Analyses
21
Feb
metaverse

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Metaverse explained

METAVERSE is the next stage of the internet, which adds virtual reality and distributed ownership to the current technology. The term Web3 is often referred to when talking about the metaverse. You only need a web browser and an internet connection to use a metaverse. Avatars are representations of users in the metaverse.

Metaverses can be divided into three different categories: player metaverses, art metaverses, and social metaverses. The player metaverses are all about action and storytelling. Sandbox is a platform metaverse that provides game-building tools and a SAND token for in-game earning logic. The art metaverses focus on visualization. Social metaverses are used to organize virtual concerts and fashion shows.

The biggest metaverse projects have launched their own cryptocurrencies. Well-funded metaverse projects will continue to grow in 2023.

What is the metaverse?

Metaverse is the next stage of the internet, which adds virtual reality and distributed ownership to the current technology. Metaverse is a new opportunity to experience, communicate, own, and invest globally. The key new feature is digital ownership in the form of NFTs.

Metaverse is primarily an economy of digital experiences and creation. Manifestations of metaverses include massively multiplayer games (MMO) and virtual art galleries. There are also social metaverses for concerts and other events.

Jon Radoff, the owner of the well-known blog Building the Metaverse, has presented a 7-layer visualization model for the metaverse. In his model, the metaverse consists of the following seven layers:

  1. Infrastructure
  2. Human interface
  3. Decentralization
  4. Spatial computing
  5. Creator economy
  6. Discovery
  7. Experience

Infrastructure refers to cable or mobile broadband. Infrastructure has to be powerful enough so that the data transfers between applications and devices connected will be done without interruptions or delays.

The human interface can be a web browser, VR glasses, or a smartphone. AR (Augmented Reality) apps require a portable interface. For example, when a user points a smartphone camera toward a street view in a city, an AR app can translate street signs and provide additional information about the surroundings.

See examples of using AR in the video below.

Decentralization refers to the implementation of the underlying services of the metaverse in a distributed manner. Blockchains and NFT are decentralized technologies that make decentralized ownership possible.

Spatial computing refers to the modeling and rendering of spaces represented in the metaverse. The more natural and detailed the metaverse is, the more CPU rendering is required.

The creator economy refers to user-generated content in metaverses. Users can also own and trade their creations. The image below shows NFT art from the popular OpenSea marketplace.

opensea

Discovery refers to the search engines and marketplaces of metaverses. The more users and content creators there are in the metaverse, the more difficult it becomes to find things, whether these things are places, information, or trading items.

Experiences are the heart and soul of the metaverse. At its best, the metaverse removes distances between people and offers virtual spaces that feel confusingly authentic. Metaverses are also entertainment and provide new ways to own and trade your digital items.

The core of the metaverse is social interaction and interactivity. This means shared experiences in virtual games, concerts, and meetings. The development of AI-based tools is changing the metaverse experience in the near future.

Artificial intelligence can be used to create endless wildernesses or dungeons in the virtual world. it can be used to create NPCs, i.e. Non Playable Characters, who talk in the virtual world like real people. The line between human-generated content and AI-generated content is blurring all the time.

If you want to learn about cryptos that use artificial intelligence, check out this article: artificial intelligence cryptos (AI coins).

Metaverse and Web3

The term Web3 is also often referred to when talking about the metaverse. It describes the development of the internet from its early days (Web1) to social media (Web2) and finally, to metaverses.

  1. Web1 = Reading
  2. Web2 = Reading and writing
  3. Web3 = Reading, writing, and digital ownership

The internet of the 90s (Web1) made it possible to read information on websites. The internet of the 21st century (Web2) gave users the freedom to produce content and express themselves socially.

Web3 adds decentralized ownership. It means that you have ownership of your online creations instead of global social media companies. This ownership of virtual items (and reselling them if desired) is one of the main building blocks of the metaverse.

The basic concept of decentralized ownership is the freedom to buy and sell certificates of ownership and authenticity. This technology is called NFTs (Non-Fungible Tokens). The NFT technology ensures that the purchased item is genuine, and the transactions related to it are readable by anyone from the blockchain. Digital items can be virtual plots of land, objects, avatar characters & their equipment, membership cards, and works of art.

