The Metaverse Fuels the Booming Digital Property Market: What did JJ Lin buy for $120,000?

2021-12-06, 08:29

[Outline]
1. On November 23, the renowned singer Lin Junjie posted his three newly purchased Decentraland properties on Twitter.
2. Digital property NFTs have gradually become a popular trend in the virtual currency industry.
3. NFTs make digital property ownership in the metaverse reliable through endowed algorithms, and it also makes it possible to exchange secure values.
4. The digital property is not only a ticket to participate in the game, but also a crucial "factor of production" used by players to "create revenue".
5. Digital property can be used for renting to obtain capital, or it can be held for appreciation. These attributes are similar to what real-world real estate has.
6. In addition to the basic value, some plots located in the center of the city and areas of high traffic have higher value due to their display purposes.

On November 23, the famous singer Lin Junjie posted his three newly-purchased Decentraland properties on Twitter, namely Prime Gallery 1, Prime Gallery 2, and Nearest to GENESIS Plaza. It is reported that the total price of these three properties is approximately $123,000. JJ Lin is known as a knowledgeable NFT player. He posted that he had a Bored Ape Yacht Club avatar as early as October 18, and used it as his pfp on Twitter since then. On November 8, he spent another 125 Eth purchasing the CryptoPunk avatar No. 8601. Now, JJ Lin has switched his focus to Decentraland virtual real estate, which reflects the shift in the dynamic of trends in the NFT field.

Digital property NFTs have gradually become a popular trend in the virtual currency industry. DappRader data shows that, in November 2021, the total market value of digital property NFT reached $4.6 billion, an increase of 228% from October. The prices of virtual plots on Decentraland and Sandbox have hit record highs. On November 23, Metensrse, a subsidiary of Tokens.com, spent 618,000 MANA purchasing a virtual lot with a total area of about 566 square meters in Decentraland. The MANA was valued at $2.43 million at the time, setting a record high for the sale of digital property. It is reported that this virtual real estate, located in the Fashion Street area of Decentraland, will be utilized by Metensrse to expand its digital fashion business. On November 30, Republic Realmthis, a digital property developer, broke this record by purchasing another virtual real estate in the Sandbox for $4.3 million.

Like what happens in the real world, the concept of space in the metaverse is no different. Limited land resources have become a popular asset that people are competing against each other to purchase.

What is Metaverse Digital Property?

In the metaverse space, the property rights of land are determined and represented by NFTs. The birth of the blockchain has created consensus for the Internet, which enables the network to witness value transfers. While NFTs create clear, transparent, and non-tamperable property rights in the digital world. In centralized traditional games, the game companies officially control all the game data. Players who purchase game props are only given the right to use the props, and the game company can take back the props at any time. However, in blockchain-based games or metaverse projects, the official has no power to tamper with the ownership of virtual items. This kind of decentralization has led to metaverse property ownership being endowed with algorithms, and it also makes it possible to exchange secure stores of value.
When considering digital property in the Metaverse industry, one needs to understand Decentraland and The Sandbox, the two leading projects in this field.
The scenes in Decentraland, a blockchain game project carried on Ethereum, can be completely created and controlled by users after purchasing their plot. Users can purchase their land in the form of an in-game NFT, build houses in the territory, hold art exhibitions, and meet with friends. They can also create content including scenes, images, games, and applications in the game. Moreover, in Decentraland, users can freely create, explore, and socialize, and can even gain revenue by creating quality content. For instance, users can set up art exhibitions on the land they have purchased for other tourists to visit and charge entrance fees at the same time. MANA is used on Decentraland. It can be used to purchase land, assets, and services, and to govern. MANA will be burned after each purchase to ensure the stability of its economic system.

The Sandbox has a longer history. It launched its ios version in 2012 and was once rated as one of Apple's top ten games of the year. In 2018, the game was acquired by Animoca Brands and used to develop its blockchain version which is currently built on Ethereum. Its Alpha TestNet officially started on November 29, 2021. Players can use Game Maker, the game component, to create virtual worlds and games by themselves. They can also use the official VOXEDIT tool for 3D modeling to create different types of characters or virtual items, and sell them on the marketplace as in-game assets in order to gain revenue.

Digital Property Value Analysis

Digital property in blockchain games or the metaverse is also kind of designed to be a scarce resource. Its value can be analyzed from three aspects.
First, for the “Play-to-Earn” blockchain games, real estate is not only an entrance ticket to the game but also an important "factor of production" for players to "create revenue". For example, in the Sandbox, players with land can participate in the lottery for free to win access to the Alpha TestNet at present. If players want to develop and operate games in the Sandbox, they must own a piece of land. Moreover, holding a piece of land in this game is also regarded as a "status symbol" that can help boost the holder’s influence and following on social media. For instance, digital artists can also display their other digital works on their virtual plots to help promote these artworks.
Second, the digital property can be used for renting to obtain income, or it can be held for price appreciation. These attributes are similar to what can be seen with real-world real estate. According to statistics, the monthly average asset trading price on Decentraland has risen from about $4,000 to $12,000 since October this year alone. It seems profitable to resell the digital property. In addition, "real estate developers" similar to those in the real world have emerged in the virtual world. For example, Republic Realm, the company mentioned in the previous article, holds over 2,500 virtual lots in games such as Sandbox, Decentraland, and Axieinfinity. The company has even set up a professional designer team to develop the digital properties.

Decentraland Land Price - Source: https://nonfungible.com

Third, despite the basic investment attributes, some plots located in the center of the city and in areas of high traffic own properties with a higher value due to their display purposes. According to what Grayscale researchers estimated, in the future, the Metaverse may be worth 1 trillion dollars. These opportunities are mainly offered by industries such as advertising, e-commerce, and hardware. Undoubtedly, the virtual world seems like a broad blue ocean where enterprises can enhance their image and promote their products. For example, Adidas has established strategic cooperation with Sandbox and gained a piece of land of its own in the virtual world. It is reported that Adidas will set up its own "adiVerse" center on this plot. Other traditional companies such as Nike and the auction house Sotheby have also declared their land building plans in the metaverse.

Picture: Land owned by MakerDao in The Sandbox

Conclusion

The metaverse shows huge development potential. It may even become the main way of life for mankind in the future. It is wise to plan businesses in the metaverse in advance. At present, data isolation remains the major problem of major metaverses which are similar to digital islands. For example, equipment created in the Sandbox cannot be used in the Decentraland. However, the major metaverses may connect with each other, and create a so-called "Multiverse".

Author: Ashley. H, Gate.io Researcher
*This article represents only the views of the researcher and does not constitute any investment suggestions.

*Gate.io reserves all rights to this original article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.

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