DappRadar Exclusive Report: The Metaverse May be an Old Idea But It’s Just Getting Started
After 30 years n gestation, the metaverse is finally emerging with citizens, economies, currencies, and millions of users.
By: DappRadarDeFi News
Ever since Facebook, the sixth most valuable company in the world, announced its corporate rebranding to Meta, the metaverse concept has gone mainstream. The truth is that the metaverse is nothing new. The author Neal Stephenson coined the term almost 30 years ago in his seminal sci-fi novel Snow Crash. The idea of a parallel virtual reality where individuals can play and socialize remotely was further popularized by Ernest Cline’s Ready Player One, which Steven Spielberg turned into a blockbuster movie in 2018.
But what exactly is the metaverse? How will the blockchain-based metaverse differ from a traditional metaverse? Why are virtual lands and cryptocurrencies like SAND and MANA exploding to all-time highs? And what impact might the blockchain metaverse have in our current way of living?
Into the Metaverse
The metaverse is an abstract concept, one that has different meanings for every individual and even every organization. Nonetheless, there are some elements that we can all agree a metaverse must include.
First, it’s a digital place, a parallel virtual augmented reality that expands beyond the physical world. Also, it is a place where people gather to socialize and share immersive experiences that range from building your own museum to showcasing digital art to assisting a virtual concert or even playing one of the games that are being developed.
But perhaps most importantly there are no multiple metaverses — there is only one. A shared universe where virtual worlds, digital brands, and services collide. In this space, people use their digital identity to interact, communicate, and transact value seamlessly and your digital persona can move freely across multiple virtual worlds.
So now that the foundation for this concept has been laid, it’s important to note that the metaverse can be comprehended from two different perspectives: a traditional metaverse and a blockchain-based metaverse. The former can relate to Web 2.0 principles, a hybrid concept where the current game and social experiences merge in an online augmented reality. The blockchain metaverse on the other hand, follows Web 3.0 principles, empowering individuals through the benefits of blockchain technologies. And that’s where we will focus going forward.
The Blockchain-based Metaverse
Thanks to the power of Non-fungible tokens (NFTs), people can own and utilize their virtual assets in accordance with their needs and preferences. In a nutshell, NFTs are unique tokens living on the blockchain that give their holders ownership rights over the digital asset. That is perhaps the biggest advantage presented by the blockchain metaverse. This type of token is the digital representation of a unique object, whether it’s an avatar, a name, a game item, digital artwork, a certain membership, virtual real estate and myriad other concepts. These tokens can be used to build experiences, or as collateral in certain DeFi protocols. In this way, NFTs become the key to handle digital assets inside the metaverse.
To put this diverse range in perspective, let’s review the case of Fortnite, one of the most played games in the world and an important player in introducing the social elements of the metaverse. In Fortnite, players can acquire skins to customize their avatars or trade weapons or materials to enhance their gaming experiences. The biggest limitation however is that all of the assets acquired by the users do not really belong to them, the assets provide a game benefit, but they are still owned and controlled by a central entity, in this case Epic Games. The Fortnite avatars are exclusive to this virtual world and non-other. Same case with Roblox, Minecraft, Animal Crossing or any other similar platform. Also, if the central server where the assets are stored stops functioning, the assets and the money invested in them are lost forever.
When a blockchain game is shut down, the NFT game items related to that game cannot be used anymore. However, the owner remains in control of the asset. Its metadata can be re-used by other projects leaving the asset with a remaining value.
In the blockchain metaverse, citizens gain full control over their acquired assets by inheriting all the properties found in NFTs. Digital identities portrayed by avatar NFTs can span many virtual worlds. Skins, game items, and other digital assets can be traded, bridged to other networks, and even rented without recurring to any type of middleman to oversee this process.
This type of interoperability is already being explored by several teams in the blockchain industry. Loot, for instance, enables the community to develop utilities on top of this virtual representation of Dungeons & Dragons. The pixelated metaverse WorldWide Webb3 allows users to walk around in the game world using their CryptoPunks, Bored Apes, and other NFT avatars.
NFTs empower their owners to control their assets based on their needs and preferences. While avatars, game items, and basically any type of NFT is part of the blockchain metaverse, there is another type of NFT that takes the blockchain metaverse to a whole new level: virtual real estate.
