Unlocking the Digital Future: Exploring VR, Metaverse, and Decentralized Identity Solutions in the Tech Ecosystem
In the face of an ever-evolving digital landscape, the emergence of Virtual Reality (VR), the metaverse, and decentralized identity solutions are set to revolutionize our daily lives and economies. As we witness monumental leaps from tech giants like Apple and the transformative growth in Asia’s digital sector, we are on the cusp of a radical shift. This report delves into these disruptive advancements, charting their trajectory and exploring the opportunities and challenges that lie ahead in this unprecedented digital era.
- After Q1 2023’s trading high ($311M), Q2’s virtual world market fell 81% ($56M) due to shifting interests towards AI, memes, and DeFi services.
- Apple’s VR Pro debut sparked significant market shifts, with Unity shares up 17%, and metaverse tokens SAND and MANA rising on that day by 4% and 6.1%, respectively.
- The Bitcoin Sats Name System within 90 days of launch, had over 250,000 .sats names registered and generated $1.3 million in sales volume.
- Asia’s integration into the metaverse could boost its GDP by up to $1.4 trillion by 2035.
- Venture capital funds invested $707 million into metaverse projects so far in 2023.
Table of Contents
- Virtual world trading plummets: mememania and DeFi shake the landscape
- Metaverse land prices plunge to historic lows
- Apple Vision Pro: the key to bringing the metaverse to the masses?
- Identity provider dapps gain traction despite metaverse market downturn
- ERC 6551: the dawn of token-bound accounts in NFTs
- Asia’s metaverse supremacy: $1.4T GDP Boost by 2035
- Metaverse startups secure $707 million
1. Virtual world trading plummets: mememania and DeFi shake the landscape
In the high-speed digital expressway of 2023, the virtual world market started the year at full throttle. The first quarter saw digital land trading volume skyrocketing by a whopping 277%, with total trading reaching an impressive $311 million. In fact, Q1 2023 marked the best quarter for virtual worlds since Terra Luna crash of May 2022. Land trades also reached an all-time high of 146,690, an increase of 83.56% from the previous quarter. However, the Q2 narrative took a decidedly different turn.
The second quarter saw a substantial 81% decrease in trading volume, dipping to a less-than-expected $56 million. Land sales followed suit, dropping by 75% to 35,522. The market dynamics shifted radically, influenced primarily by user attention diverting towards the rapidly emerging trends of mememania and DeFi services. These alternative avenues within the blockchain ecosystem became more enticing, leading to a significant decrease in virtual world trading activities.
Among the top virtual dapps, Otherdeed for Otherside held its position as the frontrunner, even though its trading volume shrunk by 84.86% to $44.5 million. Despite this decrease, Q2 proved eventful for the Yuga Labs ecosystem, detailed in this report.
Second in line is Topia, formerly known as NFT Worlds, which experienced a slight decrease of 10% in trading volume, mainly due to its rebranding. NFT Worlds was a superstar on the web3 gaming scene until a policy shift from Minecraft barred NFT and blockchain integration with their game. This setback forced NFT Worlds to close and reboot, eventually re-emerging as Topia. Despite the hurdles, the resilient team continues to make progress in their pursuit to reclaim their position in the virtual world space.
Following close behind in the third and fourth positions are The Sandbox and Decentraland, both of which have witnessed intriguing events and partnerships in Q2. Despite bullish sentiments around these platforms, land sales volumes have dipped by 44% and 66%, respectively. Furthermore, the recent SEC lawsuits against Binance and Coinbase have adversely impacted the tokens associated with these platforms, SAND and MANA bringing them more than 95% below their all-time highs (ATH). Additionally, as we will see in the next section the land prices dropped to historic lows.
2. Metaverse land prices plunge to historic lows
In the ever-evolving landscape of the metaverse, virtual real estate has seen considerable fluctuations, as seen above. Let’s take a journey back to 2022, when the land prices in the top metaverses reached their peak, and fast forward to the present year, 2023, to gauge the market changes.
