REPORT

A case review study report submitted to Manipal

University Jaipur in the partial fulfillment of the
requirement for the award Of the degree of
BA LLB (hons.)

BY

Name: Kanishka Tejwani

Registration No. 23FL10IAL00095
 SCHOOL OF LAW
MANIPAL UNIVERSITY JAIPUR
JAIPUR-303007
RAJASTHAN, INDIA

DEPARTMENT OF LAW
MANIPAL UNIVERSITY JAIPUR
JAIPUR- 303007 (RAJASTHAN), INDIA
 CERTIFICATE

This is to certify that the project titled RESEARCH

REPORT is a record of the bonafide work of KANISHKA
TEJWANI (registration no-23FLIAL00095) submitted in the
partial fulfillment of the requirement for the award of BALLB
(HONS.) in the school of law of Manipal University Jaipur,
during the academic year 2023-24.

DR. SUNITA SINGH KHATANA

Project Guide ( Department of Law )
Manipal University Jaipur

DR. SONY KULSHRESTHA

Head, Department of Law
Manipal University Jaipur
 ACKNOWLEDGEMENT
I express a deep sense of gratitude for the HOD of
Department of Law for their invaluable support
and guidance during this project. I would also like
to extend my appreciation to our dedicated
teachers under whose guidance, valuable
suggestions, constant encouragement and kind
supervision the present research work was carried
out. I am also grateful to the college faculty of law
for their feedback and keeping us on schedule.
Introduction to Contracts in the Metaverse:

The metaverse is a digital realm where individuals can interact, create, and engage in various
activities using virtual and augmented reality technologies. In this virtual environment, contracts play
a crucial role in governing transactions, relationships, and interactions between users, companies, and
other entities. These contracts often leverage blockchain technology to ensure transparency, security,
and immutability.

Key Characteristics of Metaverse Contracts:

 Smart Contracts: These self-executing contracts with coded terms and conditions facilitate
secure and automated transactions within the metaverse. Smart contracts operate on
blockchain technology, allowing for the enforcement of predefined rules without the need for
intermediaries.

 Decentralized Autonomous Organizations (DAOs): DAOs are entities that operate through
rules encoded as smart contracts. They enable decentralized governance, decision-making,
and resource allocation within the metaverse. DAOs provide a framework for community-
driven initiatives, projects, and collaborations.

 Virtual Property Ownership: Contracts within the metaverse govern the ownership, transfer,
and usage rights of virtual assets, including virtual real estate, digital collectibles, and virtual
currencies. These contracts establish the rules for buying, selling, and trading virtual
properties.

 Interoperability and Cross-platform Contracts: Given the interconnected nature of the

metaverse, contracts facilitate interoperability between various virtual platforms, allowing
seamless transfer and utilization of assets across different virtual environments.

Challenges and Considerations:

 Regulatory Uncertainty: The regulatory landscape surrounding metaverse contracts is still

evolving, leading to uncertainty regarding legal frameworks, taxation, and jurisdictional
issues.
  Security Concerns: As with any digital environment, security risks, including hacking, fraud,
and data breaches, pose significant challenges to the integrity and enforcement of metaverse
contracts.

 Standardization and Interoperability: Achieving standardization and interoperability between

different metaverse platforms remains a challenge, impacting the seamless execution and
transfer of assets across various virtual environments.

Future Outlook:

The metaverse's continued development and integration into various aspects of daily life will drive the
evolution of sophisticated contract frameworks. Innovations in blockchain technology, coupled with
advancements in virtual reality and augmented reality, will likely shape the future of contracts within
the metaverse, paving the way for new business models, digital economies, and interactive
experiences.

In the context of the metaverse, contracts often refer to digital agreements that govern various
transactions, ownership rights, and interactions within virtual environments. These contracts can
encompass various elements, such as virtual asset ownership, virtual real estate transactions, virtual
goods trading, and virtual services provision. Smart contracts, powered by blockchain technology,
play a crucial role in ensuring transparency and security within these digital ecosystems.

The future of contracts in the metaverse is likely to involve even more sophisticated and
decentralized systems, powered by blockchain and other advanced technologies. These contracts are
expected to facilitate complex interactions, such as decentralized autonomous organizations (DAOs),
fractional ownership of virtual assets, and more secure and transparent transactions.

Additionally, the integration of artificial intelligence and virtual reality is expected to further
streamline and enhance the overall contract experience within the metaverse.

Contracts are crucial in the metaverse as they establish and enforce the rules and agreements
governing virtual transactions, property rights, digital asset ownership, and interactions among users.
They provide a framework for ensuring security, trust, and accountability, ultimately safeguarding
users' interests and investments within the virtual environment.

Technology has come a long way in a short amount of time, and today, people can use new ideas to
change the way things work. In the digital ecosystem, there are loads of innovations that make ideas
like the Metaverse a potential reality. While it is still in its early days, the Metaverse is developing
quickly.

Like many things at the cutting edge of technology, there are many ideas about what the Metaverse
could be. Most people see the Metaverse as growing into a fully connected series of platforms that use
Virtual Reality (VR) and Augmented Reality (AR) to operate. People can interact with others in the
space, and live a virtual life.

While it isn’t a core technology in the Metaverse, blockchain is a vital part of the next phase of online
development. We have already seen how popular cryptos and NFTs are, and all of these technologies
can be used in the Metaverse. While VR and AR make the Metaverse ‘real’, cryptos allow people to
bring real world value to the digital ecosystem.

