The concept of metaverse or interoperable virtual worlds is not something new. It has been around for decades. But when Mark Zuckerberg decided to change Facebook’s name to “Meta” and accentuated the possibility of a future within the metaverse in the company’s plans, it went mainstream in only a few days.
This helped many metaverse-based blockchain projects raise millions of dollars from some of the most prominent venture capital firms. Recently, True Global Ventures also participated in a Series B fundraising round for a metaverse leader, The Sandbox, after having backed them in their Seed round in 2019.
The Alpha access to The Sandbox will be going live by the end of November 2021, and this will give everyone a peek into the next generation of Metaverse after years of development.
Betting on Internet’s Successor
The number of people who believe in a metaverse-based future is growing by the day, and with so much money being raised across the crypto industry, the development and innovation will surely accelerate. However, it is essential to highlight that the success of the metaverse depends on how effectively non-fungible tokens, a.k.a. NFTs, are integrated into it, and how reliable is the digital economy created around them.
Now, the sudden rise in popularity of NFTs, multi-million dollar sales for pixel avatars, and hype around every little collection can sound like a bubble waiting to burst, but that is not the case. NFTs have become this transformative technology that provides actual ownership of assets while still being unique and increasing value independently.
Thus far, the use cases of NFTs have transformed multiple landscapes like gaming, art, and fashion, showing us why they are an integral element of any metaverse moving forward. So, let’s take a look at some reasons that make NFT-integration into the metaverse almost inevitable.
NFTs Act as Blockchain-based Identities
The metaverse is all about creating virtual spaces where real people can interact with each other. In these virtual spaces, it will still be important for people to have a provable identity. That’s where we can use an NFT.
NFTs are unique digital assets whose ownership can be easily proven. So, when a user owns an NFT, they can easily verify their identity, ownership of a subscription to a creator’s premium content, access to exclusive merchandise from brands, even show their reputation and achievements, and so on. Using NFTs in metaverse may allow users to access any event or virtual space by simply using their NFT as an access card and to showcase to the community that you are “one of them.”
A Revenue Model of the Metaverse
Apart from offering a unique online experience using NFT-controlled access, the metaverse also introduces a new revenue model with NFTs. The scarcity of land and other assets inside the metaverse add immense value to any user’s profile. Not only that, users can also create new items within the virtual world to either exchange with others or sell at NFT marketplaces.
For example, let us take The Sandbox, the number one NFT Metaverse in terms of unique addresses, with over 500,000 registered wallets and 12,000 special virtual LAND owners. They have also generated more than US$144m worth of lifetime Gross Merchandise Value (GMV) by November 2021.
In this particular virtual space, users could monetize their assets like LAND to earn consistent income in the form of rent. If they create more items and populate their virtual real estate, the value could go up significantly.
When these NFTs are being traded on a marketplace, the original creator/artist and platform will get a cut of the transaction revenues. This creates a new Monthly Recurring Revenue stream that was not easy to track and payout to the relevant parties previously.
These prove that NFTs can be used in multiple ways inside the Metaverse to generate Revenue Models. And as the metaverse continues to evolve, we will see the revenue model and earning opportunities vastly improve.
NFTs Fuel Play-to-Earn Gaming
The day will come when players have two options to play their favorite game genre—one with Play-to-Earn and the other not. Then the question would be where I would like to spend my time, assuming both games have the same production and entertainment value.
The main reason players might want to spend time on Play-to-Earn besides earning some money would be the lack of actual ownership of assets. While gaming companies make hundreds of millions of in-game item purchases, players do not even have the control over their game assets to trade or sell for a higher price.
This is where NFTs can create a massive phenomenon in the gaming industry. Players can earn an income playing the games, while their NFTs appreciate on the sidelines as they power them up and make them more valuable. And when true cross-chain technologies go mainstream, players can use their NFT-based avatars in different Metaverses and different eco-systems.
For example, the Play-to-Earn game Axie Infinity’s sales were about $36 million in June 2021 and have grown to US$500m-US$800m+ in the last few months of 2021. This trend will continue with other new Play-to-Earn games becoming more mainstream.
NFTs x Metaverse: What To Expect?
While no one knows how the metaverse will unfold, one thing is sure — NFTs will play a significant role. If users continue to gain value, utility, and status from NFTs, they will accept the application it provides inside a metaverse. We also see NFTs create many crossovers from non-NFT Metaverses to add more functionality to a metaverse. It is expected that this trend will continue, and we will see numerous use cases of NFTs make their way into the metaverse.
The debate of whether the Metaverse should be fully open versus controlled by a few large corporations will probably rage on for years to come, but one thing is for sure, we cannot discount the fact that NFTs can and should be part of the Metaverse eco-system, as it brings many benefits to the users already.
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