Why Blockchain Makes Everything Real in Virtual Reality

Transcript

All right. So, while I'll be speaking and do some quick slides, my colleague will set up. And in the second half of the presentation, everything I just spoke about will show you live in VR, cuz that's how it should be done. And uh then of course we'll uh be happy to take some questions. So, we are Somnium Space. We have been in uh in a cross of blockchain and virtual reality since 2017. Uh we are one of the first metaverse projects uh which tokenized all the assets and decided to use blockchain as the backbone of all user in-game economy.

Uh we do it still to date and we plan to continue doing it. Um I am in VR for more than 10 years. Uh Somnium Space is not only social VR platform metaverse but it's also a hardware producer. We produce, design, and produce our own VR headsets, somewhere here. You will see it. Um we produce them in Czech Republic locally. We are the only virtual reality company, hardware company, which produces VR headsets for consumers and businesses and military in uh in the world. Um there is no more European and producers. Everyone else are producing in China. Uh so, I've I'm involved in many companies in

virtual reality. Um several companies uh in blockchain sphere. So, um yeah, love both. Uh love virtual reality and the blockchain. Now, why blockchain in VR? Why actually bother using uh you know, on-chain uh items in social VR space. Because it does make a big difference. Um, if you compare to conventional games right now, the, everything people do in those spaces, whether it's Fortnite or any other game, it's the only trust authority you have is

that company. And you have to trust that company 100% of the time. You cannot verify sometimes those companies are hiding the true, let's say, cost of the transactions and all the other, uh, receipts from you on purpose, um, because they want to charge you more per transaction. Um, and you don't have any transparency. You don't also have any transparency between the users when they try to buy and sell things between each other. Um, so we use blockchain for, yeah, from the very beginning.

And the good thing is when people transact inside Somnium in VR, again, you will see that in a bit, they don't need to trust us. They see everything on chain immediately right there. Um, they see how much Somnium takes as the fee. They see who is the receiver of the money, uh, if they buy something from another user. They see it immediately. And obviously that other user received the transaction and they see everything at the same time. Uh, now players can also carry those assets across different marketplaces. We, of course, Somnium has our own internal virtual reality marketplace.

It's all on chain, but nobody says and nobody can even decline you to go and sell something on OpenSea. If you bought an avatar in Somnium, or if you bought a car in Somnium, you can just go and sell it on Rarible or OpenSea or whatever, whatever marketplace. Or you can just send it via, you know, from one wallet to another. And the moment that NFT touches the user other users' wallet, he can immediately use that item inside VR. Again, whether it's a car or an avatar or a hat or whatever you imagine. So, that makes a big difference for users, for their understanding that actually the items they're buying are not just some virtual objects. They They have a real value. They have real

interoperability in a in a sense cuz interoperability is a different story and I'll I'll touch upon this a little bit uh uh in a bit. So, the sense of real economy is something very important because you can't have a long-term any social space, not even social VR, but just any game, any space without real economy because in the end of the day, without real economy, every game will die one day uh sooner or later. It It's just the case because it will Without economy, it's just a gimmick. With economy, it's a real business for some people, for creators, for example.

Uh this is my uh Beggars' Club uh I I started in Somnium Space where we lie down in a in a city center and we put our tip jars where people can tip directly both uh on the blockchain, our utility token, or even dollars with credit cards. And uh our club has now five members. I'm very proud of that. Uh so, it's of course a joke, but yeah, we're we're uh we're having fun. Now, the good, the bad, and the ugly about having blockchain integrated inside a Somnium Space game or inside our platform.

Now, the good is players have a choice. They can pay with blockchain token or they can pay with credit card. We, for example, use Stripe for credit card. Um it's decentralized ledger, it's transparency. Again, they don't need to ask me how much of the fee I take as the platform. They don't even need to trust me. Um they can just see it by themselves. and it's instant cuz we use for some assets we use layer one Ethereum for some other assets where it speed of transaction is important and also the cost of transaction we use polygon.