Decentralized technology makes it simple to bring new ideas to the Metaverse. Technology like a
DAO, or other decentralized architecture, let people form groups, even if they are spread over the
entire planet. People can vote, share capital, and more with decentralized blockchain technology.

One blockchain technology that has a bright future is the smart contract. Smart contracts in Metaverse
use cases make a lot of sense. Smart contracts are founded in blockchain technology, and platforms
that offer smart contracts are already popular. Unlike a regular contract, there is no third-party to
enforce the contract, as the blockchain allows a trustless direct connection between two parties.

Let’s take a look at smart contracts in Metaverse development.

What is a Smart Contract All About?

A smart contract in Metaverse terms is the same as any smart contract, but it operates in a Metaverse
platform. It could be used to mint an NFT, or be a part of a DAO’s structure. In many cases, there are
existing platforms that make it simple to create smart contracts, and this technology could extend to
the Metaverse.

The reason a smart contract operates is because of blockchain technology. Although not all
blockchains support smart contracts, many do, and can operate seamlessly with Metaverse platform if
the designers want to include smart contract functionality.

Does the Metaverse Need Smart Contracts?

The Metaverse is the real world in a digital space. Because we have virtual assets, like cryptos, there
is a way for people in the Metaverse to trade with each other. By using their avatars, people can make
connections, and do almost anything that would be possible anywhere else. That is why smart
contracts are so useful in the Metaverse.
A smart contract, as such, is a derivative. Said simply, smart contracts derive their value based on the
assets, or other actions, that are written into the smart contract. In some cases, this could be a
transaction, and in others, it could cover voting power in a DAO.

In fact, a smart contract can be used in the Metaverse to accomplish many things. It could be made to
sell NFTs at a given price, so a creator can sell their creations automatically. A smart contract makes
sure that the rules are followed, and once it has been created on the blockchain, no further work is
required. In this example, the smart contract can also ensure that the creator is paid royalties, and this
will happen no matter what.

In many cases, smart contracts are used as the software infrastructure that makes more advanced
operations on a blockchain possible. They can be used to create new tokens that operate on a
blockchain, or as the logic of a decentralized application, like a decentralized exchange.

With the existing smart contract functionality of blockchains like Ethereum, Solana, and others,
Metaverse developers can make their platforms do almost anything, and operate with existing
blockchains that are already popular in the Metaverse.

The Metaverse: Possible Challenges

Like any new technology, Metaverse development will face challenges. The good news is that there is
a wealth of decentralized technology to draw from, and smart contracts can help Metaverse
developers overcome limitations.

Part of the problems developers face emerge from the Web1 design paradigm. Web1 was all about
viewing information, and not much else. Users weren’t in an interactive environment, and the
technology of Web1 was about access to information, not interaction with the online assets.

In some ways Web2 came along to deal with the limitations inherent in Web1. People can interact
with platforms like Social Media, but all of the platforms were owned by massive companies that also
owned the user’s online data footprint.

Web3 takes it all to the next level. In the world of Web3, the online space is interactive, and users
own their data. In addition, Web3 gives people the ability to own online assets, like crypto and NFTs.
Smart contracts make this possible, which is why they are a big part of Metaverse development.
The Solution: Smart Contracts

Smart contracts can be used in a centralized Metaverse structure, or a decentralized one. This
advantage will become more important as Metaverse design evolves, and both types grow into global
digital ecosystems.

Centralized Spaces
Some of the biggest tech companies on the planet are working on centralized Metaverse platforms,
with Facebook’s Meta existing as a prime example. In this model, a single company acts as the
authority of the platform, and has control over what happens. While the platform itself is centralized,
if the platform wants to attract Web3 users, it would need to create a gateway for decentralized assets,
like NFTs.

The best way to create a gateway, or connection between two systems is smart contracts. If a platform
like Meta is fully gated, and doesn’t allow the use of decentralized assets, it would severely limit its
level of interest to people who demand to have control over their online assets. While these mega-tech
companies may insist on control at the outset of the design process, market forces may push them to
open up to decentralization over time.

If centralized platforms refuse to create gateways, there would be a series of parallel Metaverses, and
users would have to choose which platforms they used, and if they want to deal with centralized
control structures, and also if they want to give up their data to mega tech companies.

Decentralized Ecosystem
The Metaverse should be decentralized if it uses Web3 design ideas. The back end of the Metaverse
should use open-source architecture, so that the development community offers open access to new
ideas. All of the platforms would be connected, and assets could flow easily between platforms.

Clearly, in the decentralized Metaverse design model, smart contracts would play a critical role in
facilitating connections. DAOs would be popular, as would digital assets like NFTs and digital
currency. All of these technologies rely on smart contracts, and these digital contracts would be the
lifeblood of the Metaverse.

Smart Contracts as The Key

There is no doubt that a wide range of Metaverse platforms will be developed, both centralized and
decentralized. In both cases, smart contracts will be used for a range of applications. As we have seen,
blockchain technology enables Web3 to become a reality, and with these new opportunities, a
revolutionary design paradigm is growing stronger.

CONCLUSION
As our virtual and physical worlds converge and the Metaverse continues to emerge, advance, and
mature, we will see more feedback loops between the two worlds change technology, markets, and
products. Today’s technology deployment decisions should be governed by the vision of this future –
a coexistence of Metaverse and Universe that will be upon us faster than we can imagine.

BIBLIOGRAPHY
 THEHINDU

 INDIANEXPRESS

 LAWGIRI

 MANUPATRA

 AIGOVERNER