It’s a stark reality. The cryptocurrency market has lost 40% of its value since peaking in November, and even web3 supporters have accepted that a bear market has arrived with no end in sight.
And yet, there is one asset that has been quietly and steadily holding fast during this sell off — metaverse land. Yes, that’s right, real estate in the virtual world had tracked the larger market’s surge to all time highs last fall but rather than drop it’s remained elevated despite some tapering.
In fact, weekly metaverse land sales broke 6,000 ETH for the first time starting on Nov. 14 and hasn’t dropped below that level since, according to WeMeta, a platform which tracks metaverse “worlds” like Decentraland. Land in the metaverse is typically represented by NFTs.
Facebook’s rebrand to “Meta,” on Oct. 28 may have drawn snickers from pundits, but it’s also apparently driven some of the momentum around metaverse land.
The Sandbox, a metaversal world whose land the likes of luxury brand Gucci and rapper Snoop Dogg own, led the volume charge in November, with a pullback in the last month. Up-and-comer NFT Worlds has made up the difference in volume though, coming out of obscurity to have its 10,000 NFT collection lead metaverse land volume in the last two weeks.
NFT Worlds has leaned on an integration with Minecraft, a world-building game with 140M monthly active users as of 2021, according to Windows Central.
An $8.3T Opportunity
That metaverse land has been resilient in the face of a crippling crypto sell-off hints at how large the opportunity at hand may be — even Morgan Stanley, the Wall Street investment, sees the metaverse as a $8.3T opportunity, which would be worth more than two and half times peak crypto, according to a report issued on Feb. 23.
JPMorgan Chase is getting in on the fun too — the financial conglomerate this month opened a virtual lounge in Decentraland, another metaverse world, and people are already visiting.
Some companies, like Metaverse Group, which bills itself as a “virtual real estate company” and is a subsidiary of Tokens.com, are trying to get ahead of the curve. The firm made an estate purchase of 618,000 MANA, Decentraland’s currency, in November in the metaverse world’s Fashion District. That’s a $1.62M price tag by MANA’s Feb. 24 price and was the largest metaverse land acquisition to date.
Metaverse Group has continued it’s land grab with major purchases next to the likes of Dragon City, which the firm called a “virtual Chinese culture city,” in the press release of the deal.
When asked by The Defiant to explain the value proposition of metaverse land (after all, scarcity, the driver of value, doesn’t have to exist with digital real estate), Andrew Kiguel, CEO and co-founder of Tokens.com, doesn’t think it’s too different from the physical world.
“Ancillary or peripheral visitor traffic is real in the metaverse, just like in physical spaces. That’s why Rodeo Drive and 5th Avenue exist,” Kiguel told The Defiant over email. Metaverse Group is also signing leases to rent their digital land as well developing it with metaverse arichects.
“We are highly optimistic about the value of our land,” the CEO said. “It’s worth more now that we’re developing it and have paying clients than when it was vacant of anything. Metaverse growth continues to boom.”
Kiguel added that Decentraland users growth rate was 3,300% in 2021 and likened strategic metaverse land purchases to owning permanent ad space on Facebook starting when the platform had only a million users.
Kiguel, a former investment banker, emphasized that there’s a demographic of users which don’t watch TV or read newspapers, but instead will use new platforms like metaverses.
Unlimited Land Creation
Still, despite metaverse land showing strength as an investment, some people are experimenting with different models which actually allow for unlimited land creation. This flies in the face of the new highs hit by land sales in Decentraland, The Sandbox and the like.
The founder later told The Defiant that while he’s convinced the metaverse will be extremely valuable, it’s unproven that land will capture that value.
Smith doesn’t think any metaverse platform has a large enough user base to prove that scarce digital land can hold value. According to WeMeta, Decentraland leads metaverse world platforms with roughly 3,000 active players. “Without a user base there’s no argument that they have value,” Smith told the Defiant of the scarce land platforms.
Like Decentraland, and The Sandbox, Nifty Island is a virtual world platform, but it differs in that Smith has elected to give every user their own island for free. “We don’t believe in land scarcity in a world of digital abundance,” says the project’s website.
On Nifty Island people are expected to build structures, create and play games, and socialize, among other activities. “The whole thing is harmonized around user-generated content. That’s what we think is the killer app,” Smith said.
Nifty’s free-land model isn’t to say the platform will be without scarcity. “While land is abundant, what you create can be verifiable scarce,” said Smith. It’s a subtle difference in approach. Land is free, but people’s creations still have value.
It’s like how a YouTube or an Instagram account without any videos don’t have any value and are free to spin up, while a 100,000 follower channel is a coveted asset. “While Instagram and Youtube don’t really facilitate people trading accounts, people do it all the time,” Smith said. “There’s a big market for it.”
The founder added that people will be able to mint their island as an NFT if they so choose in later stages of the game. “The difference between us and a Web2 company is that we think people should own what they create,” said Smith. (Nifty Island is in closed alpha as of Feb. 24, meaning the platform is not yet open to the public.)
Even with uncertainty around the economics of metaverse terrain, Smith and Kiguel are betting heavily on digital worlds as a growing sector. For now, scarce land appears to be a good play. With the functional metaverse so young, and potentially worth trillions, the space’s future is one of the bright spots in an anxious crypto market.