The concept of the metaverse is still evolving and the worlds within it are changing
- The Sandbox, Decentraland, Somnium Space and Cryptovoxels have gone through lulls since the highs of November 2021.
- Facebook changing its name to Meta may have caused short-term spikes for metaverse land prices. Now everyone’s unsure where to go next.
- Smaller worlds like Metroverse and Treeverse are quietly building up their community and learning from other platforms’ past mistakes.
- Saying the metaverse will fail is like saying the internet can be turned off. Soon it will be the water in which we swim.
Virtual worlds across the metaverse were booming at the end of 2021. But since the turn of the year, the sparkle has drifted from the space’s big players like Decentraland and The Sandbox. But while the big players are going through a rocky period, new players are waiting in the wings to offer users utility, value and hope for the future of the metaverse.
Sales of land have dropped and native token prices – SAND, MANA and CUBE– continue to go down in price. The number of unique active wallets interacting with the virtual worlds has started declining steeply and the general excitement around the future of these platforms has been fizzling away perceptibly.
Drops in Decentraland
Even as recently as late March, Decentraland seemed to be going full steam ahead as it moved confidently into place as the king of the metaverse. It hosted a Fashion Week attended by over 108,000 people. Techno-Pop princess Grimes performed a DJ set, and Dolce & Gabbana sent its avatars down the catwalk dressed in the latest in NFT haute couture.
But long before any digital icons were strutting down the runway, DappRadar’s on-chain analytics for Decentraland show the platform was already having issues across a few important categories.
As we can see in the charts above, the number of unique active wallets connecting with Decentraland are down 15.11% over the past 30 days. In terms of overall visitors to Decentraland, around 25,000 people a day actually go to the virtual world. This may seem like a healthy number of users, but we’re talking about a company with an estimated market cap of over $1 billion.
Other important on-chain metrics are also down over the past 30 days. NFT trading volume is down 47.24% and the number of people trading NFTs is down 37.27%. Sales are down 44.29% and both the floor price and the average sale price for land have dropped by 8.11% and 5.2%, respectively.
The Sandbox also suffering
The Sandbox, another huge virtual world apparently set on a straight path to success, has also suffered similar drops recently.
Land prices in The Sandbox have been falling since early-February 2022. The average price of land in The Sandbox currently hovers around 2 ETH ($6,100 at current prices). On February 6th, it was 5.25 ETH ($16,000). As the graphic above shows, the average price of all assets in The Sandbox, which includes land as well as in-game NFTs, is down 35.7% to 1.5 ETH ($4,650) over the past 30 days.
Unique active wallets interacting with the dapp’s smart contracts are also down, by 66.25%, over the past 30 days. Prices and interaction are both down. All of this is despite The Sandbox having celebrity endorsements, huge brand partnerships and a brand new funding round that could value the company at $4 billion.
Animoca Brands, which owns most of The Sandbox, surely has big plans to leverage its stable of other blockchain-based platforms to create a virtual world of play-to-earn gaming and digital entertainment. This top-down, centralized system might not be within the ethos of the current web3 community. But for most people who just want some distraction, it could be a place to go and have fun.
Other big names following the same pattern
Cryptovoxels and Somnium Space make up two more of the big four virtual worlds that DappRadar’s been tracking for a while. These platforms too have been suffering from decline across many analytical categories – an important one being land value.
For anyone who bought land in the hope that its value would go up, the table below, taken from Dune Analytics, will make for disheartening reading. It shows that since their February peak, average land prices in Somnium Space have come down by 44%, from $17,679 to $9,905.
Cryptovoxels’ 250-day moving average does not make for enjoyable reading either. For anyone who holds land in the virtual world, the current average sale price of 1.23 ETH ($3,765) is just over half of the average sale price over the past year, which is 2.2 ETH ($6,735) for anyone who holds land in that game.
The peak we can see in the graph below occurred on December 6th, 2021. Since then, land values in the game have been on an almost uninterrupted downward trajectory.
So should people be worried about the future of the metaverse? Was the idea of a virtual world just a sign of the crazed times in which people lived during the worst moments of the pandemic?
