Designing Low-Cost 3-D Avatars Enabled to Teach Compounding Concepts to Gen Z for Enhancing Financial Literacy by Leveraging Web3 Gamification for Financial Literacy

Abstract

Financial literacy among Generation Z is alarmingly low, especially around compound interest and credit. This paper presents an innovative, Web3-based gamified learning system that uses low-cost 3-D avatars and visual narratives to teach compounding concepts. By integrating NFTs for identity, interactive missions, and real-time compounding simulation within a metaverse environment, the platform aims to engage 18–24-year-olds intuitively and enhance knowledge retention. A prototype was implemented and evaluated with a randomized controlled trial (N = 100) comparing it to traditional text-based instruction. The Web3 gamified group outperformed the control group significantly (75 % vs 55 %, p < 0.01), with higher engagement scores and intent to apply concepts. Qualitative feedback highlighted the motivational effect of avatar growth and NFT rewards. Results show that Web3 gamification can meaningfully improve compound interest learning while remaining low-cost and scalable. Limitations include gas-cost friction and novelty bias. Future work includes deploying advanced financial topics, refining UX to mitigate over-gamification, and evaluating long-term retention and cross-cultural adoption.