Virtual Real Estate
NFTs portraying virtual real estate are perhaps the most enticing aspect of the blockchain metaverse. When brought together, these digital pieces of land form a blockchain virtual world (BVW): 3D virtual spaces where users can immerse themselves. These are parcels of digital land that provide owners the freedom to build, incentivizing creativity and imagination while also embracing decentralization. Depending on the BVW, land owners will be able to build different types of digital buildings.
Platforms such as Decentraland, CryptoVoxels, and Somnium Space lean towards becoming social platforms, while spaces like The Sandbox, Treeverse, or Ember Sword are play-to-earn games with virtual real estate features. Nonetheless, each one of these platforms contain characteristics that make them unique. Somnium Space is a platform built for Virtual Reality (VR) while CryptoVoxels is compatible with most of the NFT avatar collections.
Use Cases for Digital Lands
Within some virtual lands, metacitizens are able to build a plethora of digital structures. In some other cases, the virtual parcels will become an important part of their host game mechanics, where a piece of land may become a guild of blacksmiths, or it might simply reward its owners with extra mining resources.
Projects like Decentraland, The Sandbox, CryptoVoxels, or Somnium Space allow users to build constructions within their owned virtual parcels. In most of them, with unlimited resources only constrained by the architect’s own design skills.
These BVW have been receiving users and visitors for a few years. Investors that acquire a piece of land within these virtual worlds can start building the venue they have always dreamt of. Examples of virtual venues include:
- Galleries or museums to display NFTs and immersive experiences
- Music venues where real-life and metaverse DJs will give digital concerts
- Business offices
- Game experiences like in The Sandbox
- Shops and boutiques that may play an important role in the virtual fashion industry
- Casinos like in Decentraland
- Advertising and billboard spaces
Decentraland virtual venues. Source: NFTPlazas
Digital lands embrace the community’s creativity as they become virtual spaces to host live events, trade virtual goods, art galleries to display NFTs, or even become monetized play-to-earn games. It is clear that virtual land NFTs present an added value rarely found in other assets.
High Demand for Virtual Real Estate
Zuckerberg’s announcement acted as a catalyst for the recent surge in virtual real estate valuations. Still, it is without a question that digital land parcels boast a massive potential by themselves. The asset has been noticed by investors and enthusiasts, supporting the latest value appraisal trend.
For instance, two virtual pieces of land were among the highest NFT sales registered in November. The Fashion Street Estate in Decentraland was sold for 618,000 MANA or $2.42 million, while an Axie Infinity Genesis Plot was sold for 550 ETH or $2.33 million.
But those sales were not isolated events. The price on average for virtual lands in The Sandbox skyrocketed almost 500% from the end of November. Virtual lands on The Sandbox were traded for $14,800 in November, a massive growth from October’s $2,500 average.
Similar scenarios unfolded in other BVW. Decentraland parcels for instance appraised 116% and were traded for $25,000 on average in November. Whereas CryptoVoxels digital lands were sold with a price 25% higher than the one registered in October.
Encouragingly, the notable rise was not exclusive to 3D worlds. Analyzing the sales of Treeverse, a browser-based pixelated virtual world showed similar results. The price of Treeverse has increased 256% on average since September, whilst the collection’s floor price has grown almost 100% in the same timeframe.
Also, it is worth noting that the demand for virtual land has increased. A rise in the demand normally translates into price changes, supporting the recent appraisal of virtual real estate. The effect is most notably on The Sandbox, where the number of trades involving virtual lands increased 421% from October to November. Again, supported by other BVW where the demand for their respective virtual parcels at least doubled.
Last but not least is the dominance that virtual lands represent to the entire NFT market. In October, the floor market cap of the top 100 NFT projects was estimated at $16.8 billion, with only 8% constituted by virtual lands. One month later, the market cap for virtual real estate ascended to $4 billion and now represents at least 25% of the NFT floor market cap figure.
Thanks to the potential entailed by these digital spaces, along with a combination of macro factors, the value of virtual real estate has appraised considerably. The Facebook event certainly helped, but it is relevant to understand the transcendence of blockchain virtual worlds.
