Metaverse White Paper

Crossing Smart Assets, Digital Identity and Value Intermediation

Entering the world of virtual reality

summary

About blockchain

A brief history of blockchain

Namecoin and Peercoin

Bitshares

Ethereum

Public and Permissioned Chains

Blockchain development path

Metaverse

Virtual Reality

Entropy - Metaverse’s Token

Smart Assets

Avatar-Digital Identity

Oracle-Intermediary of Value

Technical part

Consensus Algorithm

POW Mining

HBTH-DPOS

New transaction types

Cross-chain Virtual Machine

Potential risks and considerations

The increasing size of blockchain

The centralization problem of mining

The risks of success

in conclusion

References

summary

Metaverse is a decentralized platform based on public blockchain technology, covering digital assets and digital identities. Metaverse was originally developed and maintained by the ViewFin team, and is a project developed under the MIT license. When the Metaverse project reaches a certain level of maturity, its code will be open sourced and published on GitHub at: https://github.com/ViewFin/Metaverse

About blockchain

Blockchain technology originated from the Bitcoin system. It is precisely because of the decentralized and unchangeable ledger characteristics of this technology that the Bitcoin system is able to solve some problems, such as transaction fraud and double spending. Many people believe that the Bitcoin system is the first application of blockchain technology.

The Bitcoin system is undoubtedly an ingenious invention, and the mysterious creator behind it, Satoshi Nakamoto, once defined the Bitcoin system as "a peer-to-peer electronic cash system." In the past seven years, the ecosystem around Bitcoin has grown from the shadows, and now the total market value of Bitcoin has exceeded $10 billion.

As we all know, Bitcoin is not just a new cash system, it also has blockchain attributes and uses blockchain technology to protect Bitcoin's decentralized ledger. More importantly, the Bitcoin system makes us sure that physical assets can and will be digitized. As a decentralized system, blockchain maintains an unalterable ledger in a cryptographic way, allowing multiple parties to freely interact or trade value in an environment without establishing trust. This model can bring major changes to many industries such as banking, insurance, medical, and logistics.

A brief history of blockchain

The development of blockchain technology and concepts is accompanied by the deconstruction and reconstruction of the Bitcoin system. Counting the major milestones in the process from digital cryptocurrency to blockchain concepts, we find that Namecoin and Peercoin have made very basic contributions, while BitShares and Ethereum have brought two more influential concept upgrades.

Namecoin and Peercoin

Namecoin is the first application project forked from Bitcoin. It was designed and implemented with the purpose of adding the concept of "decentralized domain name" (which can be considered as the predecessor of digital identity) to the original electronic cash system, and adopted a method of merged mining with Bitcoin to ensure the security of the node network.

If all blockchains need to design a new POW mining algorithm, or need to share a POW mechanism with mining centralization problems, and need to deploy hardware mining machines as full nodes of the network, then the development of blockchain will lag behind many years. The Peercoin system proposed a different consensus algorithm concept, which later became the famous POS proof of equity mechanism. After the POS mechanism was proposed, new attempts on the blockchain system could continue to emerge in a low-cost manner, and micro-innovations in the consensus mechanism continued to promote the development of blockchain technology.

BitShares

BitShares is a project that grew up on the shoulders of the giant of the POS consensus mechanism, and later improved the consensus mechanism into DPOS equity representation proof. New concepts are constantly being proposed on BitShares, including the project Keyhotee that emphasizes digital identity, and by defining multiple transaction types, it is easier to register and issue digital assets. BitShares mainly decentralized the concept of exchange, and in order to achieve a good trading experience, it has re-improved the speed of fast output to achieve a second-level block output, and correspondingly sacrificed some system stability.

Ethereum

Unlike Peercoin and BitShares, the Ethereum project adopted the POW consensus mechanism in the early stage to protect the network from attacks, and will be transformed into the POS consensus mechanism through a fork in the near future. Such a design mainly considers the security of the entire system in the early stage. In addition, Ethereum is practicing the concept of smart contracts, which is the most important contribution of Ethereum in addition to improving the block characteristics and reward mechanism of its own public blockchain. Through smart contracts and specially developed EVM, Ethereum has expanded the types of transactions that blockchain can handle, but all transaction types are implemented in the form of contracts.