Um, it's user controlled uh value flow for sure. They have full control from the beginning to the end. Um, they can see our um our contract. They can validate themselves what's happening and everything after each transaction they see again you will see it in a bit. You they see the receipt of every transaction immediately on chain. Uh, they don't need to trust us. And potential of interoperability, that's a positive and also a kind of negative thing because on one hand as I told you can take any asset from the game. You can buy a hat and sell it on another platform. You don't need to ask my permission as a CEO of Somnium Space uh to you know transfer something. They can transact outside of Somnium Space

ecosystem um avoid fees for example if they can. Um, and then still use the assets in Somnium Space. Now what are the negatives of having blockchain inside your game? Normies, they really hate crypto, okay? So below you see this another crypto scam game. That's a classical X comment. Basically on almost any post on Twitter we do this like there would be one person. Most of the time is like five followers or something. They will always write something like that. And on one hand it's funny cuz they literally don't understand the technology. They don't understand why we use the technology. On the other hand um there were a lot of scams in in

blockchain. And and you know in in the hype of the blockchain there was probably I would say 90% of the projects especially the metaverse related they were just pure scams. People trying to make some trailers and stuff and of course people feel bad about it. So overall sentiment if you have blockchain in your game many normal players will just hate it outright. They will not try to understand why you use it. They will not listen to all of this what I just said to you. They will just say like, "It's a scam or whatever. It's some crypto Sorry. I'm not interested, yeah?" So, remember that if you want to integrate blockchain. Still do it. It's great, but remember that. Um then of course we do have some centralized infrastructure dependencies.

Meaning that while transaction is decentralized, you can decentralize you can transact on any platform. As I said, OpenSea, Rarible, uh LooksRare. The asset itself, the file for the avatar is still on our servers. Now, we work hard to make sure that there are some um let's say backbone where even if Somnium theoretically will go down, that the service can still run. This peer-to-peer can still run. We work towards that. We work towards full decentralization. We truly believe in that. But for now, there is some dependencies on the centralized servers.

That's just the state of the technology. Um difficult interoperability in practice again. Uh trading on different platforms is easy. But if I want to bring the avatar from one platform to another, that's a whole different story cuz they're different engines. Could be Unreal. Could be Unity. Different versions of those engines. Could be Unity 6. Could be Unity of the previous versions. And they are not compatible. So, in reality, if two platforms want to have full interoperability, meaning that if you buy an NFT in Somnium and you want to use it somewhere else, in Fortnite, we have to work with Fortnite together to make sure that that works.

Otherwise, so far there's no true interoperability in the sense of transferring the files and assets. Um and of course for some people it's clunky and unfamiliar interface. Now, we have since we've doing it for years already, we have polished it to a point where users who don't know that Somnium runs blockchain, don't even don't even know in the Indiana that it's blockchain based in the background. They don't touch it until probably they are several months in the game. That's where they kind of start to understand that there is some background transactions happening.

Um and those who know they can take full advantage of it. Those who don't know, they can still learn, but they still have to learn a little bit. So, um that's downside, uh but you know, we're still kind of climbing that hill. And speed and scalability issues, I think it's pretty much solved to be honest. Uh with Polygon we don't run into much problems, but sometimes when too many people try to transact at the same time, it, you know, transaction instead of 10 seconds or 5 seconds could take up to a minute. Uh but we never had a big issues with that.

Now, I'll just quickly tell we have parcels, we have worlds. Uh The parcels and worlds are on Ethereum mainnet cuz these are pretty expensive assets. People pay, you know, $10,000 for a parcel, um and they don't transact, they don't change hands so often, so it we decided to keep them on layer one. Um and worlds as well. And then every other thing such as an avatar, wearable, you know, you have a hat, you have a gun, you have something else, these are on Polygon and these are basically transactable instantly. Just uh Shota, are we are we ready? You're all set up? Okay, cool.

