Metaverse land & real estate

Today we’re looking at land & real estate in the metaverse.

The metaverse sort of feels like a place everyone is talking about but nobody actually goes to. The buzz is growing, but is there any substance here? Is this actually happening?

Metaverse land is very real, and so is the money pouring into the space. It is on track to become a billion-dollar industry this year, and as the industry grows, so do the sub-economies.

Yes, that’s right: There are now digital real estate firms specializing in metaverse architecture, construction, property management, and even financing. In fact, you can now get an actual mortgage to buy virtual real estate.

If this stuff bewilders you, you’re not alone. It’s pretty wild to think about, and it’s moving very quickly.

If you have no idea what the metaverse is, or would like to understand this brave new world a bit deeper, then this issue is for you.

Let’s go! 👇

What is the metaverse?

Don’t let Facebook fool you: The term “metaverse” is nothing new.

Imagine an interconnected, virtual world where anything you can dream of doing is possible. You can explore, play games, work, see and touch friends on the other side of the globe. Most of all, you can escape reality.

This metaverse concept has long been the muse of science fiction writers, especially Neal Stephenson, who originally coined the term in Snow Crash, his famous 1992 sci-fi dystopia.

One of the most memorable recent depictions of the metaverse comes from one of my all-time favorite shows, Black Mirror. Whether you love the series or find it too dystopian, San Junipero is widely regarded as the best episode in the show’s history.

In the episode, two dying souls on earth are uploaded to the cloud, where they live forever in virtual heaven. It’s one of the rare episodes that ends on a positive note, and it opens an interesting dialogue on the metaphysical nature of the metaverse.

San Junipero is my all-time favorite episode of Black Mirror. I get goosebumps just thinking about it.

That’s the utopian goal of the metaverse: A pixel-perfect recreation of what humans value most: Love, friendship, and connection in an infinite manufactured playground.

But will society ever get there? Do we even want to? And where are we now on that journey?

Early iterations of the metaverse

If it’s nothing new, where did the metaverse begin?

In my opinion, the metaverse began with MMORPGs, especially Second Life and World of Warcraft.

Second Life is a virtual world that developed in 2003. It incorporated many aspects of social media into a 3D world. You had an avatar, you could be whoever you wanted to be, you could fly around. There was no manufactured conflict, and no set objective.

Second Life kicked off the metaverse. It is still around today, and yes, you can still buy land.

As Second Life was falling out of favor, a new game blasted onto the scene: World of Warcraft (WoW).

World of Warcraft was a massive success. It completely redefined the MMORP genre, and introduced the concept of gold farming, which was essentially an early manifestation of play-to-earn. It also created a swarm of addicts, and even spawned “Wowaholics Anonymous,” a community for players trying to quit.

Although WoW peaked in 2017, it would go on to become one of the best-selling games ever — over $10 billion in sales and counting — and still has millions of active players today.

Recent iterations

The most popular metaverses today are Minecraft, Fortnite, and Roblox, the latter of which boasts over 100 million active users. Roblox is like a virtual playground, where users can construct virtual cities or explore a complex and evolving environment with their friends, total strangers, and everyone in between.

But lately, the metaverse concept has become synonymous with crypto. Blockchain technology is now heralded as the framework which will bring the metaverse to the masses.

The three projects largely responsible for this are all powered by Ethereum:

  1. Decentraland
  2. Cryptovoxels
  3. The Sandbox

What does the metaverse look like?

Let’s take a trip into some of the most prominent metaverse lands. What does it feel like to be in there? We’re going to visit Decentraland, Cryptovoxels, and The Sandbox, and we’re bringing you with us.

Decentraland

Decentraland is the largest metaverse project in the world. It contains 90,000 parcels of land, each measuring 52.5 feet by 52.5 feet.

Jumping into Decentraland is pretty easy. There are two options: you can sign in with your digital wallet or sign in as a guest. I signed in as a guest.

After customizing my avatar, I find myself in Genesis Plaza, the central terminal for all spaces in Decentraland.

The vibe is cheerful, with a Lego Movie kind of soundtrack vibe. You know, “Everything is awesome!” The first thing I do is run a couple of laps around the plaza because it’s surprisingly fun.

Genesis Plaza in Decentraland. You can jump into that pool and get teleported.

In any case, you can jump into that pensieve, and it transports you to another section of Decentraland, or you can choose from some trending scenes and jump into that land.

The most notable trending scene was a virtual Australian Open. Virtual visitors could tour Rod Laver Arena and the surrounding courts (somewhat less cool than the real stadium), have virtual meetups with tennis greats and watch live matches.

