Weekly Market Update - Friday, June 9, 2023

Exploring Crypto Metaverses

Apple unveiled its Vision Pro headset this week to much fanfare as it launched a new product for the first time in years. It is the latest installment of virtual and augmented reality headsets, including Google Glass released a decade ago and other iterations of similar headsets over the past ten years.

The excitement around these products can be tied to the rapid development of and interest in immersive worlds as we spend more time online. Crypto metaverses, which we discuss this week, are a possible application of virtual and augmented reality as we discover new ways of interacting and transacting online.

What is a metaverse?

A metaverse is a shared, immersive virtual world in which players, usually represented by avatars, can interact with each other, construct experiences, and create in-world objects and landscapes. Metaverses in the crypto space typically have their own intrinsic economies and currencies, with which users can buy, sell, and trade digital real estate, items, avatar accessories, and more. Metaverses can be experienced via a computer, virtual reality (VR) headset, or smartphone.

How does crypto come into the mix?

Specifically, a crypto metaverse is a metaverse that incorporates blockchain into its underlying technology and crypto assets, such as metaverse tokens, into its economy. Examples of crypto metaverses and protocols that incorporate metaverse elements include Decentraland, Cryptovoxels, Alien Worlds, Axie Infinity, and The Sandbox.

While metaverse-like environments have existed in massive-multiplayer online games for some time now, the incorporation of blockchain, crypto, and VR into the sector is not just drastically altering who can participate and what they can do, but also demonstrating the real-world market value of assets, interactions, and experiences earned in the digital realms of blockchain games.

Metaverse crypto assets and items — such as digital land and objects, for example — are typically represented by different types of metaverse tokens. Their ownership is recorded on the blockchain and can even be exchanged for digital assets like bitcoin (BTC) and ether (ETH) on a number of decentralized exchanges (DEXs).

Key features of crypto metaverses

Designers of crypto metaverses have generally sought to distinguish their worlds from earlier iterations of metaverses in several key ways:

• Decentralization: While early virtual worlds were owned and controlled by companies, crypto metaverses are typically decentralized, with some or all components of metaverse games built on blockchain technology. This means that blockchain metaverses themselves tend to diverge from the mainstream business structures and value extraction models of today’s gaming industry. The unique structure of blockchain games can open up more equitable engagement opportunities for participants. It also means that ownership of the metaverse itself is shared amongst its participants. Even if the original creators of the metaverse blockchain were to walk away, the game itself could continue to exist.
• User governance: Crypto metaverses like Decentraland make use of decentralized autonomous organizations (DAOs) and governance tokens to put their users in control of the game’s future, allowing them to drive changes and updates through voting. In this way, metaverses can be more than just crypto games — they can grow into entire societies with economies and democratic leadership.
• Provable provenance: Virtual world items in crypto metaverses take the form of crypto tokens, such as non-fungible tokens (NFTs). Achievements and acquisitions in gaming environments can represent value to gamers. NFTs update the standards of in-game items, adding transparency and access to asset markets. Because every NFT is unique, metaverse tokens and items can be coded to easily help prove the provenance of in-game user-generated content as well as NFT gaming assets.
• Real-world economic value: Since crypto metaverses use crypto tokens and blockchain infrastructure, their economies are directly connected to the wider crypto economy. This allows holders of metaverse tokens, avatar skins, and digital real estate to trade them on DEXs and NFT marketplaces, potentially bringing real-world value to their virtual world investments.

The future of metaverses leads to many possibilities as we imagine new ways to interact online. We invite you to read more about crypto metaverses, explore popular metaverse platforms, and discover more about this topic.

See you next week. Onward and Upward!

Team Gemini

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