Metaverse Related Cryptos Skyrocket to All-time Highs
Cryptocurrencies are the monetary forces that sustain the metaverse. Besides virtual real estate, cryptos that are native or related to the metaverse, including several play-to-earn dapps, saw their value soar in the last weeks. Despite the latest dip in the cryptocurrencies market, metaverse tokens are still overperforming most of their peers.
SAND, The Sandbox’s utility and governance token, reached an all-time high of $8.40, increasing its price 728% from October 15. The price of MANA, Decentraland’s native and governance token rose 456% in the same timeframe, while the price of CUBE, Somnium Space’s native utility token, surged 727%.
As already mentioned, the latest value surge is not specific to virtual world dapps. GALA, the utility and governance token of Gala Games also reached an all-time high of $0.82, and is still 400% up from the price registered on October 15. In the same way, Illuvium’s ILV, peaked at $1,911 on November 30th and has appreciated 78% in the same time frame.
Economy of the Metaverse
The impact of the metaverse transcends beyond the blockchain aspect. It is already paving the way to a new type of economy by generating new revenue streams, and gradually, even new social structures.
Some of these monetary flows are tightly related to virtual lands. Inside The Sandbox for instance, parcel owners can decide to build a virtual experience, where visitors pay a determined amount to be part of it. If owners decide not to build, they can simply put the space up for rent for others to develop.
But these revenue streams are not exclusive to virtual lands. Avatars, wearables and in-game items carry an interesting capital potential. These items will become the personification of ourselves, and the real habitants of the blockchain metaverse. As a reference, the market for digital skins or clothing in the traditional game industry is estimated at $40 billion annually. The opportunity window is huge.
Big brands, especially fashion brands, have taken notice. After the euphoria generated last summer by NFT collectibles, recognized fashion brands like Gucci and Dolce & Gabbana entered the space by launching their own NFT curated pieces. In August, Burberry became one of the first fashion brands to collaborate directly with a true metaverse project: the launch of 2,250 NFTs including avatars and wearables inside the BVW of Blankos Block Party.
The latest addition stole the headlines during the past week. Adidas entered the blockchain metaverse by partnering with The Sandbox and becoming the first fashion oriented partnership with the play-to-earn platform. Adding it to a list that already includes The Walking Dead, Atari, Snoop Dogg, among several others.
Citizens of the Metaverse
Not only will the blockchain metaverse open the doors for a new type of virtual economy. It has the potential to have a profound impact on our society by generating a new wave of opportunities. In this case, opportunities that will translate into full-time remunerated jobs.
- Virtual real estate brokers or investors specialized on real estate NFTs will potentially become the agents that facilitate rents and sales in virtual worlds. Understanding all the variables that most affect digital parcels will probably be well retributed.
- Virtual space designers should also be widely sought after. Individuals providing their services to land owners that do not have robust experience building digitally. Whether designing a complete construction, or simply putting the final touches on an art gallery, designers should thrive.
- DJs, musicians, and event managers: music artists and performers specialized in metaverse events will be in high demand.
- Developers will certainly be required. Either to write a (smart) contract, to sync the front and backend, or to develop a complete game, developers should be widely on demand.
- Metaverse entrepreneurs that become owners of shops, museums or basically any type of experience that has not been pictured yet.
- DAOs or Decentralized Autonomous Organizations should become the standard for business models inside the metaverse. Community and PR managers, advisors, and several other positions should be created as DAOs eventually flood the streets of the metaverse.
- Play-to-earn gamers is a position that might already exist. Axie scholars for instance are gamers hired by Axie owners to put their assets to work by completing game tasks or missions, and farming game items. This model allows both parties to end up with a form of income.
These are only a few examples of what jobs in the future might look like. The metaverse will transform our current way of living. It has the potential to create a profound effect on the way we socialize, trade, and entertain ourselves. It is already creating an evolving economy to meet the nascent digital needs and preferences of the virtual society.
But this is just the tip of the iceberg. The blockchain metaverse has the potential to shift our traditional reality, giving way to a decentralized space where CyberKongz, RTFKT’s Clones, and your favorite avatar will dance together until the virtual dawn.
DappRadar is an NFT and DeFi Dapp platform.
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