Original author: Chen Lishan
Original source:01 Blockchain
At the end of 2021, the virtual world has set off a “geogeism fever”, and with the bursting of the bubble in the first half of this year, the future of virtual real estate and the metaverse has once again affected the nerves of the market.
According to WeMeta data, the price of virtual land will drop significantly in 2022 due to waning user interest and the impact of the crypto bear market. From the six major Ethereum metaverse platforms. The average price per digital lot fell by nearly 85% from about $17,000 in January to about $2,500 in August.
At the same time, due to unfavorable macroeconomic conditions, the entire cryptocurrency industry has declined as a whole, further causing the market valuation of Metaverse platform tokens to drop by over 80%. On a weekly average, land transactions for the six major Metaverse projects have fallen from a peak of $1 billion in November 2021 to around $157 million in August 2022.
Virtual real estate from “popular” to “collapsed house”
In the second half of 2021, the concept of the Metaverse is popular all over the world, and it has brought about a wave of “land speculation”.
By creating a virtual world parallel to the physical world in a virtual space, the new metaverse platform becomes an important carrier for carrying the concept of the metaverse. Unlike the virtual space in general games, the land of the metaverse project has the following characteristics.
One is scarcity and liquidity. The virtual platform under the metaverse concept is not infinite, but consists of a fixed number of plots, and the price of the plots is also different according to the geographical location and the flow of people. Plots exist in the form of NFTs to ensure the uniqueness and traceability of the underlying property rights.
Second, the platform has its own economic and governance system. Most of the virtual plots are decentralized. The platform implements transactions by launching tokens, and the virtual world has its own economic system. And token holders can also participate in the management and development planning of the platform by voting to achieve platform autonomy.
The third is real estate properties. This reflects the ability of virtual land holders to buy, sell, transfer and develop land. Examples include resale and lease, and the creation of buildings and landscaping on purchased plots. By embedding corresponding functions and services, various commercial or non-commercial activities can also be carried out on the plot.
The fourth is to have parallel space-time dimensions. Relying on the blockchain, all activities on the metaverse will be time stamped and permanently recorded. This enables the metaverse to have a space-time dimension parallel to the real world, and the virtual existence and events within the platform have a historical dimension.
The fifth is to support the construction of offline scenes. Many things that are done in the physical world can be done in the metaverse, including shopping, working, studying, socializing, holding carnivals, etc. In the future, more and more offline scenarios will also be moved to the metaverse and carried out in a way that is not limited by physical conditions.
These characteristics of the metaverse platform redefine the virtual space, and under the attention of people, this market continues to ferment.
In the second half of 2021, as the concept of Metaverse is popular all over the world, the platform of Metaverse has also risen, and has taken a place in the investment field, and various digital land transactions have repeatedly hit new highs. In November 2021, a piece of digital land in the virtual world platform Decentraland was sold for a whopping $2.43 million. In December, a piece of virtual land on the virtual gaming platform Sandbox was sold for $4.3 million, a price that was refreshed by a $5 million transaction that month.
At the same time, the ecology in the metaverse platform is also expanding in an all-round way. British artist Philip Colbert founded an art town in Decentraland for NFT art exhibitions and concerts. Nike uses the Roblox platform to create Nikeland, providing a series of brand experiences such as fan meetings, social networking, and promotions. HKUST plans to launch MetaHKUST as a virtual campus of HKUST Guangzhou campus to provide an immersive campus experience. Barbados has established a virtual embassy in Decentraland as a hub of activity to drive stronger bilateral relations with governments.
However, since 2022, the market enthusiasm has turned sharply downward, and the speculation in the virtual world has gradually receded.
From prices that are comparable to luxury homes at every turn, to the whole market that nobody cares about. The entire Metaverse project market is in a bear market. According to NonFungible.com data, as of the press date, among the top ten Metaverse projects by transaction volume in the past 7 days, both transaction volume and transaction value have dropped significantly compared to the beginning of the year.
Note: For some platforms launched in 2022, the data 7 days after the launch date is used as the calculation basis for the year-to-date increase data.
The virtual real estate bubble burst
Why did the Metaverse project encounter “Waterloo”? 2022 is a year full of uncertainty. The international economic and political instability will increase, and the decline of the encryption industry has set the main tone for the entire market. In addition, the exploreability and intrinsic value of the Metaverse platform cannot support the prices previously raised by the hype.
(1) Bear market in the global crypto market
2022 is a year full of changes, and the atmosphere shrouded by the epidemic has not yet fully recovered. Against the background of the Federal Reserve rate hike and the conflict between Russia and Ukraine, the international economic and political situation is turbulent, and the uncertain international situation makes the cryptocurrency continue to decline. The implosion of the stablecoin UST in May made the cryptocurrency plummet, which cast a shadow over the overall crypto market.
