At the end of 2021, the virtual world started a "land speculation fever", and with the bursting of the bubble in the first half of this year, virtual real estate and the future of the metaverse once again touched the nerves of the market.

Virtual real estate from "popular" to "collapsed room"

In the second half of 2021, the concept of metaverse took the world by storm, and brought a wave of "land speculation" boom.

By creating a virtual world parallel to the physical world in the virtual space, the new metaverse platform became an important carrier of the metaverse concept. Unlike the virtual space in general games, the land in the metaverse project has the following five characteristics.

1, scarcity and circulation.

2, the platform is a self-contained economic and governance system.

3, real estate properties.

4, it has a parallel spatio-temporal dimension.

5, it supports building offline scenarios.

These features of the metaverse platform redefine virtual space, and with people paying attention, this market continues to ferment.

In the second half of 2021, as the metaverse concept arised a storm, the metaverse platform rose to the top and took its place in the investment landscape, with various digital land deals reaching record highs. in November 2021, a digital land in the virtual world platform Decentraland was sold for a whopping $2.43 million. in December, a piece of land on the virtual gaming platform Sandbox Inside virtual land was sold for $4.3 million, and that price was set by a $5 million sale that month.

But since 2022, the market has taken a sharp turn for the worse, and the virtual world's land speculation fever has gradually receded.

From prices that are easily comparable to luxury properties in first-tier cities in China, the entire market is unattended. The whole meta-universe project market is in a bear market. According to NonFungible.com data, as of the date of publication, among the top 10 metaverse projects in terms of transaction volume in the past 7 days, both transaction volume and transaction value have experienced a significant drop compared to the beginning of the year.

The Bursting of the Bubble of Virtual Real Estate

The year 2022 is a year of uncertainty, with increased international economic and political instability, and the downturn in the crypto industry setting the tone for the entire market. In addition, the explorability and intrinsic value of the metaverse platform cannot support the previously inflated prices by speculators.

(1) Global Crypto Market Bear Market

2022 is a year full of changes, not yet completely out of the atmosphere enveloped by the epidemic, the volatile international economic and political situation against the backdrop of the Fed's interest rate hike and the Russia-Ukraine conflict, the uncertain international situation makes cryptocurrencies continue to go down, and the implosion of stable coin UST in May made cryptocurrencies plummet, which made the overall crypto market be shrouded in a shadow.

According to Coinmarketcap, a cryptocurrency price tracking website, mainstream cryptocurrencies have suffered massive declines year-to-date. With the exception of stablecoins, the top-ranked cryptocurrencies in terms of market cap are down mostly in the 40%-60% range. The overall market cap of cryptocurrencies is now close to $1.04 trillion, down nearly 50% compared to the beginning of the year.

(2) Desolation and lack of immersion

Virtual real estate, like physical real estate, planning and design and foot traffic are the keys to prosperity and value-add. For the virtual world, a deserted city is like the end of the world. At present, virtual real estate has not yet built a prosperous ecology, and the flow of people is not satisfactory.

On the one hand, metaverse platforms have created mirror worlds, moving brand stores, experience stores and office buildings in the physical world into the virtual space to support players to enjoy various services. But after the novelty of this experience, the problem of single and limited services starts to be exposed. Most of the metaverse projects are still in the "opening period", and the playability and explorability of the platform are limited.

On the other hand, the lack of immersion is another important factor: VR/AR technology has entered a high-speed development stage, but it has not been applied to mainstream metaverse projects on a large scale. The two-dimensional plane of vision and hearing is difficult to present a sense of reality comparable to the real world, and the real-time interaction with virtual scenes is also at a rudimentary stage. The single sensory dimension is still the common problem of mainstream metaverse platforms.

(3) Monopoly and loss of scarcity

When the metaverse project first emerged, people had high hopes for it.

The real world is always unsatisfactory, with epidemics sweeping the world, traditional economies facing difficulties, and serious social involution. People's desire to "live in the void" was growing stronger and stronger. Unlike the virtual world, which is separated from the real world, the metaverse platform opens up a new frontier parallel to the physical world, where human beings can redefine the appearance of cities, set business rules and social order.

However, the reality is that metaverse construction is also inseparable from the power of capital, and players' perceptions and feelings in the virtual world are under the established framework, and the vision of freedom and equality is difficult to be realized in the metaverse platform.

(4) The choice between reality and ideal

The construction of the metaverse is not about creating a utopia. Relying on the blessing of the virtual world to escape from reality will cause a retreat of human civilization. The monopoly and fickleness of the real world can hardly be avoided when combining the virtual and the real. But the expandability of the metaverse gives us the right to choose, and human beings can switch between different metaverse to find and build an idealized habitat.

In reality and in ideal, the exploration in the metaverse platform will become an important exit for us.