Public and Permissioned Chains

The difference between public blockchain and permissioned blockchain mainly reflects the attitude towards nodes and the scope of trust. In public blockchain, the threshold for node access is very low. We generally believe that each node is untrustworthy, so we need to use some kind of proof mechanism (POW, POS or their improvements) to select accounting nodes, while permissioned blockchain only allows access to whitelisted nodes and may set up strict firewalls. Therefore, the trust mechanism of public blockchain is for the public and has a wide range. All people who participate in the accounting and use of public blockchain are within the scope of trust, while the scope of trust of permissioned blockchain only exists between permitted nodes, which is relatively small.

Metaverse

Virtual is reality

The term Metaverse first appeared in Neal Stephenson's science fiction novel Snow Crash (1992). In the world depicted in the book, people have their own avatars, through which they communicate with each other in a virtual reality world and even have relationships with electronic agents.

Modern life is just as Neal Stephenson described in 1992. Our work and life are increasingly dependent on the Internet. People spend a lot of time online rather than offline. The way people communicate with each other has changed and the frequency is more frequent than before. In the near future, we can foresee that people will experience a transition from the information Internet to the value Internet. More and more smart assets will be transferred online, and Avatar (digital identity) and intermediary Oracle will become the mainstream economic model at that time.

The name of the Metaverse project was inspired by Neal Stephenson's Metaverse.

Entropy - Metaverse’s Token

Entropy

The concept of entropy is borrowed from the description of the degree of disorder of microscopic particles in thermodynamics. It will be used as the token of Metaverse, abbreviated as ETP. The total issuance of ETP on Metaverse is 100 million, and the smallest unit of ETP is 10-8, which is eight decimal places after the decimal point, similar to the design of Bitcoin. ETP can be transferred and traded on Metaverse, and its security is guaranteed by the Elliptic Curve Digital Signature Algorithm (ECDSA).

ETP is not a new form of digital currency, it represents the equity of Metaverse. Therefore, the price of ETP will not be anchored to any fiat currency or cryptocurrency, such as Bitcoin.

ETP will be used to measure the value of smart assets on Metaverse or as general collateral in financial transactions. At the same time, when fees are required in the process of using the Metaverse system, they will be charged in the form of ETP, such as creating a new smart asset, registering an Avatar, or applying to become an Oracle.

ETP distribution mechanism

In the blockchain field, the ICO distribution mechanism is a common and default way of distributing tokens. In January 2014, the BitShares project started a 200-day ICO; in July, the Ethereum project launched an astonishing ICO of 25,000 bitcoins; in 2016, the DigixDAO project and the Lisk project also launched ICOs, as well as the controversial TheDAO project. The domestic Antminer project also successfully raised 2,100 bitcoins through crowdfunding in October 2015.

The Metaverse project's ETP will distribute 50% to 60% of the total 100 million tokens to the outside world through two ICOs. The first ICO in August 2016 will distribute 20% to 30%, and the second ICO will be launched after the Metaverse client (wallet) and blockchain bottom layer are completed. The second ICO will also distribute 20% to 30% of the total 100 million tokens, and the estimated time is October 2016.

The remaining 40% to 50% of the total ETP will be distributed to system security maintainers in the form of block rewards through the POW mechanism. This process is also called mining.

Microinflation

ETP is the equity token of the Metaverse DAO (Democratic Autonomous Organization). ETP is not a circulating currency, so ETP should not have inflation; however, considering the various natural losses of tokens during use, including accidental loss, forgotten passwords, or natural death of holders, this will make the problem of insufficient ETP stock increasingly serious. In the Ethereum white paper, Vitalik Buterin proposed a prediction of the token loss rate, and he believed that there would be a loss rate of about 1% per year. In order to ensure that the system tokens have sufficient liquidity and allow Metaverse to accommodate more digital assets, we designed a linear micro-inflation economic model. After the POW phase is over, 4 million ETPs will be issued by the system each year and put into circulation in the system. It is not difficult to foresee that the inflation rate in the first few years will be about 4%, and then this inflation rate will become smaller and smaller, and when it reaches the same as the 1% annual loss predicted by Vitalik, it will maintain a dynamic balance.

