing these property rights.

Deliver a common, consistent and resilient wallet infrastructure

  • With a myriad of cryptocurrencies, wallets and associated private key management options, financial institutions will be able to support the abstraction of the complexities associated with wallet management, multi-chain environments and enable the flow of funds in a regulated manner within the meta-universe.
  • Organizations will also offer hosted services to enterprises with one or more trusted third parties to improve security and resiliency while providing easier and more consistent access.

Paying orbits in the metaverse

  • The foundation of the metaverse economic infrastructure will be a seamless and high transaction throughput financial infrastructure, working in a decentralized implementation between centralized platforms and decentralized instances. It is expected that 24×7, always-on, instant micro-payments will become the primary payment method in the metaverse.
  • While cryptocurrencies, stablecoins and central bank digital currencies (CBDC) are likely to coexist in the meta-universe, the important role of financial institutions in payments is also foreseen, especially with the ability to deposit and withdraw funds, as well as support a myriad of commercial and consumer use cases.

Liquidity providers and automated market making

  • Financial institutions are expected to play a role in providing liquidity to the market, including for certain DeFi agreements. Institutional participants may help provide additional liquidity, facilitate price discovery, and make DeFi agreements more resilient.
  • It is also expected that the number of assets available for trading will grow exponentially and that strong institutional liquidity will help stabilize the market and improve efficiency.

Financing in the metaverse

  • DeFi has a collateralized lending, liquidity mining protocol and is expected to co-exist with TradFi with unique credit risk management capabilities in multiple forms, including collateralized lending, off-chain and on-chain credit history assessment, crowdfunding and microfinance.
  • It is expected to enable DeFi to operate in its best position, while TradeFi and CeFi facilitate further capabilities by conducting off-chain due diligence and credit assessments.

NFT and digital native assets as collateral

  • Over time, it is expected that more and more traditional financial institutions will begin to use digital native assets such as NFTs and fungible tokens as collateral.
  • In today's context, the volatility of mainstream NFTs and tokens is high, resulting in a significant cut in value as collateral. It is expected that the digital nature of this activity could enable new risk models and create baskets of different asset classes as the market evolves.
Citi research: metaverse market size could increase to $13 trillion by 2030

MetaFi: DeFi in the meta-universe

MetaFi is increasingly being used as a new term that combines two of today's major technology trends: the Metaverse and DeFi. Jamie Burke and his team at Outlier Ventures note that MetaFi refers to the "decentralized financial tools of the meta-universe" that will drive much of the growth of DeFi. It will drive much of DeFi's growth.

Why choose DeFi?Virtual worlds like Roblox are not open today. In order to achieve openness, there needs to be ownership of digital assets independent of proprietary implementations. This is enabled by blockchains like Ether, whose market-based standards allow for fully portable ownership of digital objects in a metaverse implementation. Once property rights are established, it opens up avenues for the financialization of assets - leasing, lending and trading through property in a similar way to how we currently deal with it in the real world. Current traditional media do not yet interoperate with the open technologies and standards of the metaverse.

No license, no trust and decentralized services

  • The open metaverse is expected to run primarily on license-free, trust-free and decentralized systems powered by DeFi.
  • Key use cases today include decentralized exchanges (DEX), lending, pledging, and liquidity, to name a few. Over time, expect DeFi to work with an increasing number of assets - from traditional financial assets such as stocks and bonds to collectibles and in-game tokens.

Combinability in DeFi

  • Smart contract applications that work as "monetary Lego blocks" can be stacked on top of each other in a trustless and permissionless manner, resulting in interoperable and composable services.
  • Users can exchange tokens on decentralized exchanges, deposit those tokens into lending agreements to earn revenue, or use bridges to cross the exchanged tokens into other blockchains.
  • In the context of the metaverse, composability and interoperability will enable different virtual worlds and NFTs to build upon each other for transmission and exchange using the DeFi protocol.

Autonomous Financial Accessibility

  • As the popular cryptocurrency adage goes, "If it's not your key, it's not your cryptocurrency." It is expected that more and more users will keep their cryptocurrencies on their own.
  • Self-hosting and key management in cryptocurrencies is expected to become increasingly easy as the user experience improves on the front end of the wallet, driving mainstream adoption.
  • The combination of autonomous accessibility and Web3-enabled single sign-on will allow metaverse users to seamlessly access the virtual world and carry their digital assets with them.

Early stage is too complicated for the average user

  • The absolute number of tokens and currencies and the management of various assets may be too much for the average user.
  • It is expected that intermediaries will evolve (including the current centralized financial services) to address these complexities for meta-universe users or small business owners.

Interoperability of NFT and DeFi

  • DeFi can help unlock the value of NFTs by using them as collateral for loans, especially for the high-value NFTs that cannot be unlocked today without an outright sale.
  • The segmentation of NFT also brings more liquidity through DeFi by combining NFT with tokens that can be traded on a DEX (peer-to-peer) based liquidity pool. The nesting and packaging of non-substitutable and substitutable tokens opens up new use cases.

Real-world asset markets

  • It is expected that the overlap of real-world assets and NFT will drive unique ways to unlock the potential of NFT.
  • Two-way linkage - real-world assets being on the chain (e.g., tokenized real-world mortgages/REITs used with virtual plots), but also on-chain assets being transferred to the real world (purchasing NFTs in the virtual world and redeeming them as e-commerce products in the real world).

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Copyrights:Dexnav Posted on April 2, 2022 at 10:53 am.
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