The metaverse sector is witnessing its very-own housing crisis moment, thanks to massive declines in the prices of its virtual lands in 2022, led by waning users’ interest and a crypto bear market.
In particular, metaverse projects built on the Ethereum blockchain, including the Sandbox and Decentraland, have witnessed substantial declines in their valuations and other key metrics, data from WeMeta shows.
For instance, the average price of lands sold across Decentraland peaked at $37,238 in February 2022. But as of Aug. 1, their costs had dropped to an average of $5,163. Similarly, Sandbox’s average sale price dropped from circa $35,500 in January to around $2,800 in August.
Real Estate in the Metaverse Declining Sales Volumes
Cuban also criticized the idea of buying land in the Metaverse, explaining that he believes that buying real estate on these platforms was not a good idea. He referred to this as the “dumbest sh*t ever,” declaring:
“It is not even as good as an URL or an ENS because there are unlimited volumes that you can create.”
Overall, the average price per parcel of virtual lands across the six major Ethereum metaverse projects dropped from approximately $17,000 in January to around $2,500 in August, or an 85% decline.
Poor land sale volumes further indicate dampening user interest in Metaverse projects.
On a weekly average, the volume, which represents the amount of land (derived in currency) traded, has dropped from its peak of $1 billion in November 2021 to approximately $157 million in August 2022.
Technavio Offers Contrarian View of Metaverse Land
The real estate business in the Metaverse has been booming, and it is projected to keep growing in the short term by some estimations. According to analytics firm Metametric Solutions, the sale of real estate in the Metaverse is expected to reach $1 billion this year.
Furthermore, a report issued by Technavio in July predicts these sales will grow by $5 billion by 2026, fueled by the implementation of virtual reality solutions and the popularity of cryptocurrencies.
Simultaneously, the market valuations of the Metaverse tokens in circulation have dipped by more than 80%, led further by a broader retreat across the cryptocurrency sector due to unfavorable macroeconomic conditions.
For instance, the market valuation of Decentraland’s MANA tokens in circulation dropped from $10 billion in November 2021 to $2 billion in August 2022. Similarly, Sandbox’s SAND’s net capitalization reached $8.4 billion to around $1.78 billion in the same period.
fricking metaverse housing bubble just popped who would’ve thoughthttps://t.co/4OZKoi5fH4
— lil t the based god (@fauxzus) August 7, 2022
Mark Cuban Mocks the Metaverse: ‘It Is Anything You Want It to Be’
Most everyone knows or has heard about Mark Cuban. Crypto enthusiast and backer of crypto platform projects pokes criticism at the Metaverse.
The concept of the Metaverse has been an object of skepticism for many people. In a recent podcast, Shark Tank star and National Basketball Association (NBA) team, the Dallas Mavericks owner, Mark Cuban, mocked the current concept of the Metaverse, stating that it could be anything anyone wants it to be. Cuban stated:
“People that focus on [virtual reality] VR want it to be the Metaverse. Others want Web3 to be the Metaverse. There is no rhyme or reason to it yet.”
Metaverse – Virtual Reality or Web 3.0 or Land?
Founder and CEO of metaverse platform CEEK Mary Spio is also one waving the VR metaverse flag. In an interview with Cointelegraph, Spio argues that users cannot realize the true power of a Metaverse unless they are immersed through VR devices.
Spio’s metaverse platform CEEK helps digital content creators, including musicians and athletes, connect directly with their fanbase in a virtual world setting.
“Spio said that her platform opted for a focus on VR immersion because the benefits of the Metaverse cannot be fully realized in the non-VR mode:”
“Virtual Reality enables full immersion and creates that sense of presence, real emotions, and memories; no different than being at a time and place in real life.”
However, Spio admits that their Metaverse needs to allow for both VR and non-VR accessibility, as content, ease of use, and accessibility are all still required for the mass adoption of VR technology.
She believes a “quantum leap will be in the next two to three years” for Metaverse and VR adoption.
Janine Yorio, CEO of metaverse ecosystem developer Everyrealm, however, disagrees.