Topia, previously known as NFT Worlds, recorded a towering floor price of 23.57 ETH ($40,670.59) in 2022, the highest among the top metaverses. Fast forward to 2023, the floor price has taken a significant tumble, down to a mere 0.099 ETH ($170.973), marking a staggering decrease of approximately 99.58%.
Otherdeed for Otherside also witnessed a similar trend. From its peak price of 6.13 ETH ($10,582.91) in 2022, it slumped to 0.86 ETH ($1,483.20) in 2023, reflecting an 86% decrease in land value.
The Sandbox, a popular virtual platform, followed suit. The floor land price plummeted from its 2022 peak of 2.43 ETH ($4,196.51) to the current value of 0.36 ETH ($621.72), marking an 85.19% drop.
Similarly, Decentraland, another top player in the metaverse industry, saw its floor land price decrease from 8.64 ETH ($14,919.68) in 2022 to 0.44 ETH ($759.88) in 2023, accounting for a substantial drop of approximately 94.91%.
FLUF World: Burrows wasn’t immune to this downturn either. Its floor land price fell from 11.45 ETH ($19,764.15) at its 2022 peak to 1 ETH ($1,727) in 2023, signaling an 91.27% decrease.
What caused these drastic shifts? As we noted earlier, the first half of 2023 has been a mixed bag for virtual worlds. After a bullish 2022, the market took a significant hit in 2023. The trading volume and land sales both took a downward turn due to the users’ shift towards emerging trends such as mememania and DeFi services. The reduced user interest in virtual worlds is strongly reflected in the decreased floor prices of metaverse lands in 2023.
Further compounding the issue, certain platforms like The Sandbox and Decentraland faced the fallout from SEC lawsuits against Binance and Coinbase, impacting their associated tokens, SAND and MANA, and possibly influencing land prices.
The changing landscape of the metaverse market is a testament to its dynamic nature. While 2022 was a banner year for land prices in the top metaverses, 2023 has brought a change in tide. The resilience of these platforms amidst these market shifts will pave the way for the future trajectory of virtual real estate.
As the second half of 2023 unfolds, will we see a resurgence in interest and an upswing in metaverse land prices? Only time will tell.
3. Apple Vision Pro: the key to bringing the metaverse to the masses?
The sphere of virtual reality (VR) took an unprecedented leap forward as Apple unveiled its cutting-edge spatial computing device, the Apple Vision Pro. This stylish $3,500 gadget, with its futuristic aesthetics and impressive capabilities, is set to redefine our virtual interactions and shape the future of the metaverse. While some skeptics question the feasibility of VR in the mainstream market, enthusiasts argue that Apple’s entry could transform VR from a niche technology to a mass-market product.
The advent of the Apple Vision Pro is a game-changer not only for Apple but also for other companies in the metaverse ecosystem. Unity, a prominent game development platform, saw a substantial 17% increase in shares following the announcement of Apple’s VR set. Disney experienced a surge in stock value as well, when it declared that its streaming service Disney+ would be compatible with the Vision Pro.
The unveiling of the Apple Vision Pro led to a price surge for native tokens of blockchain-based metaverse projects such as Decentraland (MANA) and Sandbox (SAND). These platforms, which play a crucial role in developing the metaverse landscape, are likely to gain increased traction with the arrival of Apple’s VR set.
The aftermath of this unveiling saw SAND rise by 4%, MANA by 6.1%, and APE Coin by 6.45%. Unfortunately, the ongoing lawsuits against Binance and Coinbase, affected the altcoins, and especially SAND and MANA, as they were listed as securities.
Overall, the introduction of the Apple Vision Pro marks a significant milestone in the evolution of the metaverse. As Apple leverages its massive ecosystem to mainstream VR, the ripple effects will be felt throughout the tech industry and beyond. This revolutionary step may catalyze new possibilities and opportunities in the metaverse, underlining the potential of spatial computing in shaping our digital future.
4. Identity provider dapps gain traction despite metaverse market downturn
In today’s digital landscape, concerns surrounding data breaches and privacy have reached an all-time high. However, the rise of decentralized identity solutions is paving the way for a secure and efficient environment for digital transactions.
