Decentralized metaverse: failed experiment or the future?

Decentralized metaverse: failed experiment or the future?

Weekly stories are first featured in our Newsletter. Subscribe here to receive it directly in your mailbox every Monday

The best way to understand the concept and the potential of the metaverse is to watch Ready Player One, a Steven Spielberg’s movie released in 2018.

It is based on a 2011 book by Ernest Cline that describes rather vividly a world where most interesting things happen in an immersive virtual reality called Oasis. The idea is not new (one of the first mentions of a “metaverse” can be retraced to a 1992 novel Snow Crash by Neal Stephenson), but in the context of impressive tech development we have been witnessing in the past decade, it gets a whole new meaning.

The movie plot evolves around the ownership of the Oasis metaverse, symbolically represented as a golden egg, hidden by its defunct creator. Unsurprisingly, the egg is hunted by a group of villains and a group of good guys (you can see for yourself who wins at the end).

Like many science fiction stories, Ready Player One has high chances of becoming reality.

A truly immersive virtual world would require many things that our current technology does not allow: much more powerful (and accessible) personal computers, huge internet bandwidth, state-of-the-art wearable equipment… Good news is that all these things are constantly evolving, and it is not unreasonable to imagine that at one point in the future we will be able to go on adventures, socialize and work in a truly engaging metaverse.

However, when we’re all there, a crucial question will arise: who owns it? Who will possess a “golden egg” with a power to create or destroy virtual worlds, rent virtual land, control virtual commerce?..

And this is the moment when the difference between centralized and decentralized metaverses will become crucial.

Quick tour of the existing metaverses

There are several metaverses worth noting, both centralized and decentralized.

Centralized metaverses are those where developing companies fully control the setting.

The one reminding the most of Ready Player One is Fortnite, a battle-royal-style world developed by Epic Games in 2017 and played by over 30 million daily active users. Fortnite is mainly a game, but it also hosted several successful concerts: singer Ariana Grande gathered over 1 million viewers at the peak of her concert broadcast, while rapper Travis Scott set a record with over 1.2 million.

Another metaverse-style gaming platform, which targets a younger audience (median age is 9-12 years old) is Roblox. With over 40 million games, Roblox has over 55 million daily active users and had an all-time high of 5.7 million concurrent users.

Horizon Worlds, the metaverse project developed by Meta, has more social components to it, but so far it has been rather disappointing. So much so, in fact, that Mark Zuckerberg had to apologize for the poor graphics and put the project on “quality lockdown” last month.

Decentralized metaverses are those where users can experience real and disintermediated ownership: in-game assets, wearables, virtual land where one can build whatever they want… And of course, the only way such ownership could be achieved is via blockchain.

Decentraland was one of the first attempts at creating a decentralized metaverse. Built on Ethereum, it uses its coin MANA to fuel the commerce of in-game artifacts, skins and, most importantly – virtual land plots, all in form of NFTs. Decentraland tries to imitate the real world, hosting a number of NFT galleries, companies and events, but the graphics is still quite poor.

The Sandbox is a boxy 2D metaverse, developed by a French company belonging to the Hong-Kong crypto gaming giant Animoca Brands. Initially built on Ethereum, but transitioning to Polygon now, it provides users with a set of tools, with which they can easily build their own games or experiences within the metaverse. The project’s main coin is SAND, which users can stake, but it also uses LAND token to sell the virtual land.

Despite their high valuations (both MANA and SAND market caps are around $1.25 billion), Decentraland and The Sandbox register dramatically low user metrics.

According to Decentraland’s own stats, the platform registers an average of 7’700 daily users, however a much smaller number actually interacts with it. DappRadar recently showed that the number of unique wallets interacting with Decentraland daily ranged from 38 (!) to 675.

The Sandbox is doing a bit better, probably due to its stronger gaming component, registering somewhere from 500 to 4’500 active wallets daily. However, these numbers also seem ridiculous comparing to the centralized metaverses’.

Facing such disappointing figures, it is worth asking what exactly people can do there?

What can you do in a decentralized metaverse ?

Building a metaverse on a blockchain opens many possibilities as to the development of its commerce, and it’s not surprising that many brands have quickly understood the its potential as a new media and retail channel.

Metaverse as a new way of engaging with clients

Since the end of 2021 many companies, from the crypto space and beyond, have opened their metaverse representations, like JP Morgan’s lounge and Samsung building in Decentraland, or South China Morning Post and DJ Steve Aoki’s games in The Sandbox.

Brand notoriety can also be boosted with a metaverse events, like a Dolce&Gabbana defile in the Decentraland during the Metaverse Fashion Week or Snoop Dogg’s parties at The Sandbox.

Metaverse as a new e-commerce outlet

Metaverse is a good place for NFT galleries, and Decentraland hosts quite a few, both crypto-native and legacy ones like the Sotheby’s. Brands on The Sandbox can sell their branded artifacts and avatars: the Smurfs, the Walking Dead, Snoop Dogg…

Metaverse as a gaming space

Who says crypto gaming says play-to-earn, and it is totally possible in decentralized metaverses: The Sandbox hosts a bunch of mini-adventure games, while Decentraland has a couple of gambling stations.

What’s the problem with the actual state of decentralized metaverse?

Just one look at the current use cases says loads: it is too much about the brands, and too little about the user. Even if brands’ marketing departments all over the world are doing their best trying to invent an experience that would be worthy of the users’ time, it is often not interesting enough.

Users will go to a metaverse where they will have fun, and this means that both Decentraland and The Sandbox still have a long way to go.

The same applies to the social part of the metaverse. While it can be fun to actually see and speak with (the avatars of) people who play the same game as you, or attend the same event, the technology must evolve to provide a better experience.

The future of the metaverse

Centralized metaverses are better positioned for developing an engaging user experience: it is easier technically and financially (there’s no doubt that Meta resources outweigh those of any decentralized project). However, we must not forget that any centralized metaverse is intrinsically flawed, because it is controlled by one entity.

If the metaverse is to develop like the Oasis from ready Player One, it may someday take even a bigger importance in our lives than social media; and we already understand how dangerous a centralized control over social media can be.

So while it may be too early to call decentralized metaverse a success (it is not), it may be wise to keep a long-term view. Who knows, maybe newer projects like Netvrk, Otherside or The Open Metaverse would learn from the existing ones’ mistakes and create a whole new era of scalable, easy-to-use, beautiful and interesting decentralized metaverses.