The Metaverse is being realized at a rapid pace. Promised as an experiential shift building on a raft of existing technologies, it is seen by some as one of the key developments of the early part of this decade. Specifically, the metaverse concept is billed as an attempt to build on the promise of projects like VRChat and open games like Star Citizen –– as well as tech that will leverage hardware and software advances including the new generation of digital assets.
Like with earlier iterations of web-oriented projects, it will ultimately only be as good as what people create for it and how they make use of it. So what are the different ways metaverse developers have come up with for interacting with it?
Metaverses generally have their own native crypto tokens meant to comprise a layer for trading and an asset class unto themselves. Inside the metaverses, these or other cryptos are usually the currencies used to purchase all sorts of digital assets –– typically various forms of NFTs, such as plots of “land.” In Decentraland for instance, these are $MANA and LAND, respectively. $MANA was introduced to the public via an Initial Coin Offering (ICO) — a form of “early-bird” crowdfunding through a token sale to launch a platform — back in 2017.
An IDO is the equivalent of an ICO, but on a decentralized exchange (DEX) –– and it’s worth paying attention to metaverse-related ones addressing needs within these emerging tech environments. For instance, Smart Places Protocol recently had its IDO on the ADAX DEX. It aims to minimize the problem of bots and harassment by building an ID through rewarding human interactions.
There are at least a few advantages of trading in metaverse tokens on a DEX versus a centralized exchange (CEX). Firstly, by using your own wallet you can actually own your coins versus keeping them on the exchange platform. Secondly, cutting out the middle-man also reduces fees. And thirdly, tokens are often traded earlier on the various decentralized platforms –– one example being the newly released $LTVN token from Luntivo Finance, itself a DEX that specializes in metaverse transactions.
It is true that using a DEX requires getting a wallet and learning a bit about how it works, but this process is not as complicated as is sometimes suggested.
Using a CEX is usually thought of as “easy mode” for trading, with the main trade off being higher fees, as mentioned previously. At the top of the pile in terms of platforms is of course the Binance CEX. Even easier to use is Coinbase, which will also suit those U.S. users who are unable to access Binance.
Let’s start with the big dogs. When the share price of Meta took a massive hit in early February, stock was bought up in massive volumes, demonstrating that many expected the crash to be temporary. This doesn’t mean there’s necessarily confidence in the direction Mark Zuckerberg wants to take things as much as there is in the idea that with such a huge user base the company is “too big to fail,” and will therefore stabilize. Existing metaverse Roblox already has a huge user base as well, but since those users are children it remains to be seen if the company will turn a profit. Whatever the case though, it’s clear that companies like these are viewed as having significant potential by investors.
There’s also a hardware component, of course. Zuckerberg has been promoting the use of VR, for instance, having acquired one of the biggest headset manufacturers back in 2014. Augmented Reality, or AR, is also bound to feature prominently (with Microsoft currently positioned as a leader). Chips from manufacturers like Qualcomm and Nvidia are already powering the devices that metaverses depend on, meanwhile, and intend to continue.
Finally, there are companies like Unity and Unreal Engine creator Epic Games that provide the software many designers use, as well as others like Autodesk that are involved in 3D modeling.
Inside a metaverse, there are invariably ways to earn coins that can either be used within the platform or traded outside of it. Multinationals like Square Enix have gone on record in support of Play2Earn, with blockchain-based iterations on ideas like in-game gold in World of Warcraft. Familiar MMORPG P2E activities like item auctioning and hunting can exist alongside the kinds of services people have provided on platforms like Second Life, as well as assets like the aforementioned digital “land.”
All this interfaces well with blockchains and NFT marketplaces like Opensea, which is more or less how the internal economy of a metaverse is supposed to work. Ambitious metaverse projects like Phala World aim to combine different kinds of experiences, but unlike many older projects will stick to its decentralized ways. Meanwhile, Cryptokitties broke through a barrier for blockchain gaming, but the industry has a way to go.
These methods cover the primary ways of interacting with and investing in the metaverse as of this writing. And of course, while all are exciting, new and emerging concepts such as these demand a cautious approach.
First and foremost, whether trading on a DEX, CEX, stock exchange (see below), NFT marketplace, or other platform, volatility is a major concern. This, fortunately, is something that can be measured; FXCM demonstrates how volatility charts can be used to make clear when stocks or assets are moving with unusual volume or frequency, and thus when they may be at their riskiest. Prospective investors would do well to monitor such information when considering metaverse-related assets. Volatility provides opportunity, to be sure, but it also implies unpredictability that most investors can’t overcome.
Another important aspect of a cautious approach is to avoid “buying the hype.” As a piece at Medium put it, buying whatever’s been going up is not investing, so much as gambling –– and this will be an easy trap to fall into as metaverse tech expands. This doesn’t mean that if assets like those described above gain value they no longer make for good investments. However, it’s important to interact with these digital assets for the right reasons; buy into what analysis and strategy dictate to be worthwhile, as opposed to what’s “hot,” or hyped.
The bottom line is that different ways to interact with metaverses are multiplying, and opportunities are arising as a result. Whether you’re familiar with the newer technologies involved or not, it’s now easier to engage with them than ever. No two metaverses have the same design and structural ethos, however, and every emerging asset poses risk and uncertainty. So do some research before jumping into the deep end!
Written by Eleanor Park for berchain.com