Smart Assets

The Wikipedia entry for Bitcoin mentions that Nick Szabo proposed the concept of "smart assets" in his 1997 research. In fact, Wikipedia made a mistake. Szabo only defined a class of assets that are embedded with smart contracts to implement specific contractual conditions.

In the Ethereum project, the concept of smart contracts is overemphasized, and digital assets must rely on smart contracts to exist. Such a design is counterintuitive.

In Metaverse, we need to re-emphasize the importance of digital assets. The order of dependency is that smart contracts need digital assets to work, not the other way around. If we use the object-oriented programming model as an analogy, we will find that digital assets are an object-oriented class, and contracts are methods in the class.

Different from the design of Ethereum, Metaverse's digital assets will follow the UTXO method (Unspent Transaction Output) of the Bitcoin system. Digital assets will retain a domain space and an address/digital ID identity. Any transaction will be defined by a set of inputs and outputs, and will be signed by the private keys of the current digital asset owner and the previous trader. These elements together form a new UTXO.

The result of this design is that digital assets on the Metaverse will be able to be easily received and sent like Bitcoin, and smart contracts will only be needed when more complex transaction models are needed.

Avatar-Digital Identity

A person cannot physically hold online smart assets like holding physical gold in real life. The ownership of smart assets needs to be controlled by the individual's digital identity, which is then held by the digital identity in a mathematically unforgeable way. As a symbol of online identity, Avatar can represent people holding smart assets on the blockchain.

Creating an Avatar is more than just adding an alias to your public key. Just like your ID card and mobile phone number are not aliases for your name, other information with application value will also be integrated into the Avatar and protected by cryptography. This information will be able to be shown to others through zero-knowledge proof technology, and must be approved by the Avatar owner (private key signature). In the Bitcoin system, we can hold Bitcoin anonymously through public and private key pairs, but in real life, most activities require us to provide various degrees of personal information. For example, if you need to join a club for female entrepreneurs, you need to provide two basic information: age and gender.

Behind the Avatar, there may be a real person, AI (artificial intelligence), a machine in the Internet of Things (IOT), or a company or organization.

An avatar can own multiple types of smart assets, and a smart asset can be owned by multiple avatars. The relationship between avatars and smart assets is many-to-many. This relationship may seem complicated, but it is a real ownership relationship in real life. On the Metaverse blockchain, these relationships are confirmed and protected by encryption technology.

On top of smart assets, specific (financial) application scenarios can emerge: trading, lending, leasing, and mortgage, etc.

Oracle-Value Intermediary

Using the example of Alice and Bob, how many Oracle intermediaries are needed in a simple contract to predict the weather in New York? The answer is at least 3: an Oracle for weather data input, an Oracle for arbitration of the group, and an Oracle for guarantee.

Blockchain technology claims to be about decentralization, or "eliminating the middleman", but it seems to be just a fantasy at present. Value intermediaries still play an important role and will continue to play an important role for a long time in the future. They are like wormholes in the parallel time of virtual and real worlds. Without them, the communication between the two worlds will be hindered, because at present, the value judgment standards and logic of the two worlds cannot be fully quantified and written into code, let alone practical application.

Different from the slogan of "eliminating the middleman", Metaverse will reserve a place on the blockchain for value middlemen, which we call Oracle. Custody Oracle can keep physical assets and then issue smart assets on the chain, identity Oracle can provide proof of the relevance of personal information and Avatar on the chain, and regulatory Oracle (such as government departments that supervise special transactions) can provide proof of transaction authenticity and compliance on the chain... There are many other Oracles that can provide such services on Metaverse.

Technical part

Consensus Algorithm

Metaverse is a public blockchain with several outstanding consensus algorithm designs, including the proof-of-work (POW) mechanism pioneered by the Bitcoin system, the proof-of-stake (POS) mechanism pioneered by the Peercoin system, the delegate proof-of-stake (DPOS) mechanism pioneered by BitShares, and some other Byzantine Fault Tolerance (BFT) mechanisms.

