Palantir's Role In The Metaverse: Foundry for Crypto
Unless you've been living under a rock for the past year, you've probably heard of the term, "Metaverse."
This will be part 1 of a two part article series on how I think Palantir could play a role in the metaverse. There are two layers to my thesis: cryptocurrencies and artificial intelligence.
Let's start with crypto.
Crypto & The Metaverse
The metaverse is argued to become the next generation of the internet. Users will not access content through their phones or desktop screens, but rather through immersive experiences in which they can actually feel as if they are a part of the content.
In this respect, the metaverse is almost like a portal to a new version of reality, likely being simulated by some version of VR/AR devices.
One element of the metaverse that is incredibly important to understand is it's emphasis on being decentralized. Most Web3.0 and crypto developers do not want the metaverse to be controlled by bigger companies like Meta, formally known as Facebook.
The only way to decentralize any type of platform is to give users the ability to control it, run it on their servers, have the ability to own "equity" (token) stakes within it, and force the platform to be built on decentralized protocols and not a single database controlled by one company.
Crypto provides the framework to do this.
Many Web3 protagonists argue that there is a new way to fund the internet outside of the horror of advertising: tokenizing networks.
To understand this, it is important to understand what is a "network effect."
Platforms develop network effects when they are able to match two sides of the marketplace: creators and consumers (for most content-based networks)
Twitter has people who tweet on it and people who consume those tweets. There is more value for every user who joins the network, whether they be a creator or consumer. If a consumer comes, creators have more of an audience to potentially go after. If a creator comes, consumers have a higher chance of finding content they enjoy.
As a result, network effects can become exponentially powerful. Uber, Facebook, Doordash, Airbnb - the biggest companies in the world have solved the problem of network effects and created thriving networks.
However, getting a platform to have network effects is really, really hard. It's probably up there in top 3 most difficult things to do on the planet. If you don't have thriving network effects, your platform becomes irrelevant.
Web3 argues there can be a new incentive to get people to join networks: tokenization. This is the process of starting a company and having that company create it's own crypto-token. As a result, when new users join the platform, they can either earn tokens through performing actions (like play-to-earn games) or they can buy the token and then spend more of their attention on the network because now they have an incentive for the network to become more powerful, enhancing their own financial gain since the token will go up in value.
Many companies have begun using this strategy, and many more startups will in the future.
Where Does Palantir Come In?
So let's back up.
Metaverse fans want it to be decentralized.
The only way to build a decentralized platform is by having tokenization via cryptocurrencies as the foundation for the platform to be truly owned by the users and not one central authority.
If these two assumptions are correct, there are going to be many, many more crypto based startups funding their own version of the metaverse and using tokenization as the method to gain network effects.
This is where Foundry for Crypto comes in.
Foundry for Crypto is Palantir's attempt to offer their technology that has been used to fight financial fraud, stop money laundering, help banks comply with heavy regulation in the financial industry, and much more to the land of crypto currencies.
Just yesterday, there was a hack for another cryptocurrency startup resulting in $622M of damages.
The major crypto startups need protection, and they need the most sophisticated technology to serve as the backbone for how they engage in decentralizing their product. There are many benefits to decentralizing, but also many more possibilities to be hacked openly and never recover the money once it's gone.
Palantir Wants To Be The Backbone
On Palantir's website, they offering the following for crypto startups:
With multi-layered security, Palantir software is trusted by banking giants, up-and-coming fintechs, and regulators alike to deliver realtime fraud detection
Foundry for Crypto allows Web3 startups to build complex workflows on top of dApp metadata with rapid speed, enabling data-driven internal product roadmaps, external campaigns, and governance measures
Palantir Foundry is chain-agnostic and automatically integrates transaction and smart contract data from top mainchains to enable rich analytics with low / no code, all the way back to the genesis block."
There are a lot of ways Palantir may be able to integrate into the metaverse if the metaverse is owned and operated in a decentralized landscape. If the big companies end up owning the metaverse and centralizing it, Foundry for Crypto likely will not play a major role.
Time will tell, but if the ethos of the metaverse remains true to it's roots, there may be a massive opportunity for Palantir to be the modern operating system of every crypto startup trying to secure it's networks in a decentralized manner.