According to statistics from cryptocurrency price-tracking website Coinmarketcap, major cryptocurrencies have suffered massive losses since the beginning of the year. In addition to stablecoins, the top-ranked currencies in terms of market capitalization mostly fell in the 40%-60% range. The overall market value of cryptocurrencies is currently close to $1.04 trillion, down nearly 50% from the beginning of the year.
NFTs have also been severely affected. Forechain’s data shows that the performance of NFTs will weaken in 2022, and the transaction volume, transaction value, and the number of buyers and sellers will all drop significantly. Among them, the transaction volume in the second quarter decreased by 85.68% compared with the first quarter, the transaction value decreased by 80.05% compared with the first quarter, and the number of buyers and sellers decreased by 68.57% and 57.33% respectively compared with the first quarter.
Virtual real estate uses cryptocurrency as the main trading medium and NFT as the main carrier. With the decline in the price of tokens on various platforms, the value of virtual real estate has also plummeted. Previously, a large number of speculators poured in, and they all exited the market, which directly triggered the burst of the virtual real estate bubble. Judging from the sales volume and price of virtual real estate, except for May, the market has shown a downward trend since 2022, and has shown a greater correlation with the cryptocurrency market and the NFT market.
(2) Desolation and lack of immersion
Like physical real estate, planning and design and flow of people are the keys to prosperity and appreciation. For the virtual world, deserted cities are like the end of the world. At present, virtual real estate has not yet built a prosperous ecology, and the flow of people is not satisfactory.
On the one hand, Metaverse platforms have created mirror worlds one after another, moving brand stores, experience stores, office buildings, etc. in the physical world into virtual spaces to support players to enjoy various services.But after the freshness of this experience is over, the problem of the singularity and limitation of services begins to be exposed.And most of the metaverse projects are still in the “land reclamation period”, and the playability and explorability within the platform are limited.
On the other hand, the lack of immersion is another important factor. VR/AR technology has entered a stage of rapid development, but it has not yet been applied to mainstream metaverse projects on a large scale. The vision and hearing of the two-dimensional plane are difficult to present a sense of reality comparable to the real world, and the real-time interaction with virtual scenes is also in its infancy.A single sensory dimension is still a common problem with mainstream metaverse platforms.
(3) The loss of monopoly and scarcity
In the early days of the metaverse project, people had high hopes for it.
The real world is always unsatisfactory. The epidemic has swept the world, the traditional economy is facing difficulties, and the society is seriously involved. People’s desire to “be born out of nothing” is getting stronger and stronger. Different from the virtual world separated from the real world, the metaverse platform opens up a new frontier parallel to the physical world, in which humans can re-plan the appearance of cities, formulate business rules and social order.
But the reality is that the construction of the metaverse is also inseparable from the power of capital, From buying land, building, to determining the functions and rules of land plots, capitalists are gradually monopolizing. People who can’t afford to buy a house in real life are also in the virtual world. Players’ perceptions and feelings in the virtual world are under the established framework, and the vision of freedom and equality is difficult to achieve in the metaverse platform.
At the same time, the scarcity of plots is being questioned as more and more multiverse projects emerge.The tiles in a metaverse are finite, but the metaverse itself can be infinite. Obviously, the current metaverse platform is not yet irreplaceable, and the homogeneity between the various platforms is serious. As the supply of land plots for the Metaverse project gradually rises, the value of the land plots is also difficult to maintain.
(4) The choice between reality and ideal
The virtual real estate market continues to decline. On the one hand, it is the influx and escape of speculators. On the other hand, it is the “insufficient confidence” of the Metaverse project at this stage. But in the long run, this market still has great potential for development.
At a time when the digital economy has become a development trend, the Metaverse project has become an important port.Online platforms such as mobile banking, shopping platforms and online courses have increasingly become a form of life that people rely on. Creating game-like perceptible interactive scenes can adapt to the growing online life scene. In addition, new businesses in the form of virtual clothing and virtual concerts are also taking advantage of the wind, creating new economic growth points for the virtual world.
In the bear market of the crypto industry, the concept of the metaverse has not cooled down. On the contrary, various technologies related to the metaverse are accelerating. As the experimental field of the metaverse, the virtual land is the closest product to the concept of the metaverse. The metaverse is not yet defined, and the limited human imagination is not enough to generalize it.At this stage, human beings have pioneering significance for the construction of the metaverse platform, and are shaping and influencing the final form of the metaverse.
The construction of the metaverse is not to create a utopia. Relying on the blessing of the virtual world to escape reality will cause the withdrawal of human civilization. While mixing the virtual and the real, the monopoly and impetuousness in the real world are inevitably brought in together.But the extensibility of the metaverse gives us choices, and humans can switch between different metaverses to find and build idealized habitats.
In reality, in ideals, the exploration on the metaverse platform will become our important export.
(The above content is excerpted and reproduced with the authorization of our partner MarsBit, original link | Source: 01 Blockchain)
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This article virtual land prices plummeted 85%! Does the Metaverse’s test field still have a future? First appeared in Block Guest.