More recently, Yuga Labs, the team behind the world-famous Bordeaux Fungible Token (NFT) Primate, has caught some $300 million with the sale of other deed NFTs, a collection of land plots in the soon-to-be metaverse. . Indeed, NFTs, the blockchain industry’s primary way of creating a scarcity of digital assets, have emerged as the preferred method of handling virtual land ownership for most Metaverse projects, including Decentraland and The Sandbox. All this has raised an interesting question in the community: In the Metaverse, a vast, nearly endless digital space, how could the digital land ever be scarce? Well, let’s dig in.
First and foremost, let’s address the elephant in the room: The Metaverse isn’t real. I mean, ready player one-Style Metaverse, as we know it, an intuitive virtual reality-based rendition of the Internet. So, while you can donate your VR helmet to a rave in Decentraland, the device will hardly last for your daily dose of Instagram or news feed surf.
In other words, right now we have a growing number of relatively silent Metaverse projects, which provide users with an array of project-specific experiences and tasks as opposed to browsing—whatever the larger web. This in itself hints that scarcity is a valid concept to consider as their land, even if we consider their value through the same prism as real-world land.
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laws of the land
In the real world, the value of a plot of land is a product of a few absolutely categorical variables – that is, natural resources, ranging from oil or mineral deposits to forestry and renewables, access to infrastructure, urban and logistics centers, and fertile soil. It all depends on what you plan to do with this land. Objective defines value, but value is still quantifiable.
Price, for its part, often goes hand in hand with scarcity, and land is no exception. The planet has a total surface area of 510.1 million km, but more than half of it is under water, which serves for oil and gas pipelines and submarine cable lines, but much less. So far, we have modified about 15% of the available land area, and yet, at the end of the day, land is limited. Factor in value and financial viability considerations (an investment must be worth it), and the pool of land that actually makes sense to acquire becomes even thinner.
Let’s take The Sandbox as an example. What is the cost of getting there? Again, value comes from purpose. For example, if you’re a fashion brand, you’ll probably benefit from being in the same digital space as Gucci. Also, if you want to compete with this brand, you want your plot to be located as close as possible and try to cut down on your footfall with the luxurious exterior of your own outlet.
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This is where scarcity comes back into play. There are only so many NFT plots you can buy next to a Gucci store. In the digital realm, the distance may seem arbitrary, but it is not entirely accurate. Distance comes down to how this specific metaverse handles space, objects, and movement – critical, fundamental components of its design. After all, you probably want your own Metaverse store to be a real 3D store that a buyer can find, which demands a 3D spatial grid and at least a basic physics engine. Sure, it’s possible to play with non-Euclidean geometry and other smart design features to make the space appear larger on the inside than on the outside, but that would increase the workload on the backend and affect the user experience.
As we see, technical constraints and business logic can play a role in the fundamentals of the digital sector and a host of activities in these areas. The digital world may be endless, but it doesn’t have the processing capacity and memory on its backend servers. There’s only so much digital space you can host and process without your server stack setting fire, and there’s only so much creative leeway within these effects while keeping the business afloat. These frameworks create a system of coordinates that inform how its users and investors interpret value – and in the process, they create scarcity.
great wide world out there
While much of the evaluation and reduction mechanisms come from the intrinsic characteristics of a specific metaverse as defined by its code, real-world considerations have as much, if not more, weight in that. And metaverse spread will hardly replace them or reduce the scarcity.
Let’s start with the user bases. Sandbox reports 300,000 monthly active users, and for Decentraland, the figure is roughly the same. In terms of pure math, that’s the cap for your monthly footfall at whatever Metaverse outlet you’re running. So, even if they’re not very impressive, they’ll be hard to beat for most new Metaverse projects, which again, takes a toll on the value of their land. By that same account, if you have 10 projects with one AAA metaverse and zero users, investors will go for AAA and its land, as rare as they can be. It also creates a value-driven meta-shortage: Sure, there’s a lot of land in general terms, but only a limited portion of it makes possible investments.
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A comparison with on-page ads would be helpful here. Advertisers prefer websites with high traffic, and the number of ad spots on a page is limited by the constraints of proper UX. You can always build another dozen websites, but if they don’t drive the same amount of traffic, ad spots will hardly be as valuable, and are rare on a top site.
Moving beyond user bases, there’s also the intangible wow-factor. Part of the reason why brands buy land in the metaverse is because they know the media will write about it. It’s true that the biggest companies will generate traction no matter what kind of metaverse they enter through their own influence. Still, they’d rather roll with something that built some traction on its own, the same way they’d love a short newspaper coverage on Bloomberg. Brands like partners who play in the same league, or punch above their weight, or at least come off like they’re doing something like that. And they are usually rare.
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One day, we may end up with a truly coherent metaverse, but even there, the rules bound to it will serve as a natural – or artificial – foundation for perceptual value, which is lacking in some form. will be a factor. Now, in a world of scattered metaverses, users who can’t easily bounce between competition, and by extension, scarcity is very much part of the equation.
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The views, opinions and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Adrian Creon He is the founder of Berlin-based blockchain gaming startup Spielworks and has a background in computer science and mathematics. Starting programming at the age of seven, he has been successfully connecting businesses and technology for over 15 years, currently working on projects that connect the emerging DeFi ecosystem to the gaming world.