So, uh you will see again how it works and I will show you some videos. Let me should check the time. All right. So, utility token, we have Cube. It's decentralized. Uh we have revoked the Cube, so we can't mint anymore. It's all out there. Um and uh it's again transparently verifiable. People can pay with Cube in Somnium or they can pay with credit cards. We give the freedom uh of option. Now, this is the wearables. Um We've developed the whole system where those items, which you can see the glasses, the hat, everything else, it's all on the blockchain. Those are all NFTs. And you can wear them, uh, instantly transact, change hands, and, um, they change wallets and stuff. So,

that's just, um, yeah, it's a very unique system. No other game in the world does that the way we do it. And, uh, yeah, we're very proud, uh, of that. So, this is full body tracking, um, of course, sense of realism, and I'll talk about it in a second. Uh, I think Shota, you can start VR already. Uh, so, this is full body tracking where I wear VR headset, trackers, and then all my movements in real life, uh, yeah, don't do this often, okay? Uh, not every day, but, uh, uh, whatever I do in real life immediately uh, transitions to VR and all other players see me doing that. So, that's full body tracking. Now, I do one last thing, camera. Why camera?

We have a very advanced camera in in VR where you can take some really cool pictures. And why it's important is because, first of all, when you buy a cool hat, and it's on blockchain, you own it, you know, it's yours, it already adds to sense of realism for you because you own it. But, when you can make a fantastic picture with it with a bokeh effect, and, you know, really cool picture, then you can share it, and it's even, you know, it enhances the realism even more. And it's a very tiny signals which are bringing your brain, uh, the ability to kind of, uh, comprehend that and and understand that.

So, camera is very important. We spend thousands of hours developing just camera in Somnium Space, the VR camera. It's like a handheld thing, you just hold it like this. There's drones, I mean, there's it's crazy. This is what you can do with camera. On the right side, you know, the, uh, the the Matrix. On the left side is the recreation of the shot inside Somnium. You have drones. In the background, you see those buildings and water and, uh, things. These are the parcels on the blockchain. Everything is on the blockchain there. And that is the end of the boring slides, and now we'll try to go to the real presentation of VR, and I'll be commenting while Shota will be uh doing it. Let me comment. Uh so, let me connect it to the HDMI.

All right. Are you receiving our signal from HDMI? You should be. Okay. Can you see it, or is it too bright for you? Can you see what's on the screen? Yes. Okay. Whatever, Arthur. Who cares, right? No, okay. So, let me go here, and Shota will be showing you something in real time. Um So, he's now in the city center. There are some other players as well. It's pretty dim. Uh but, yeah. He's You see, whatever he's doing, obviously, it translates uh into VR. Shota, can you open the tablet and show the uh show the camera? Okay, so he's now using the camera. That's what I Yeah. Can you show your own view

on your own avatar? Yeah, so it's his hands. Um so, let's go and transact, Shota. Maybe go to the store and buy some item on on on blockchain right away. Okay, there are some other users. This is the city center where everybody appears, so there are some obvious other users. And now he's going to the store, where whenever someone creates new item in Somnium, they upload it through SDK, they mint it immediately, uh and it appears there. And now he will buy something. So, what it will be, Shota? What are you spending your money on today? And what will what you you will see, hopefully everything works uh well.

Okay, how much is it? Okay. Okay, so there are some cubes involved. Don't look at PIN. Don't look at his PIN. Uh Okay, so now the transaction started. Now, we'll see how fast the transaction. Maybe there are some other transactions running in the background, but uh uh just look back. Look back. Um So, once the transaction finishes and the item flies into his inventory, we have a very cool animation there. The the computer will immediately open the browser and show you the receipt on on chain, the Polygon receipt. Um and we do it on purpose so that the users, when they do this fashion uh session for a couple of hours, they buy several things, they can close VR later and just go through receipts and they purchase.

