UpOnly | Research #11: Investors double down on Metaverse real estate and Web3 profitability
Thousands of investors are betting that real estate in the virtual world — popularly known as the Metaverse — will become increasingly valuable over the next few years. According to publicly available data, the total volume for Metaverse land deals is now approaching the $2 billion mark, a significant milestone given the nascent nature of the industry.
This week’s UpOnly | Research reviews the exploding public interest in the Metaverse, as well as key statistics from top projects. We also consider recently published research disclosing how Web3 has already become a profitable playground for creators.
Race to own a piece of the Metaverse heats Up
The world is waking up to the reality of people immersing themselves in virtual environments that mirror the real world. As scary as the thought may seem to some, the Metaverse movement is gaining traction, buoyed by the increased involvement of mainstream heavyweights such as Meta Platforms, Nike, HSBC, PwC, and JPMorgan.
The Metaverse space is still dominated by crypto-native companies within the art and gaming niches. Digital land properties sold as NFTs are becoming increasingly valuable, causing trading volumes to soar to new highs. Data on Dune.com reveals that the total sales volume of all Metaverse land sales have now surpassed $1.8 billion.
A significant portion of the trading volume (over 40%) comes from Otherside, the Metaverse gaming project backed by Yuga Labs. Launched in late April to much fanfare, Otherside’s Otherdeed NFTs represent “the key to claiming land” in the Metaverse game. The project raised a record-breaking $320 million in initial land sales, with secondary trading volume now surpassing twice that figure.
Otherdeed’s early success can be attributed to a strong affiliation with popular NFT collection Bored Ape Yacht Club (BAYC) and Yuga Labs’ leading position in the NFT space. Although the Otherside Metaverse game is yet to launch, the Otherdeed NFTs currently have a 3.19 ETH ($6320) floor price, slightly higher than the 2.5 ETH mint price. The over 34,000 NFT holders are betting on Yuga Labs delivering on its key roadmap timelines to make the virtual lands even more valuable.
Decentraland and The SandBox keep pace
With Metaverse environments launched in 2020 and 2021 respectively, Decentraland and The Sandbox complete the rankings for the top three Metaverse land sales by trading volume. Cumulative land sales in Decentraland sits just below $490 million, with The Sandbox recording $345 million.
Noteworthily, the user base for these Metaverse gaming projects still pales in comparison to mainstream games. For instance, Decentraland and The Sandbox report 300,000, and around 350,000 monthly active users, respectively. Meanwhile, mainstream Metaverse ROBLOX reports nearly 50 million daily active users, while social VR reality app Rec Room has three million.
The wide gap in user base statistics highlights a massive growth opportunity for crypto-native Metaverses. It also reveals the increased competition the industry faces on the path to mainstream adoption, especially with big players like Meta yet to go full steam ahead. Prospective investors looking into Metaverse economies can arguably make better choices by weighing the competitive edge of projects they choose to add to their portfolios. Projects with little to no appeal outside the crypto-native community will likely struggle to gain traction as competition intensifies.
Web3 vastly outperforms Web2 in creator rewards
A key value proposition for Web3 is to give back power to creators and communities. Impressively, a study published this week by a16z’s crypto arm reveals that Web3 applications are already paying out significantly higher rewards to creators compared to their Web2 counterparts..
The study notes that the primary sale of Ethereum-based NFTs and royalties paid out to creators on popular marketplace OpenSea totalled $3.9 billion. With the platform having around 22,400 creators, the average payout per creator would equal $174,000. The figure is significantly greater than the $1 billion (or $0.10 per user) which Meta’ Facebook had earmarked for 2022. Other Web2 platforms like Spotify and YouTube paid out $636 per artist, and $2.47 per channel respectively.
Web3’s rapid changing landscape means the huge payout for creators may dwindle as more creators come onboard. However, its lucrative nature could play a key role in attracting millions of creators, gamers, spectators, and other classes of internet users in the coming years. Investors can improve their Web3 investment thesis by backing projects with sustainable mechanisms to reward community participation.
UpOnly’s week in brief
- UpOnly Hosts Second Round of Native Staking!
- UpOnly Announces New Prediction Event
- UpOnly Hosts Community AMA
UpOnly is a first-of-its kind data directory dedicated to providing insightful and actionable data on the move-to-earn, play-to-earn and Metaverse gaming fields. Our solution addresses a market that is left largely uncovered by other data providers and we aim to become a one-stop-shop for gamers worldwide to identify the most lucrative play-to-earn and optimize their performance within these gamers. Alongside our data directory, we will launch a decentralized predictions platform that will allow anyone globally to bet on the outcome of play-to-earn and Metaverse gaming events.