Presumably Facebook founder and CEO Mark Zuckerberg hopes not. He appears to have bet the company’s considerable fortune on the idea of a web3 virtual world. The tech leader even changed his company’s name to Meta, in anticipation of the metaverse being the future of the internet.
Ironically, it was Zuckerberg’s announcement on October 28th, 2021 of his company’s name change that set in motion the events that lead us here. When a company as big as Facebook says the future is the metaverse, everyone else will rush to join in before it’s too late. When this happened, prices went up.
Why the recent drawback?
They call it a correction in finance. Ever since Facebook changed its name to Meta and the term metaverse became a part of everyday speech, unrealistic valuations have been placed on virtual worlds.
It should be noted here that Zuckerberg’s conception of “the metaverse” differs from many other people’s within the web3 community. He sees his metaverse as a single platform that houses all of his existing, separate platforms. Users will be able to move through all the different, connected parts, as long as they remain on his servers. It’s a centralized system wearing a pair of VR goggles.
So when Facebook changed its name, many people with spare cash and little experience moved towards anything that sounded similar. We only need to look at a graph of the price of Decentraland’s native token MANA to get an idea of what happened. That vertical line shot up on October 28th, 2021. It still hasn’t dropped back to the $0.81 it was before Meta was born.
The exact same thing happened with The Sandbox’s native token SAND. This token has also remained above its pre-October 28th level. It’s also following the same uneven path downwards from the highs of the late-November fever when the metaverse was in full hype mode and cryptocurrencies were on fire.
Decentraland and The Sandbox are victims, at the moment, of being the platforms that were in the right place at the right time to succeed off the back of Meta’s hype. Once Zuckerberg shined a light on the metaverse, people flooded to the biggest names in the game. Now we’re seeing those platforms come back to the level they would have been at had Facebook not decided to rename its company.
So if we view what’s happening at the moment as a correction, then there’s still hope of recovery for the metaverse lands that have dropped off since their late-2021 highs. They may have grown too quickly in full view of an expectant and critical community, but if they can get back to a place where its key audience is able to afford land, then maybe they can regain some of the confidence they had a few months ago.
‘It’s important for us that we don’t have ghost districts’
The problem for the four virtual worlds that we’ve looked at is that when they became too popular, corporate money started entering the market and regular players were pushed out. Unfortunately for everyone involved, it’s the community of regular players that make these platforms worthwhile.
Decentraland’s Community and Events Producer, Giovanna Graziosi Casimiro, said a few weeks ago that ‘it’s important, of course, for us that we don’t have ghost districts’. Casimiro, who headed up Decentraland’s Fashion Week, could have been talking for the whole of the metaverse when she said this.
Big companies like Adidas, Atari, Samsung and PriceWaterhouseCoopers have all bought land in Decentraland and The Sandbox. To them, spending $50,000 on some virtual land is not a huge outlay; to a normal person, it can be a huge financial risk. Many firms have purchased their land because they don’t want to miss out on what the metaverse might become. But now they have it, and the price has gone up massively, they aren’t doing much with it.
As in the real world, where a quick influx of capital can lead to gentrification and the hollowing out of local culture, expensive prices in the metaverse have led to homogeneity and tedium. The longer this goes on, and the smaller the communities of these virtual become, the more ghostly these towns will get.
Fortunately for the metaverse, it isn’t made up of four virtual worlds. The metaverse is a constellation of interconnected platforms that, perhaps one day, users will be able to inhabit and move seamlessly across with one single identity.
NFT Worlds moving into position
Epic Games CEO Tim Sweeney told Bloomberg last year that ‘the metaverse has the potential to become a multi-trillion dollar part of the world economy’. The founder of the company that owns Fortnite certainly knows what he’s talking about when it comes to web3 and how the space is evolving.
He also said ‘the metaverse is a term like the internet. No company can own it’. While this might be bad news for Mark Zuckerberg and Meta, who seem intent on funneling all internet activity through their platform, other, newer organizations see the metaverse as something they can help build.
NFT Worlds is the current standout project to realize impressive growth in 2022. Looking at DappRadar’s NFTs ranking pages, it currently sits at number 8 by market cap. The all-time average sale price of land in the NFT Worlds is 1.65 ETH ($5,060).