Most cryptocurrencies selectively ignore the Byzantine Fault Tolerance algorithm because it does not solve the problem of token distribution. Although Metaverse's ETP is not a currency, it will be distributed to nodes as a reward for nodes that contribute to network security.

In the early stages of any blockchain project, the total number of full nodes is insufficient, so it is difficult to ensure the security of the entire network. By introducing the proof-of-work mining mechanism, Metaverse distributes ETP to mining nodes as block rewards, and the system itself will obtain a large number of miner full nodes, which can provide sufficient system security in the early stages of the project.

In the future, as the project matures and the distribution of ETP for mining rewards is nearing completion, Metaverse will switch to a modified DPOS consensus algorithm that will take into account the important indicator of "coin block height destruction".

Proof of Work POW Mining

In the first few years of the Metaverse system, GPU mining will be used to ensure system security, as well as a decentralized timestamp service. Metaverse's mining algorithm is still under comparison and research, but it will avoid using Bitcoin's SHA256 algorithm and Litecoin's scrypt algorithm to avoid 51% computing power attacks on Bitcoin or Litecoin mining pools.

HBTH-DPOS

Although the POW mining mechanism can help the Metaverse system to ensure system security in the first few years, POW mining also has its problems, such as energy waste, the trend of centralized mining, etc.

The DPOS equity representative proof mechanism pioneered by BitShares is a more robust and decentralized mechanism compared to POW and POS. More importantly, every participant in the system is a qualified voter.

However, the design of the DPOS consensus algorithm still has two flaws: the first is the problem of financial interference. An attacker can hold a large number of system tokens in a short period of time, vote for or against important proposals in the system, manipulate the voting proposal, and then sell the tokens to make a profit in the trading market. According to calculations, in the BitShares system, only about $3 million worth of tokens are needed to complete such an attack to manipulate the voting results.

The second is voter apathy. Voter holders generally do not care about the working status of the system. Most of them are unwilling to change their representatives after selecting them, and even when their representatives do evil, they are not motivated enough. In the past three months, only 1% of voters changed their representatives.

Metaverse has improved the DPOS consensus mechanism and added the concepts of coin block height and heartbeat.

The coin block height (TH) originates from the concept of coin day destruction.

Bitcoin coin-days = number of bitcoins × number of days since last spend

TH = the number of ETPs × the number of blocks from the last spend × the Metaverse constant

Metaverse uses TH as the voting weight in DPOS to avoid financial interference. If an attacker temporarily obtains a large amount of ETP from the market to influence the vote, their coin block height will be small, so the influence of the vote will also be weak. In order to achieve their goal, the attacker will have to obtain more ETP from the market, or hold ETP for a long enough time to obtain the coin block height. Either method will significantly increase the cost of the attacker.

In the DPOS phase, Metaverse, like other systems that use the POS consensus mechanism, will distribute ETP to different equity holders based on the equity holdings at the time. However, the difference is that equity holders in the Metaverse system will not obtain new ETPs by passively receiving tokens, but will need to send a "heartbeat" to the system to prove that the equity holder is still active. At the same time, this heartbeat is equivalent to a digital signature from the equity holder's private key. When sending the heartbeat, the equity holder must choose to replace or maintain his or her equity representative. There are two benefits to designing this heartbeat: the first is to encourage people to check their equity representatives. Although it does not fundamentally solve the problem of voter indifference, it has a mitigating effect; the second is that the system will no longer distribute new ETPs to inactive equity, and it will have a dilutive effect on inactive equity.

Transaction Type

Aside from the coinbase transaction type, there is only one other transaction type on Bitcoin, which is the transfer of Bitcoins from a sender to a receiver.

The Ethereum system introduces another type of transaction called "contract", which will be used for all transaction types except Ether transactions, including asset issuance, etc. Ethereum users need to know some codes to complete such operations. Although the Ethereum team has invested a lot of effort to make Ethereum code easier to write, for example, only a few lines of code are needed to implement some functions, the concept of writing code to perform common operations still makes many commercial customers stay away.

There are many types of transactions on Metaverse. The design of transaction types takes into account both efficiency and usability. It is neither like Ethereum that uses one contract to accommodate all transaction types, nor does it define many transaction types like BitShares.