Okay, you can see now it loaded. I'm not sure. Yeah. So, now you see the transaction happened and he bought this. He see from whom to whom, what's the fee and stuff like that. I'll minimize that. We just wanted to show you that that's uh that's how it works. Um Shota, can you show the uh some wearables? Can you put some wearables on on top of your avatar? So, now he has the wearables. Everything you just see load in in in this in this tablet, everything is NFT. Whatever he's wearing on himself, his avatar, his hat, whatever he just bought, all are NFTs.

But they're very, let's say, smartly hidden from users. As I said, if you don't know what NFT is and you want to use VR, you can. You don't need to know it. But if you know, you can actually take advantage of it. So, now he's placing the item on his avatar. Um again, this is the system we developed. And he's not placing whatever, the beard, on his avatar. And now he will just click exit astral mode and he'll turn the camera on to see the selfie. He'll just Yeah, okay. So, that's what he just bought. And this is the uh this is the item and he's wearing it already.

Now, all the other users are seeing it as well. So, um so, that's that. Um how much time do I have? 5 minutes, right? 10 minutes? Okay, perfect. So, we have a lot of time. So, Shoda, you can go to some of the parcels or do whatever you want, Shoda. I will be commenting. Um So, all the For example, there is a car standing in the city center. That's also an NFT. A very expensive NFT. I think I bought one.

Of course, it was in a height of the NFT market. I think I bought a car for like 6,000 euros. I own uh but it's again, it's it's a collaboration. Those cars are collaboration of an uh artist and the 3D modeler. They worked on it for probably on one car like 70, 80 hours. And they model it and the paint job of the car is the uh the art piece. A unique art piece. So, it kind of combines both worlds. Uh that's why it's collectible. But it drives nicely as well in VR.

Okay, so here is the tip jar. He is receiving now one cube tip in real time. That's what you just saw is an transaction on chain. Everything you see in VR happening in real time is on chain transaction. And now he's tipping a dollar. How much are you tipping? $1. Okay, $1. Now, he's doing the credit card because his credit card is connected to his Somnium account. So, if he hates blockchain, he can do it on credit card. Um if someone wants to tip uh cubes. And the classical example, which happens several times per week in Somnium. We have event, let's say the DJ rave event. It's a disco.

Um and the DJ always put the tip jar in front and they have their wallet connected to the tip jar and have their credit card connected uh to the to the tip jar. And during their rave, let's say, presentation, rave uh set, people who are dancing in the club, they're tipping. And you can clearly see that some are some are tipping cubes, some are tipping dollars because in some countries, for example, Stripe is not available. Even though it's available almost in any country in the world, but some countries are not allowed that. And blockchain, as we know, you can't stop blockchain from working. So, those people are using blockchain to tip the DJ. And that's just a beautiful thing to see because anywhere from Brazil to Japan to Australia, Russia, whatever, United States, they can transact in the

system and be part of one, let's say, society, digital society. And that's of course what we are trying to trying to build. So, no matter what country you are in, um you can do that. And again, why I'm saying all of this is because blockchain makes everything more real. That's that's the Let's say my title of my presentation. Because if you just do something on a company's servers and you don't have a receipt, you don't own anything. That company can just And there are companies who are doing that, by the way, in this space. They can just delete your item and say, "Oh, you know, you never owned it. Sorry."

It's your problem. Sometimes it's a technical glitch. Or sometimes it's a malicious attempt by the company just to, you know, "Oh, you did something uh against terms and conditions." Um I used to play Ultima Online when I was uh younger. And uh uh okay, I didn't hear any woos. So, I probably I'm very Okay, great. Um very old. But Ultima Online was a great game. I spent probably 5 years playing that game. I It's kind of like World of Warcraft, right? And I had everything, houses and everything. And then one day the company decided to wipe all the servers.

And they just wiped all the servers. And all my thousands of hours I played the that game are gone. Literally gone. And that taught me a lesson, and that's why we are trying to do not only that, but this is one of the reasons. So, now Shoda everything Shoda, can you look at the at the uh beyond the water? So, everything you see around is built by users on the parcels which are also NFTs. And some of the parcels you see there next to the water, they're waterfront parcels, they were more expensive, some are less expensive. The real economy is happening.