If you look at NFT Worlds data for the past 30 days though, you can see that the average sale price is just under 10 ETH ($30,010). All other statistical indicators, except market cap, show that the platform is strengthening. It’s possible that market cap has gone down as a result of the new staking function that NFT Worlds introduced in March.
The new staking function created a lot of excitement around new possibilities for land in the metaverse. Introducing rewards for locking it away leads to decreases in its supply and increases in price. It also gives people a reason to buy land and stay involved with the platform, as they will be rewarded for contributing.
On the flip side of land price increases in NFT Worlds, purchasing it has now become a distant dream for most people. With a current floor price of 9.2 ETH ($28,300), it would take most people a long time to save up to buy one.
One interesting development in this area is the creation of a secondary market based on NFT Worlds land that lets people buy into a small portion of the NFT and share in a small portion of the profit. Skuxxverse, which I wrote about here, offers people the chance to buy an NFT and then receive income from land staking, renting and play-to-earn yield.
Smaller projects are also getting in on the act
Aside from NFT Worlds, which now has the third highest cumulative land sales of all virtual worlds, smaller projects are creating their own corner of the metaverse.
Metroverse Genesis and Metroverse Blackout together have the fourth highest cumulative land sales for virtual worlds.Treeverse, which began life in September 2021, has maintained strong land values through the first quarter for 2022 and its on-chain analytics continue to look strong.
Metroverse has two worlds: Genesis and Blackout. 10,000 lands were minted for each one. And together, they have generated sales of $82.3 million. If you read its roadmap, you can see that from inception, staking and rewards were a part of the plan.
This is reflected in how many people are staking in Genesis, which is slightly further along on its timeline than Blackout. The platform has 4,233 users and 3,973 of them have staked their land. This means that 97.3% of all land is currently staked and users are now earning the platform’s native token MET, which launched in late March.
Whales who have staked hundreds of lands in Metroverse Gensis are now buying up land in Metroverse Blackout. One user, called electricFeel, has a total of 227 lands staked in Metroverse Genesis. Recently, they’ve been selling off their Bored Apes, Mutant Apes and Azuki NFTs in order to buy up more Metroverse land. When anyone with so much experience and power in the NFT space starts paying attention to a certain project, it probably means that something special is happening there.
Treeverse is another sector in the metaverse that is growing quietly and steadily while its bigger, better-known forebears are struggling to cope with the constraints of success. It was started by Loopify, a well-known NFT creator and collector. He began with an NFT collectibles project for NFTress and the community has grown naturally from there.
Now there’s a whole open virtual world with elements of sci-fi and fantasy. Founders’ Private Plot holders got their hands on land in September 2021 and plots are currently available on the secondary marketplace with a floor price of 1.3 ETH ($4,030). As we see in the graph below, this isn’t a huge way off the average sale price Treeverse land was achieving near the end of 2021, when anything metaverse-related was probably overpriced.
With a committed community and rewarding utilities, both of these platforms are showing that there’s more than one way to build a metaverse.
Like the internet, the metaverse can’t be stopped
These new games experiencing their own success show us that the idea of “the metaverse” fading away is as nonsensical as saying smartphones are finished or electric cars have no future. It may be the case that the iPhone or Tesla will relinquish their crowns as the market leaders, but the sectors will still move forwards with others at the helm.
In the same way, Decentraland and The Sandbox might end up as footnotes in the history of the metaverse. They’re the early adopters who showed what was possible and then newer, more refined platforms came along who learnt from past mistakes and made efforts to solve them.
What this current crop of virtual worlds have in their favor is the chance to grow organically, away from the limelight. They have committed communities and they have learnt that utility for everyday users is just as important as brand partnerships and Fashion Weeks.
Saying this, Decentraland and The Sandbox are still the two biggest platforms in the metaverse and this article is not saying that their day is over. They are aware that they have problems to address and they will be making efforts to make their platforms sustainable.
The main thing we should take away from the current state of the metaverse is that even if one virtual world goes down, there are others who can prop up the space. As long as we have the internet and people who want to create something with it, we will have a metaverse. It’s just that the worlds within it might change from time to time.