The issuance of smart assets and the registration of digital identities are the two highest-level transaction types besides ETP transactions. In the future, transaction types like Ethereum smart contracts will also be added to the Metaverse system.

Cross-chain virtual machine

Ethereum's smart contract code is executed through the EVM virtual machine. Metaverse is different and will focus on the research and development of a cross-chain transaction virtual machine (CCVM) to achieve value exchange between different public blockchains.

Potential risks and considerations

Blockchain technology is still in its early stages of development, and its maturity is still under research. Blockchain technology comes from the Bitcoin system, so it will inherit the advantages of the Bitcoin system, as well as some defects.

Growing block size

The total data volume of the Bitcoin blockchain increases by about 1MB every 10 minutes, equivalent to 1GB per week, so the cost of running a full node will increase significantly. The number of Bitcoin full nodes worldwide has dropped from more than 10,000 in the second half of 2013 to more than 5,500 in July 2016. The block data volume of Ethereum increases by about 2GB per month, and the growth rate is still increasing. The Metaverse blockchain will also face the problem of increasing data on the blocks, which may be more complicated because the design of Metaverse adopts the UTXO method. This problem is elaborated in detail in the Ethereum white paper. In the early stage, this problem will be solved by miners because they need to run full nodes for mining.

The problem of centralized mining

Mining is a double-edged sword. On the one hand, mining can ensure that the system is protected by computing power. On the other hand, mining creates some new problems, such as mining centralization and the potential threat of 51% computing power attacks.

In the Bitcoin industry, mining centralization is a very disgusting result, and Ethereum is gradually losing the initiative in facing the problem of mining centralization.

Metaverse hopes to optimize the mining algorithm. Although it cannot guarantee to avoid the problem of mining centralization, it can ease this process until the entire system migrates from POW to HBTH-DPOS consensus algorithm.

Failure from business success

If Metaverse is commercially successful, this will bring a new risk. When the total value of digital assets on Metaverse rises to a certain level, it will become profitable to attack the Metaverse system and short digital assets on exchanges.

Therefore, the total value of digital assets on Metaverse is a function of the cost of maintaining/attacking the system (specifically the cost of mining in the POW phase). Ideally, the total value of digital assets should not exceed 5 times the mining cost.

in conclusion

Similar to BitShares and Ethereum, Metaverse is inspired by the Bitcoin system and uses blockchain technology to solve more complex problems than the electronic cash system; BitShares solves the problem of decentralized trading platforms, while Ethereum solves the problem of smart contracts and decentralized application platforms. Metaverse ensures the confirmation of digital assets and defines the foundation of future digital finance through clear definitions of digital assets and digital identities, as well as the importance of Oracle, the value intermediary on the blockchain.

In Metaverse, through the role of value intermediary, smart assets can be transferred securely in different digital identities. Thanks to blockchain technology, Metaverse naturally inherits its unalterable ledger and the advantages of non-double spending. Metaverse will roam in the ocean of digital assets and digitizable assets.

References

1. Bitcoin Whitepaper——Satoshi Nakamoto http://bitcoin.org/bitcoin.pdf

2. Namecoin: https://namecoin.org/

3. Bitshares whitepaper——Daniel Larimar http://docs.bitshares.org/bitshares/papers/index.html

4. Ethereum WhitePaper - Vitalik Buterin: https://github.com/ethereum/wiki/wiki/White-Paper

5. Smart Contract——Nick Szabo http://szabo.best.vwh.net/idea.html

6. Smart Property - https://en.bitcoin.it/wiki/Smart_Property

7. Blockchain— from Digital Currency to Credit Society ——ChangJia, HanFeng and etc. ISBN：9787508663449

8. Snow Crash—Neal Stephenson 1992

9. Metaverse——https://en.wikipedia.org/wiki/Metaverse

10. Tim Swanson - http://www.coindesk.com/smart-property-colored-coins-mastercoin/

11. Coin Days Destroyed —— https://en.bitcoin.it/wiki/Bitcoin_Days_Destroyed

Note: This white paper is currently a consultation version and is still being improved. If you have any good opinions and suggestions, you are welcome to give us your suggestions!