And again, without the blockchain, it would be way more meaning- meaningless for for those people and they would not have been attached to what they own because they would not have any receipt, they have no control over the items. Um so, yeah, I think if you have any questions, please raise your hand. I'm happy >> Thank you Arthur for the presentation. Um how would you Do you have any issues with cheaters in in your space? I mean, I guess there's no reason for that, but where I'm aiming at is uh I own a lot of digital items in Counter-Strike.

And uh I think it's a paradox, but I think the the ability of Valve to uh delete those items and have a full control is actually what gives those values and items a value. Uh because those those items are flex because they are a deposit. >> I promise I didn't pay him to ask this question, but it's a perfect question. Um so, Valve and Counter-Strike, recently Valve did a pretty big cleanup of these items and the whole market of those items collapsed. By the way, I don't like that skin thing because it basically is a gateway of gambling for kids. Uh it's a huge problem and I don't approve that.

Um Somnium Space is first of all 18+ platform with a mandatory age verification on registration. We did that from, you know, very it's it's a very conscious decision because kids and adults should not mingle in one space, especially when a hyperrealistic spaces like VR. Um so, Valve, for example, wiped a lot of items, changed the economy, and suddenly you were holding items which were virtually uh placed at a value of $5,000 and overnight it became 1,000. You had zero control over it. You can't even, you know, you can't instruct anything. You can't do nothing with that. And yes, one thing is Valve is backboning this. Valve is a reputable company. It's a good

company. But what if they change their mind? You have no idea how to where to take those items. Those could be gone tomorrow and you would have no control over it. In our case, as I told you, half of that is solved. We can't take items from your wallet anymore. It's impossible. Even if I hate you as a user, even if I ban you in Somnium Space, you receive the full ban, you you you went did something, you know, against terms and conditions, you can still go and sell all your items on any other marketplace and say, "Bye Arthur, but I redeemed my value." And some user did. You know, some users, um, left Somnium. They didn't like uh, Somnium or they got tired of it. They had some parcels and they just sold it

for, you know, 5,000, 10,000. They redeemed their money and they're just gone. They didn't lose their value. So, Valve is a perfect example. They just changed their mind and overnight the market collapsed uh, of those skins. And it could happen again and tomorrow could be gone. Every all of it. Because some somewhere someone decides that uh, Gabe will decide that it's not good anymore. And he wants to get rid of it. Any other question? Thank you very much for question. Last question. No questions, great. So, thank you very much. Remember, oh, there is a question.

There is a question. I can run to you. I do you I do I do it for you. >> So, I understand you can easily track the ownership of the items, but like the functionality of it itself, if you do some rebalancing or you decide, "Oh, we won't support this item in the future." How can basically holders fight against it? Do you have some doubt or like something they can make sure those changes doesn't happen? >> Great question. Thank you very much. We don't control how many of what people upload through Somnium. Uploading through our SDK and creating items is free.

They can create like the beard he bought on Fuzzy's avatar. Um it's probably like, I don't know, uh addition one of 10 or something, but creator can create 1,000 of those beards. And by doing that, cuz when you're buying it, you can see it's, you know, addition one out of one or one of 1,000. If he does 1,000 hats or 1,000 beards, the value will just go down by itself. So, we don't control anything. We give the tools to creators, and those creators create items by themselves, and they decide the free market decides how much value people assign to those things.

We We don't even like the land is given. It was given in the beginning. There's only 5,000 parcels, but the worlds are unlimited. So, think about land as like a Monaco of VR. Uh it's limited, but everything else is unlimited, and people can build as much things as they want, and they control the economy by themselves. We just give them the tools. All right. Thank you, Shota. Beautiful VR presentation. Little bit dim, but still good. Thank you very much, everyone, for attention. And if you have any questions, come to me later. Bye-bye.