The Metaverse Set to Scale Vastly in 2022
VYSYN Ventures Weekly Insights #82 - Analysts expect exponential rise in projects leveraging virtual worlds
The Metaverse is the latest trend sweeping the tech world. Innovative projects that launch immersive virtual worlds are increasing, with novel use cases being explored. One of the reasons for its popularity is the new ways of interaction that the Metaverse facilitates. Add to this, digital land ownership, token exchanges, and in-world rewards, and it’s easy to see why the Metaverse has captivated the world.
In the latest VYSYN Release, we highlight the various developments around the Metaverse. We explore some of the notable events in more detail, particularly in the context of the blockchain industry. We will also examine non-blockchain versions of the Metaverse and how those projects are unfolding.
Microsoft joins list of Metaverse tech giants
The year has just begun, but we may have witnessed one of the most notable deals of 2022 already. Tech giant Microsoft Corp has reached an agreement to buy Activision Blizzard, the creators of the popular game “Call of Duty”, among others. The deal is estimated at $69 billion, setting a record of the biggest gaming industry deal in history. Observers expect Microsoft to leverage the potential of releasing VR-powered games on its native Xbox platform and to eventually leverage the technology to create highly interactive game worlds.
With this acquisition, Microsoft joins a list of global tech giants exploring the Metaverse. Facebook also made waves last year with news of it’s Meta rebrand and thinly veiled hints at the direction it was planning on moving. These American companies are joined by the likes of Tencent (China) and Sony (Japan). The Metaverse’s potential for work, play, and socialization is enormous given the moves these companies have made.
Gaming isn’t the only Metaverse-specific use case. Academic institutions are also exploring opportunities in the virtual world for social interaction and value exchange. In what was a pioneering effort, the Communication University of China became the first academic institution to join the Metaverse. The university achieved this goal by creating a virtual representation of its physical campus on Baidu's XiRang Metaverse.
One of the highlights of its anniversary celebrations of December 26th, 2021, virtual visitors had the opportunity to walk around the digital campus and experience interacting with facilities. Using VR headsets or via mobile phones and PCs, users could experience the university just as they physically would.
Blockchain adds to Metaverse options
Baidu’s Metaverse, along with those of the traditional tech giants, are non-blockchain projects. Currently, blockchain-based Metaverses are more popular with greater user adoption. In what is the latest twist in the centralized versus decentralized battle, blockchain Metaverses are leveraging the popularity of digital assets, especially NFTs, to boost user adoption.
For instance, a blockchain-based Metaverse, Mars4, sold out within 24 hours of launching. Over $250,000 was raised within the short period that the sale lasted. The project tokenized the surface of Mars and allows users to “own” a digital imprint of a land parcel on the planet. Using data curated from NASA and other top-tier space research agencies, the project’s creators have ensured the NFTs accurately represent Mars’ terrain.
These use cases and project goals are completely different from the ones centralized Metaverses are exploring. For instance, Meta aims to capture more user data to feed its advertising machine, in what is a long list of questionable actions. Microsoft aims to boost bottom lines by adding new dimensions to in-game experiences. Neither company has any plans to explore technological frontiers that can blur the distinction between the physical and virtual world.
Blockchain-based projects are blurring these lines and this explains the greater adoption they’ve witnessed. Most importantly, these projects aren’t seeking to leverage forcibly collected user data and boost profits. Blockchain Metaverse projects reward their users as much as they do their dev teams.
Play-to-earn projects highlight blockchain Metaverse advantages
Axie Infinity, the Sandbox, and Decentraland are the top Metaverse projects currently. Interestingly, all three are gaming platforms. Thanks to their exponential growth, venture capital funds have flown into the ecosystem, turning play-to-earn into one of the fastest growing industries on the planet. The huge popularity of these games is driven by the earning potential they provide gamers.
During the COVID pandemic, people in developing countries who were forced out of their jobs turned to play-to-earn games as a means of earning a living. Thanks to in-game rewards, trading digital assets, and NFT values exploding, play-to-earn morphed from a side hustle to a livelihood.
In 2021, NFTs exploded as a tool to reward participants in the virtual world. Gaming platforms rushed to implement NFTs to reward users, in a bid to give them greater control over their earning potential. As a result, this drove the prices of NFTs higher and boosted game adoption concurrently.
These games adopted the Metaverse model early, providing gamers with virtual worlds that offered money much like the physical world. Thus, spending entire days in the Metaverse wasn’t a losing proposition anymore. For instance, users on Decentraland bought virtual real estate plots, developed them, and resold them for profits. Alternatively, many users establish in-game businesses and earn money via the platform’s native token routinely.
Virtual economies are now a reality and this makes the Metaverse as real as the world we live in. It explains Microsoft’s purchase of Activision Blizzard. It also highlights the mainstream gaming industry's move away from controversial “pay to play” models to more open, user-driven experiences.
The future of the Metaverse is exciting
As fast as the Metaverse is growing, there are challenges. Centralized projects face user adoption barriers in the face of more popular decentralized options. For their part, decentralized options are hobbled by the inefficiency of the blockchains they’re built upon. Many DeFI projects are built on Ethereum, and the network’s inability to handle large transactions is well-known. The Ethereum 2.0 upgrade is expected to improve the situation, but the situation continues to evolve.
Many observers are also questioning the nosebleed-levels to which NFT valuations have risen. The possibility of a bubble might dampen user adoption in the future, driving gamers to seemingly secure centralized Metaverse options. However, DeFi is an innovative space, and there will undoubtedly be more solutions in the future to mitigate these risks.
For now, there’s no doubt that the Metaverse is here to stay and we will soon begin treating it as an extension of our physical world. The implications for social media platforms and indeed communication are astronomical.
About VYSYN Ventures
VYSYN Ventures is a longstanding venture capital company that specializes in funding and supporting disruptive startups in the blockchain and cryptocurrency industry. We have provided early-stage support to several projects that have grown to USD market capitalizations of hundreds of millions and even billions. Our incubation program focuses on providing capital allocations, versatile marketing support, and tech assistance.