Ethereum Name Service (ENS) is a decentralized identity provider that simplifies the process of transferring assets on the Ethereum network by replacing long, complex addresses with human-readable names. With over 2.5 million ENS handles registered so far, ENS has gained significant traction. Furthermore, more than 64,000 wallets have between 1 and 100 handles, indicating widespread adoption among Ethereum users. Notably, 44 wallets hold more than 100,000 ENS handles, highlighting the versatility and popularity of this decentralized identity solution.
Cardano is spearheading the development of secure and decentralized identity solutions. ADA Handle, an NFT on Cardano, enables users to associate a customized, human-readable address with their accounts.
In the past 30 days alone, ADA Handle has experienced a remarkable 452.67% increase in trading volume, reflecting the growing demand for personalized and secure identity services. The average price of ADA Handle has also witnessed a significant surge of 355.02%, further validating the market’s interest in such decentralized identity solutions.
Unstoppable Domains is another prominent player in the decentralized identity space. The platform offers a login solution for DappRadar and introduced Humanity Check in 2022, an identity verification function that distinguishes humans from bots without compromising privacy.
Recently, Unstoppable Domains partnered with MetaRides Racing to launch a racing game featuring NFT cars. These NFT cars enable Unstoppable domain holders to showcase their identities through customizable features such as unique colors, body styles, and license plates with Web3 domain endings like .x, .crypto, and .nft.
The Bitcoin Sats Name System offers a decentralized domain name service built and supported by the Bitcoin community. Using Bitcoin Ordinals, Sats names are represented as BRC-20 NFTs (Bitcoin Represented Coins) that enable users to own and manage their domain names on the Bitcoin network. Within just 90 days of its launch in June 2023, more than 250,000 .sats names were registered on the Bitcoin network. Additionally, over 120,000 names with namespaces like .btc and .ord were registered, generating a remarkable $1.3 million in sales volume.
Decentralized identity solutions are proving to be a game-changer in addressing the rising concerns surrounding data breaches and privacy. With their secure and user-centric approach, these identity dapps offer tamper-proof identity verification, personalized addresses, and ownership of digital assets, enabling users to regain control over their personal information in the digital realm. As the demand for secure and efficient digital transactions continues to grow, identity dapps are set to play an increasingly pivotal role across various industries.
5. ERC-6551: the dawn of token bound accounts in NFTs
The emerging world of blockchain technology, NFTs, and the metaverse, is set to witness a groundbreaking shift with the introduction of Token Bound Accounts (ERC-6551). As a new protocol that equips every NFT with its unique account/wallet address, ERC-6551 promises to add a new dimension of interactivity, utility, and value to NFTs.
ERC-6551, or Token Bound Accounts, fundamentally revolutionize the way we interact with NFTs. They operate as the inverse of Soulbound Tokens (SBTs), tying every NFT permanently to an account/wallet, instead of the conventional reverse arrangement.
This protocol, which doesn’t require any modifications to the original ERC721 contract or any transactions from the owners, enables each NFT to own Ethereum (ETH) and other ERC-20, 721, 1155 tokens. The unique characteristic of ERC-6551 lies in its ability to embed an ownership layer over all existing and new NFTs, opening avenues for a range of use cases previously inaccessible or difficult to implement on-chain.
One significant advantage of token bound accounts is the ability for NFTs to record their on-chain history, or provenance, enhancing their value proposition. This system allows the value to accrue within the token, as opposed to a wallet like MetaMask or Rainbow. Therefore, when an NFT is sold, it carries along all its related tokens, badges, and transaction history, thereby transferring its complete value and heritage.
One project that can benefit greatly from the advancements brought by ERC-6551 is The Sandbox. The Sandbox is a virtual world where users can create, own, and monetize their gaming experiences. With the implementation of ERC-721 for game items and ERC-20 for token rewards, The Sandbox has already established a solid foundation for creating a thriving in-game economy. However, by incorporating ERC-6551, the project can take it a step further.