Read more about NFTs from our in-depth NFT guide.

What do you need for using the metaverse?

You only need a web browser and an internet connection to use the metaverse. If you want, you can also get VR glasses and a customized avatar. A cryptocurrency wallet is needed for buying and selling metaverse items.

There are several metaverse user interfaces, i.e. ways to experience the virtual world. A standard two-dimensional computer screen is still the most common way to adventure in the metaverse. If you want a more complete experience, this can be achieved by purchasing virtual glasses (VR) and controllers.

VR technology has been in development for a long time, and native VR games and apps provide an amazing experience. The Oculus marketplace has a long list of great VR games and applications to get you started. The developers have also wearable equipment, such as gloves and suits with motion sensors and haptic tactile feedback.

The VR glasses still cost so much that the metaverses will be primarily used through ordinary PC screens for a long time. The Meta Oculus Quest 2 (pictured) is a reasonably affordable option to start your VR experiments.

metaverse oculus

A crypto wallet is necessary if you plan to buy metaverse assets (NFTs) such as land, avatars, or equipment. The most common wallet on the Ethereum blockchain is Metamask. Read more about crypto wallets in this guide.

Metaverse and avatars

Avatars are representations of users in the metaverse. Users are typically offered a so-called default character (avatar) for free. This can be modified within certain limitations. Better characters and equipment are offered as NFTs that must be purchased separately.

Almost all metaverses require a 3D avatar created for that particular metaverse. Many projects aim for compatibility with the most popular and largest Profile Picture (PFP) collections. In this case, users could join the metaverse with an existing NFT avatar, which has been associated with a personal brand that has been built for a long time.

A metaverse account is also usually associated with a blockchain address. In the Ethereum network, this address can also be replaced with an ENS domain name (web3 username), which is managed as an NFT. Just the blockchain address is enough, but the ENS name is just more convenient to use.

Here are some examples of different avatar projects:

  • Meebits (3D Voxel avatar series by Larva Labs)
  • Sandbox (3D Voxel avatar of the Sandbox metaverse)
  • Habbo Avatars (Habbo NFT avatar series)
  • MetaKrew (meta key project avatar series)
  • Clone X (avatar series of the RTFKT studio bought by Nike)

Up to hundreds of thousands of dollars have been paid for individual avatars on NFT trading platforms (OpenSea).

Different types of metaverses

Metaverses can be divided into three different categories: player metaverses, art metaverses, and social metaverses. Next, let’s go through these categories in more detail.

Player metaverses: Otherside

The player metaverses are all about action and storytelling. The biggest player metaverse is Otherside by Yuga Labs. Yuga Labs released 100,000 plots of land to the Otherside metaverse in May of 2022. Of these, 30,000 were given to Bored Apes and Mutant Apes NFT owners and 70,000 were sold to the general public.

Otherside is based on Improbable’s multiplayer engine, which enables thousands of players to move and communicate simultaneously in the metaverse. New technologies here include e.g. rendering massive troops and processing audio streams of thousands of players. Below is a picture from the Otherside website.

otherside

Otherside will implement an 11-part story (“The Voyager’s Journey”) directed by Yuga Labs, which Otherside NFT owners can participate in. The first part of the story was released in July 2022. It was a success and involved 4500 concurrent users.

The next part is scheduled for March 2023. Along with the guided story, Yuga is coming with an Otherside Developer’s Kit (ODK), which will be used to create avatar characters, locations, and other assets for Otherside. The Otherside ecosystem will use the APE token as a means of exchange.

Player metaverses: Sandbox

Sandbox is a platform metaverse that provides game-building tools and a SAND token for in-game earning logic. Sandbox has focused its activities on attracting big brands to its platform. More than 700 different partners and brands have already joined its ecosystem.

Sandbox metaverses have been in development for years. The results have been viewed through Alpha publications. The most recent was Alpha Season 3, which lasted from August to November 2022 and was attended by big product brands, e.g. The Walking Dead, Warner Music Group, Bored Apes, and Atari.

In the Alpha Season 3 release, all these brands had their designated playing areas. Those who completed tasks accumulated SAND tokens which were distributed to players at the end of the season. The average playing time in the 3rd season was 80 minutes per day per player.