Here I am at the Australian Open in Decentraland. Rafa, you here?

Decentraland is sort of a hermetically sealed economy. It runs on a native cryptocurrency called $MANA. You need $MANA to customize your character, buy assets, or develop land. As of this writing, $MANA is the world’s 29th largest cryptocurrency by market cap.

Cryptovoxels

Visiting Cryptovoxels is as easy as going to the website. No wallet is needed. Press the guest button, and boom, you’re sucked into Origin City.

Stepping into the Cryptovoxels world, I’m thinking, okay, I’ve done this before. I’ve been in online gaming rooms, explored different worlds, so what? It doesn’t feel any different.

But I quickly realize the city wasn’t created by a single entity, but by thousands of different people with different tastes and interests. Unlike World of Warcraft, which was meticulously designed by a company, this feels like the “Minecraft of NFTs.” It feels organic and messy like a real city should.

Here I am standing in a water fountain in Origin City, staring at a messy, decentralized landscape.

I walk around and explore different places on the map. One minute I’m checking out somebody’s new land; the next minute, I’m in a room with displays of CryptoPunks and XCOPY art.

Standing in an art gallery, checking out some XCOPY art.

The ambient noise is experimental, delicately balanced house music. It lends a certain eeriness to the entire land. Some parts of the land have many fellow metaverse travelers, but others are just an empty, desolate landscape.

There are tons of structures with nothing inside. It feels cheapened, like a way for speculators to park their money in a place they never visit. It reminds me of Inception, or China’s eerie ghost cities.

Lots of buildings are currently in development. I can tell whose land I’m on by the index on the top right.

Some development is evident, but no one else is around. I feel lonely here, no joke. But I also get the sense that I’m an early traveler, and the land I’m standing on could look very different 100 years from now.

At the moment, there are 6,956 parcels of land minted in Cryptovoxels. The creators have more than doubled the original 3,026 parcels of land, which now come in all shapes & sizes.

Cryptovoxels land map. High-res version available at Andrew Steinwold’s blog

While you don’t need a wallet to jump directly into Cryptovoxels, you’ll need one to purchase land or wearables. The wallet works like your personal account to keep your assets safe.

The Sandbox

The Sandbox is the 2nd largest Metaverse project after Decentraland. I wanted to enter The Sandbox badly. And I did.

But the sandbox isn’t a single place; it’s a decentralized collection of user-generated virtual spaces. Unfortunately, I couldn’t test out the different “sandboxes” made by other users because I no longer have a Windows computer.

One of the lands in The Sandbox.

For all you Apple fanboys like me, the good news is that Mac support is coming soon. In the meantime, the Sandbox is backed by some of the biggest names in the world, including Adidas, Binance, and Snoop Dogg, who we’ll talk more about later.

But the ultimate owners are the players. The Sandbox is a play-to-earn platform with some well-developed graphics. The Sandbox has created a metaverse of engaged players who contribute to the platform’s development by focusing on user-generated content.

The Sandbox parcels measure approximately 315 feet by 315 feet on the avatar scale. There will only ever be 166,464 parcels of land available for purchase. Here’s a good video explaining how buying Sandbox land works:

video preview

 

The Sandbox uses a currency called $SAND, one of the fastest-growing cryptocurrencies in the world. If you want to learn more, check out this excellent deep-dive on $SAND by our own Colin Ma.

Who is buying metaverse real estate?

Last year, total metaverse land purchases reached $500 million, with predictions that they’ll reach $1 billion in 2022. With that money in the game, digital real estate firms have sprouted to capitalize on these new opportunities.

There are two big metaverse land investors you should know about:

  • Republic Realm, has invested in 23 different digital landscapes, including all three we highlighted above, Axie Infinity, and Aavegotchi. But Republic isn’t stopping with real estate; they have a full suite of tangential services, including construction, staffing, property management, and wearables.
  • Tokens.com. Based out of Canada, Tokens is a publicly-traded company with a majority stake in The Metaverse Group. CEO Andrew Kiguel likens today’s digital land opportunity to buying land in Manhattan 100 years ago. He plans on hosting a fashion show in late March, complete with a runway and VIP after-parties.

Notable metaverse land purchases

Last November, The Metaverse Group purchased 116 parcels of land in Decentraland for about $2.5 million, making it the largest real estate acquisition ever by landmass at the time.

Each parcel in Decentraland is 2,756.25 square feet in avatar scale, making the total acquisition 319,725 square feet. At $2.5 million, the cost came out to $7.82 per square foot – or about what you would expect to pay for a condo in Manhattan back in 1910.