With ERC-6551, The Sandbox can offer its users the ability to combine game items (ERC-721) and token rewards (ERC-20) into a single entity, possibly utilizing the ERC-1155 standard or even the groundbreaking ERC-6551 itself. This integration would enable players to create more complex and unique in-game assets that carry their own history, value, and provenance. These enhanced virtual objects would not only serve as items of ownership but also as carriers of meaningful narratives and increased value.
ERC-6551 is poised to have a profound impact on the metaverse industry, particularly in projects associated with virtual worlds. By offering every NFT its account/wallet address, it bridges the gap between virtual and real-world assets, fostering a new level of engagement, personalization, and value accrual within the metaverse.
Moreover, by enabling NFTs to carry their provenance and related assets, token bound accounts may lead to the emergence of more complex economies and social structures within virtual worlds. It adds depth to virtual objects, making them not just items of ownership but also carriers of history and value.
The launch of ERC 6551 marks the beginning of a new era in the NFT community, with the potential to shape a brighter and more interactive future for the metaverse.
6. Asia’s metaverse supremacy: $1.4T GDP Boost by 2035
The metaverse is rapidly transitioning from the realm of science fiction to a tangible, virtual landscape. At the forefront of this revolution are Asian nations, as they pioneer innovative platforms such as Roblox, Decentraland, Fortnite, Sandbox, and Zepeto. As technology continues to evolve, the metaverse is projected to make a significant impact on Asia’s GDP, estimated to reach between $800 billion to $1.4 trillion per annum by 2035.
Asia, with its dynamic demographics, robust supply chain, and influential socio-cultural trends, is ideally poised to shape the metaverse.
Hong Kong: an international metaverse hotspot
Hong Kong, known for its world-class business environment, is poised to leverage the metaverse as a strategic asset for its digital future. The local government’s commitment to creating an innovation-friendly climate has cultivated a fertile ground for metaverse explorations. Tech behemoth Meta has recognized this potential, making Hong Kong a testing site for its metaverse initiatives.
In Hong Kong’s vibrant business landscape, real estate and luxury goods sectors stand out as significant beneficiaries of the metaverse. The virtual real estate sector, illustrated by developments such as Mega City in the Sandbox metaverse, underscores the economic potential of the digital world.
Moreover, Hong Kong is harnessing its unique positioning at the intersection of culture and technology to navigate the metaverse landscape. The city’s flagship events like Art Basel and Christie’s Hong Kong Auctions are being enriched with digital art, marking a new era in the cultural scene.
China: charting an unique metaverse course
China, with its impressive technology and manufacturing capabilities, is shaping a metaverse that reflects its unique characteristics. The Chinese government’s two-year metaverse innovation plan focuses on developing advanced infrastructure while promoting metaverse application in sectors like education and tourism. Shanghai’s inclusion of the metaverse in its 14th five-year plan and the construction of the Zhangjiang metaverse-themed industrial park mark significant milestones in this direction.
China’s tech giants, including Bytedance, Alibaba, and Baidu, are investing heavily in the metaverse, indicating the country’s resolve to lead in this domain. Bytedance’s acquisitions of VR headset company, Pico, and virtual social platform, PoliQ, reflect the aggressive investment strategy. The Joint Research Institute of Metaverse and Virtual-Real Interaction, set up by Tencent, Huawei, and premier Chinese universities, epitomizes the nation’s drive for collaborative innovation in this space.
As China’s consumers readily embrace digital experiences, the metaverse is becoming an integral part of the country’s economy. The live-commerce market, dominated by virtual influencers, reflects the immense potential of the metaverse economy in China.
Japan: harnessing cultural and technological assets
Japan’s strong cultural legacy and digital craftsmanship make it a compelling player in the metaverse. The administration under PM Fumio Kishida’s leadership is leveraging the metaverse as a key component in its digital revolution plan. The strategy encompasses blockchain promotion, NFTs, digital talent upskilling, and increased R&D in AI and quantum technologies.