In addition to branded adventures, any LAND NFT owner can build on their own piece of land using Game Maker and VoxEdit tools. You can supplement your board with various ready-made assets from Sandbox’s NFT Marketplace store. The entire Sandbox metaverse consists of 166,464 LAND NFTs, so there’s plenty to explore.

The metaverses of an art enthusiast

The art metaverses focus on visualization. Compared to game metaverses, they can feel deserted unless you happen to be there on a prearranged occasion.

The NFT art area titled OM100, started by a Collector called Punk6529, is one of the most active art-metaverse projects. The goal of the OM100 metaverse is to be a metaverse open to everyone, where up to 100 million NFT collectors could display their NFT collections.

The OM100 metaverse is being built in collaboration with Oncyber, a company known for its previously launched NFT gallery applications. Follow this link to an OM100 gallery of the author of the article, which mainly exhibits works by Finnish NFT artists.

The social metaverse

Social metaverses are used to organize virtual concerts and fashion shows. For example, Decentraland has been the venue for many such events. Finnish-based Habbo is also building its own version of a social metaverse under the name Habbo X brand.

habbox

Various memberships and entry fees have become common in the NFT world. This also applies to moving in different metaverses. If you want to enter the metaverse clubhouse of a certain NFT community, you need the right avatar or membership card.

Entrance tickets to gatherings and events can be bought and sold as NFTs. In addition, the venue itself can also be an NFT. For example, Spatial offers NFT rooms where guests can be invited to see their own NFT collection hung on the walls of the room with a link. The experience can be amazing with VR glasses.

Metaverses as investments

The biggest metaverse projects have launched their own cryptocurrencies. For example, the Otherside metaverse uses Apecoin and the Sandbox token for the medium of exchange and distributing player rewards.

The building blocks of metaverses (virtual land) are also investments and NFTs. The value of a land plot in Decentraland can increase by thousands of percent in a short time. An investor can speculate on the pixels of the metaverse the same way you can with real estate.

There are also airdrops, sharing of whitelist positions, and other benefits based on which NFTs you hold within the metaverses. One NFT may turn into several NFTs over time. You can usually get in at the cheapest price when you participate in the first sale of the project.

Below are the tokens of the popular metaverse projects.

NFT projectTokenATH pricePrice at
21-Feb-2023
Otherside APE $22 $5.73
Sandbox SAND $8.4 $0.79
Decentraland MANA $5.9 $0.71
Gala Games GALA $0.83 $0.05

Below are the prices of the most popular NFT collections. Floor price refers to the cheapest NFT in the NFT series. In the NFT series, the price is formed based on the rarity of the NFT, so the desired features increase the price. This explains the large price differences within the NFT series.

NFTDescriptionATH FloorFloor Price
at 21-Feb-2023
Otherdeed Otherdeed virtual land 625 ETH 1.39 ETH
LAND Sandbox virtual land 3.6M SAND 0.88 ETH
DCL PARCEL Decentraland virtual land 2M MANA 1.6 ETH

The biggest metaverse hype hit in November 2021, but since then the prices have fallen really hard (80-90%). This is due to the general bear market experienced in the crypto and the stock markets in 2022. NFTs have fared better in ETH prices, but in USD prices they have crashed hard from the peak.

Evolution of metaverses in 2023

Well-funded metaverse projects will continue to grow in 2023. It is said that the success stories of the next bull market are born in bear markets. Some projects have faded or slowed down in the bear market of 2022, but the well-funded projects (Otherside) are going strong.

Traditional product brands such as Adidas, Nike, and Porsche are moving more and more virtual and following influencer communities. For example, Forbes predicts that the metaverse will grow specifically as a new and mandatory marketing channel for companies.

The breakthrough of artificial intelligence tools will certainly affect the development of the metaverse in the coming years. Virtual worlds and environments can be created easier and faster. A taste of the AI’s creativity was seen in the images produced by the MidJourney service, which NFT artists increasingly use as a basis.

We could also see some new player metaverses emerge which are designed as NFT-based from the scratch. These include the likes of Treeverse and Illuvium.

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