Not to be outdone, Republic Realm purchased 792 plots of land in The Sandbox from Atari for $4.2 million.

The Sandbox has been at the forefront of partnering with celebrities to increase land value. As we mentioned earlier, Snoop Dogg has invested heavily in The Sandbox. He’s carving out his own space called Snoopverse, and residents are called Snoopers and get access to members-only parties.

caption for image

Last December, Snoop auctioned off 200 plots of land, including some directly connected to his virtual mansion. Nine plots next to his property sold for $1.23 million, with one mystery fan forking over $450k to be Snoop’s virtual neighbor.

Laugh all you want, Snoop is killing it over in The Sandbox.

Adidas recently purchased a 144-parcel of land in The Sandbox for a reported $40k (though that seems absurdly low), calling it the “Adiverse.” (I think “Adidaverse” sounds better, but whatever)

To complement the purchase, Adidas also bought a Bored Ape for $204k named “Indigo Herz” and promptly decked him out in an Adidas jacket. Indigo figures to play a prominent role in the Adiverse as a spokesman.

That’s one way to brand

How much does it cost to buy your slice of heaven in one of these digital worlds?

There’s no Zillow for the metaverse (yet). But you also don’t need one. To check the price of a plot in Decentraland, toggle left and up until you find the coordinates, and click on them.

You’ll go straight to the “Waterhouse,” as it’s advertised on OpenSea. Just like that, you see what $12k will get you. A developed plot with some cool hexagon tiles, but very little privacy through the glass walls.

This is the cheapest property for sale in Decentraland. It’s located at (-52, 140) and is going for 4.7 ETH ($12k). Am I trespassing?

Tangential services

On the services side, digital architectural firms like Voxel Architects are charging up to $300,000 for their consulting services and designs. The picture below shows their work on “Project Pagoda.”

Project Pagoda from Voxel Architects

It’s beautiful from the outside, but the inside pictures give you an idea of the work in crafting these digital buildings.

Centralized or decentralized metaverses?

The biggest irony about the metaverse is that, well, there isn’t a single metaverse.

Depending on how you define it, there are dozens of them, if not hundreds or thousands. And none of them have much to do with one another.

Even with strong new metaverses developing, none of them seem to be leading to a fully-realized metaverse. Many futurologists believe the metaverse will resemble an immersive world based on interoperability.

But we’re not there yet. Present iterations like Decentraland and The Sandbox feel miles away from being an all-encompassing virtual society like San Junipero. There’s no guarantee the tech will ever catch up, and there’s no guarantee these spaces will still be relevant if it goes.

Sure, there may be a point where technology can host a singular metaverse that everyone in the world can connect to. We know that’s what Mark Zuckerberg wants. But is that really what we want? Is a centralized company “owning” the metaverse better for society?

This is why Zuck is getting so much pushback. Yes, theoretically, a single, centralized metaverse could be willed into existence by a single powerful company. But this sort of inorganic development goes against thousands of years of human evolution.

A decentralized metaverse owned by the people is a compelling alternative, though this also has issues. Without moderation, the potential for abuse is high. Explicit content is something Roblox is struggling with now, and graphic violence plagued Second Life’s attempt at a decentralized metaverse.

Moderation can combat this, of course. But then once again you have problems with control. And round and round we go. There is no single solution here. It will take a mix of private and public laws. It’s messy, just like real-life.

Conclusion

What becomes of society if the metaverse becomes a full-scale virtual world that integrates with our consciousness? When everything is possible and mortality isn’t a reality, what motivation would we have to live in the real world? Why go outside, play with your dog, or create Abbey Road, when we can pretend we’ve done all that online?

Would it lead to perhaps the greatest philosophical catastrophe of human existence? Or is it an inevitable next step in our evolution, one that humans will naturally adapt to?

The metaverse is exciting, terrifying, and complex. For now, it exists mostly in our peripheral vision. But there are already some interesting opportunities unfolding, and as time and technology advance, these opportunities will become more pronounced (but also more expensive!)

Nobody knows what will happen in the long run. But I hope I live long enough, in the real world, to see it develop into something truly special.

The idea of the metaverse bothers a lot of people. I get it. But I’m not one of them.

I’m just enjoying the ride.

This is the metaverse I want. If you know, you know.

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Author

Stefan Von Imhof

Stefan Von Imhof

Stefan lives and breathes asset analysis and valuations. Before co-founding Alts, he was the Head of Product at Flippa, where he created Flippa's Due Diligence Program. His favorite alternative investments are vacation rentals, cashflowing websites, and especially vinyl records (he has ~250 records). Originally from Boston and later Santa Barbara, CA, he now lives with his wife in Australia.

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