Japan’s dominance in gaming and entertainment provides a solid foundation for its metaverse pursuits. From the fantastical realms of manga and anime to the vibrant video gaming scene, Japan has consistently led in creating immersive experiences. Titles like Pokemon Go and the nation’s pioneering role in developing gaming consoles attest to this. These strengths, coupled with the nation’s forays into retail and tourism through metaverse technologies, show Japan’s commitment to leveraging its cultural and technological assets for broader economic gains.
Asia is more than ready to seize the trillion-dollar opportunities offered by the metaverse. The nations of this region are not only ready to transform their economies through the metaverse but are also set to leave a lasting impact on the global metaverse landscape. This shift to the metaverse represents a significant milestone in Asia’s digital transformation journey, marking a new era of innovation, growth, and prosperity.
7. Metaverse startups secure $707 million in funding despite economic challenges
Startups in the metaverse space – a term encompassing the companies involved in the augmented reality, virtual reality, and virtual world industries – have seen a significant decrease in funding, with a 66% drop from 2022. Interestingly, this coincides with the shifting attention of investors towards artificial intelligence (AI) startups in 2023. These dynamics reflect the current state of a global economy grappling with an array of challenges.
Yet, even in this climate, funding to metaverse projects is not entirely bleak. The industry has attracted a sum of $707 million since the start of 2023, marking a commanding 43.68% dominance over the web3 investments.
To better understand this, let’s define the ‘infrastructure’ category within web3 investments. This refers to funds allocated to the underlying technologies, systems, and platforms that support the Web3 or the decentralized internet. In 2022, this category held the most significant portion of the funding pie with a 33.47% dominance, surpassing metaverse projects, which held 27.32%.
However, the $707 million poured into metaverse projects is still an impressive figure, especially for an industry anticipated to grow from $416.02 billion in 2023 to a staggering $3,409.29 billion by 2027. According to a report by Fortune Business Insights, this represents an incredible compound annual growth rate (CAGR) of 69.2%.
Backing these optimistic projections are various companies that remain bullish on the metaverse industry. Among them is Animoca, a prominent supporter of metaverse startups. Over the past six months, the firm has made more than 20 investments in companies pushing the boundaries of the metaverse.
Animoca recently extended its support of metaverse and web3 developments in Japan. In 2022, the firm allied with MUFG, Japan’s largest bank, and announced a partnership with Mitsui on June 19, 2023. This collaboration is part of a broader movement, with both the national government and the Japan Business Federation promoting Web3 as a national strategy.
Web3 promises secure, universally accessible systems that can revolutionize various industries. Animoca Brands contributes to this vision by driving practical Web3 business initiatives using digital assets and blockchain technology. Mitsui brings to the table an expansive portfolio of business development expertise and a global network.
In summary, despite the apparent lull in metaverse funding hype, the future looks far from bleak. The industry continues to attract significant investments, backed by the belief that the future is shaped by our actions in the present. This continuous funding and development hint towards an exciting future in the metaverse space.
The ongoing evolution of digital technologies, particularly Virtual Reality (VR) and the metaverse, is reshaping our world and economy in groundbreaking ways. Apple’s introduction of the Apple VR Pro has the potential to make VR technology mainstream, driven by innovative features that aim to enhance user interaction in the virtual world. Concurrently, the rise of decentralized identity solutions and AI technology marks an era of heightened digital security and efficient, user-friendly digital environments.
Asia, as a key player in this digital transformation, is set to reap immense benefits from the metaverse, estimated to boost the region’s GDP by up to $1.4 trillion by 2035. Countries such as China, Japan, and Hong Kong are leveraging their unique strengths to harness the potential of the metaverse, thereby enhancing economic growth and digital innovation.
However, challenges remain. Legal implications, particularly around blockchain technologies and cryptocurrencies, must be addressed to ensure a smooth transition towards these digital futures. Furthermore, concerns around privacy, data security, and technological access inequality need to be addressed to ensure an inclusive and safe metaverse.
As we look to the future, these trends underline the massive potential of spatial computing, AI, and decentralized identity technologies in reshaping our digital interactions. These technologies, along with the growing influence of the metaverse, herald a new era of innovation and growth, carrying profound implications for businesses, governments, and individuals globally.