Trading volumes for virtual land NFTs have fallen by over 98% from their peaks, according to an analysis by Delphi Digital, citing data from Metaland. Prices for the cheapest parcels (“floor” NFTs) have fallen by three-quarters and parcel ownership is becoming more centralized.
As an example of the industry’s decline, transactions for land within the billion-dollar crypto metaverse The Sandbox have declined by at least 99% since January 2022. Other crypto metaverse projects like Axie Infinity, Decentraland, Earth2, Crypto Unicorns and NFT Worlds are not faring much better.
Consulting giant McKinsey estimated that investments in Metaverse-related projects totaled $120 billion in the first five months of 2022. The majority of these investments are now being made gasp underwater.
The largest Metaverse investor, Meta, has so far admitted over $13 billion in losses to its own Metaverse initiatives in public filings.
Virtual land NFTs, from boom to bust
Last year’s speculative bubble in Metaverse attracted bulk buying from big names like Adidas, Atari, Prada, Samsung, PwC, Miller Lite and Sotheby’s.
However, the problem with virtual land NFTs is quite unique: unlimited supply. Any organization in the world can create its own Metaverse. Since users can switch between virtual worlds as easily as between video games, there are few imperative limits on package delivery.
Some users believe that prime plots, such as B. Adjacent properties to properties owned by Bored Ape Yacht Club which could perpetuate supply shortages. Of course, the same argument could have been made about mall anchored by Nordstrom or Saks Fifth Avenue, which continue to depreciate year after year.
Although The Sandbox attracted 30,000 players during its time Alpha season 1 Only half played series of games for more than an hour a day. The low number of active players is calculated at astronomical costs per user.
Continue reading: The play-to-earn crypto bubble has burst – Axie Infinity leads, 99% less than ATH
During the peak of the bubble in January, one analyst admitted the bare truth: Investors valued each monthly active user (MAU) of The Sandbox at $472,000. For comparison, Roblox’s cost per MAU is only $227. Even the largest Metaverse crypto project, Decentraland, was slightly lower but still a stratospheric $24,333 per MAU.
The collapse of virtual land NFTs reflects this Wreck in the NFT market. Trading volume on leading NFT marketplace OpenSea plummeted from $3.1 billion in May 2022 to a 12-month low of $826 million in June. Along with the drop in virtual property prices, The Sandbox’s native token, SAND, has fallen from a 52-week high of $8.44 to $0.92 today.
The future of virtual real estate
There is a catch-22 in virtual real estate. Most Metaverse brokers rely on corporate partners to promote fun experiences to attract new buyers. However, corporate partners are reluctant to purchase packages unless users are already nearby.
With an industry-wide trading volume down 98% from its highs, the virtual real estate market has undoubtedly collapsed. Hype and speculation drove pricing into bubble territory during last winter.
Today’s near-zero trading volume could pave the way for Metaverse projects to transform from mere vehicles for speculation into something that landowners actually want to use.
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