The metaverse saw a surge in cash late last year from corporate marketers and tech enthusiasts. Alt-coin and CryptoPunk NFT owners with stars in their eyes, cash in their pocket, sought to justify skyrocketing prices by purchasing properties close to those of celebrities. Many of these celebs were using the metaverse for promotional purposes rather than the view.
It is accurate to say that the boom wasn’t built on solid foundations, but it’s also an understatement.
Snoop Dogg built a virtual replica of his Southern California home in the middle of Sandbox metaverse. He named the 144-parcel square “Snoopverse” Snoop has a few virtual neighbors, including Steve Aoki, the mega-DJ and a handful of large Atari developments where visitors can play company games and attend events.
Soon after the purchase, a record-setting deal was made. For example, P-Ape (or ) spent $450,000 for a nine-parcel property next to the Long Beach rapper. An anonymous buyer purchased a single parcel measuring 16 by 16 meters for 25 ETH or about $60,000.
The price of crypto has been at its highest since January. However, a crypto bear and slower-than-expected metaverse adoption caused prices to plummet.
P-Ape’s parcel may now only be worth $25,000, but Uncle Snoop will likely give it a little boost. A digital map of Sandbox shows many properties that are available for sale. Although some sellers are ambitious and want to list prices as high as the hundreds of thousands, the market isn’t expecting that.
According to Waneta (a metaverse data analytics company), the average price for a parcel in five of the most significant Ether-based metaverse projects dropped to $2,500 from nearly $21,000 in January. Sandbox, the largest metaverse land world in terms of volume, saw a sharp drop to $2,800, from $35,500. For the week ending August 7, the weekly importance of property bought across the top five metaverse worlds fell to $650,000, down from $62.5million in mid-November. This is a drop of almost 99%.
“Metaverse investments can be risky. Fabian Schar, professor at the University of Basel and managing director of the School’s Center for Innovative Finance, says there’s a high chance you will lose everything.
Many corporate property owners bought land to market their products or place virtual storefronts along busy boulevards in the metaverse metropolises. Samsung created a virtual replica of its New York flagship store for guests to try out the products. Adidas has its Sandbox property, where it sells digital athletic gear, also known as NFTs.
When metaverse hype and cryptocurrency were high, these businesses paid hundreds of thousands of dollars, and money flowed into digital assets. Due to the harsher economic outlook, it is now more difficult to justify spending money on land in virtual realms. However, the utility or lack thereof is primarily unaffected.
Lorne Sugarman is the CEO of Metaverse Group. He says that although the most utility is still available, it has declined in value for economic reasons. Sugarman says he doesn’t worry about falling prices as his company plans to keep properties for many years as utility rises with adoption.
“We don’t see any significant drop in traffic numbers,” Schar states that traffic has not been exceptionally high in the past. “What has changed are people’s expectations.”
Those remain sky-high for some. In June, the management-consulting giant McKinsey projected that the metaverse could grow into a $5 trillion market by 2030, which would equal the size of Japan’s economy, the third-largest in the world.
Mark Cuban, a billionaire businessman, has been one of the loudest critics of metaverse land sales despite his investment into Yuga Labs, which created Bored Ape Yacht Club and Otherside. Yuga made around $320 million selling Otherdeeds. These NFTs granted Yuga ownership to 55,000 parcels of land at the BAYC’s virtual hangout.
“The worst thing is that people buy real property in these places. Cuban stated in an interview that was published Sunday on Altcoin Daily. Cuban said buying metaverse land was stupid “because you can make unlimited volumes.”
Cuban said that some properties might have value if the metaverse community is more vital. According to, a paper by Schar, and other researchers, the most valuable metaverse land can be found in areas where existing communities have boosted chance encounters.
It’s an attention economy. Mitchell Goldberg, a doctoral candidate at the University of Basel who is also one of Schar’s co-authors, says that people are keen to have land in areas with high foot traffic. “But, if there is less attention for the entire world, then prices for all these land parcels will drop.” Goldberg says that although he agrees with Cuban that new metaverse land can be created at any time, companies can’t manufacture that attention.
A memorable address is another crucial element. Metaverse visitors can teleport to any virtual world within the same virtual world by simply entering X and Y coordinates. Schar stated that catchy numbers like 100 by 100 degrees attracted more visitors than 271 or 73.
Short-term rentals have been a great alternative to purchasing metaverse properties. Sugarman’s Metaverse Group is a company that rents land and has a team to help them realize their tenants’ dreams.
The Australian Open rented virtual land from another metaverse company to host the festival. It featured digital stadiums that allowed fans to interact with each other and view historic matches.
Sugarman claims that his company expects adoption will rise over the next one to three years. However, he doesn’t see this happening without developing traffic-driving technologies like better games. Sugarman stated that Metaverse Group took advantage of the low prices to build on the land. He believes other companies will soon realize the importance of developing.
Sugarman states that more tools and experiences must be used to make the metaverse enjoyable and drive traffic. We believe that the critical mass will be achieved with more understanding and learning.