To Yorio, Metaverse platforms and VR technology should develop exclusively for each other without mutual consideration.
By her estimation, a tiny portion of Metaverse experiences is being built for VR like CEEK, noting VR making a significant change in the world likely won’t happen in any meaningful horizon.
The reasons for this lie in “technological obstacles” and simple human preference for the most simple applications of technology:
“People typically game or engage with technology while they are doing something else. That is impossible when using a VR headset which effectively blocks out the rest of the world and makes the user physically vulnerable while using it.”
According to Virtual Reality Marketing, her view is backed by the numbers, as Statista found that the VR market size was about $4.8 billion in 2021 from only 2.4 headsets per hundred households. Compare that to Web2 companies that enjoy a $14.8 trillion market cap and the metaverse token market worth $7.1 billion, according to CoinGecko.
Meanwhile, the creative and technical director at Human Park, Rick Pearce, took a middle-ground stance on the issue.
To Pearce, the main hurdle is the headset, which he says Oculus has solved for the most part by making the device more accessible. However, connectivity and gameplay will remain a difficult challenge for least the next five years.
“When we saw VR kickoff, you could see that there was potential. But the mechanical components to be able to deliver a sustained enjoyable experience just weren’t there, and they still aren’t now.”
Human Park has not yet implemented VR to its platform but says it is possible in the future.
Related News: The Future of Metaverse Gaming AR/VR for 2022
More From Everyrealm CEO Janine Yorio
Everyrealm CEO Janine Yorio has dispelled misconceptions that the Metaverse can only be presented “exclusively in VR.”
Speaking on Tuesday during Korean Blockchain Week 2022, Yorio told an audience in Seoul that Steven Spielberg’s Ready Player One had given us a glimpse into what life could be like if we lived in the Metaverse.
We can expect the next “12 to 36 months” to be the most exciting time for the Metaverse, said Yorio, noting this will be the time “when a lot of the triple-A gaming studios…are actually going to start building and delivering the kind of Metaverse” that people are looking forward to experiencing.
After this significant shift in development happens, this is when we can expect “mainstream adoption the moment we’re all waiting for,” she explained.
Everyrealm is a company that invests, manages, and develops digital assets such as non-fungible tokens (NFTs), metaverse platforms, gaming, and infrastructure. The company currently has holdings in 25 Metaverse platforms, owning over 3000 NFTs and managing more than 100 real estate developments.
During the presentation, Yorio also shared Everyrealm’s project plans for the near future with a focus on fashion, as it is “one of the private primary driving drivers of commerce:”
“Metaverse users will be able to look forward to having a look-alike avatar that they can dress with clothing from different designers […] as we strongly believe that fashion will move the Metaverse forward.”
Metaverse ETF Loses Almost 50%
Meanwhile, the Roundhill Ball Metaverse exchange-traded fund (METV) is tanking alongside blockchain-focused metaverse projects. The ETF gives investors exposure to companies that have been employing the Metaverse in their growth strategy,
On the daily chart, METV has dipped by nearly 45% from its record high of $17.11 in November 2021, with the companies in its stock portfolio, including Meta (formerly known as Facebook) and Snap, reporting substantial second-quarter losses.
Nonetheless, corporations, venture capital funds, and private equity investors pour over $120 billion into the Metaverse sector between January and May 2022, more than double the $57 billion invested in all of 2021, according to a recent McKinsey report.
Related: Facebook’s Metaverse will ‘misfire,’ says Vitalik Buterin
Despite the decline in the metaverse market, McKinsey believes the space can become a $5 trillion sector by 2030, noting that e-commerce will likely realize a market impact of between $2 trillion and $2.6 trillion. They were followed by the academic virtual learning sector, which could generate $180 billion to $270 billion.
5 Common Misconceptions Regarding Metaverse/Decentraland
1: You need virtual reality goggles to access the Metaverse
2: The Metaverse is just a gaming world and has no real-world uses
3: Metaverse platforms are a fad and will not last long
4: Investing in the Metaverse is a surefire way to lose money
5: Metaverse real estate is just a pyramid scheme
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