After the time of troubles: Today’s metaverse and the dream of digital ownership

Opinion by: Yat Siu, co-founder and executive chairman, Animoca Brands

In 2023, I delivered a TED Talk on the prospects of Web3, the essence of an open metaverse, and the significance of digital property rights (watch: The dream of digital ownership powered by the metaverse, TED Talks, 2023). Shortly afterwards, Web3 and cryptocurrency encountered significant setbacks, which made my presentation a bit awkward. Now, as we move into 2025, I’d like to revisit some of the open metaverse indicators I mentioned during that talk and discuss how they have changed since then.

2023 was a chaotic year for Web3, marked by unparalleled turmoil, doubt, and the disappearance of notable figures like TerraUSD, Luna, and FTX, who were considered industry titans. It was indeed a difficult period. The early part of 2024 continued to cause worry: The Web3 market grappled with ongoing uncertainty, both economically and politically, well into the summer.

Thankfully, the situation in the Web3 industry has seen a remarkable turnaround following various challenges such as recessions, tough economic conditions, crypto downturns, major scandals and collapses, and political uncertainties about its future. Despite these obstacles, the industry not only grew stronger and more focused but also managed to secure institutional backing for digital assets from prominent entities like BlackRock, VanEck, and others – a first in its history.

What is the open metaverse?

In my TED presentation, I clarified that at Animoca Brands, our perspective on the metaverse differs from conventional views. Instead of envisioning it as a fully immersive 3D virtual reality space with sensory stimulation, we see it differently. The reason is not that we’re uninterested in such technologies (we certainly are!), but rather because we think it’s crucial to distinguish between the ways people access the metaverse and the metaverse itself.

As a researcher exploring this exciting frontier, I describe the Open Metaverse as a network of interconnected, decentralized experiences, where users are granted property rights – a privilege largely absent in earlier iterations of the internet. This newness stems from the concept of digital ownership, which is facilitated by Web3 and blockchain technologies.

Should you possess either fungible or non-fungible tokens, you’re already immersed in, and hold a stake within, the vibrant metaverse – an ever-evolving cosmos brimming with bustling capitalist economies, encompassing virtual realms, experiences, businesses, and countless individuals.

Return of the new economic opportunities

During my presentation in 2023, I discussed how Web3 allows individuals to tap into novel and unconventional financial possibilities, such as earning rewards by playing online games. The idea of earning through ownership in blockchain games gained significant traction and visibility in the public eye around 2021, with Axie Infinity being one of the pioneers. However, challenges arose afterwards.

The notion that one could make a living by playing video games started to appear unrealistic during the crypto winter of 2023, given the frequent reports about collapses, scandals, and falling prices within the cryptocurrency world. However, the economic possibilities I discussed in my TED Talk were still apparent even during troubled times. These opportunities were more noticeable in less wealthy markets, such as an article in the New York Times from March 2024 about play-and-earn in the Philippines, which highlighted that despite the downturn, these opportunities persisted.

These games offer players digital tokens as rewards when they finish short tasks on a daily basis. Frequently, these tokens are exchanged for Philippine Pesos, allowing individuals to make approximately double the country’s minimum wage of 550 PHP (around $11 USD) per day.

And:

Cryptocurrency billboards have sprung up in Manila, and people are now earning money through a new farming game called Pixels in the virtual world. Moreover, overseas Filipino workers (O.F.W.s) are coming back to their homeland to earn cryptocurrencies as M.F.W.s, or Metaverse Filipino Workers.

Sky Mavis and Ronin, both backed by Animoca Brands, have been featured prominently in similar articles, such as these examples here and here. Despite dropping from its record high in 2021, Axie Infinity continues to hold the top spot for all-time NFT sales volume, currently at approximately $4.3 billion. Notably, NFTs play a crucial role in the play-and-earn dynamics of Axie Infinity.

DAO treasuries have grown impressively

One key aspect I emphasized in my TED Talk revolved around the collective worth of Decentralized Autonomous Organizations (DAOs) treasuries – these are funds controlled and managed by DAOs, used to finance their projects and aspirations. As we stepped into 2023, the combined value of these treasuries was approximately $12 billion, displaying a pattern of growth that seemed almost rebellious against the challenging times.

As of January 13, 2025, the collective treasury of Decentralized Autonomous Organizations (DAOs) stands at approximately $32 billion. Remarkably, this vast sum surpasses the value of numerous multinational corporations and is managed by a relatively small group of 11.4 million governance token holders.

Fungible tokens: currencies of the metaverse

As a crypto investor, I’ve emphasized that the combined economic transactions within the open metaverse can be perceived as the economy of a novel digital nation – a vibrant, self-governing online society, complete with unique customs, operational structures, inhabitants, and commercial hubs.

In the vast digital world known as the open metaverse, fungible tokens play a crucial role. They function both as a way to save wealth and as a means for trading goods and services, driving economic growth. While the overall value of cryptocurrencies and other similar fungible tokens does not include NFTs or stocks, these digital currencies can serve as a quick estimate for the economic transactions happening in the open metaverse (the ownership-based internet).

In 2023, I delivered a speech at TED when the combined market value of all circulating cryptocurrencies was approximately $1.1 trillion. Currently, as of January 13, 2025, that figure has grown to about $3.2 trillion, with a daily trading volume of roughly $148 billion.

Let’s make clear the importance of our growing metaverse economy by using an analogy with a thriving financial market within a cutting-edge economy: Just as traditional finance plays a pivotal role in that dynamic setting, so too does the metaverse economy promise to become crucial in its own right.

As a researcher, I’m based in Hong Kong, where Animoca Brands calls home. Notably, this bustling city is home to one of the world’s leading financial hubs – the Hong Kong Stock Exchange. This exchange is renowned for its significant global influence, being one of the world’s busiest by trading volume, market capitalization, and liquidity. According to HKEX-Market Data, the daily trade value averaged approximately $18.2 billion in December 2024. By the end of the same month, the total market capitalization of the HKEX stood at a staggering $4.5 trillion as per the same source.

At this moment, the currencies in the open metaverse are being traded daily at a volume significantly more than four times greater than the average daily trading value of the Hong Kong Stock Exchange in December 2024, even though they only represent approximately 70% of their total market capitalization and a minute fraction of their history.

NFTs: culture in the metaverse

In essence, if cryptocurrencies function like the currency within the metaverse, then Non-Fungible Tokens (NFTs) serve as its unique items of ownership and cultural artifacts. NFTs can symbolize a variety of distinct entities in this digital universe: identity markers such as digital identifiers (DIDs), avatars, personal profile pictures (PFPs), or any type of personal records; virtual real estate; artistic creations; collectibles; game elements or world assets; music; domain names, and many more.

In the broader context of the open metaverse, Non-Fungible Tokens (NFTs) share a fundamental aspect: they confer digital property rights. When you possess an NFT, it signifies that you truly own whatever is detailed in its smart contract, be it an image, a game item, commercial rights to an asset, or numerous other items. This ownership signifies a significant transformation in the digital realm, where goods and services have typically been offered through licensing agreements rather than outright possession.

It’s essential to recall that Non-Fungible Tokens (NFTs) are a relatively new phenomenon, despite their seeming longevity in discussions. The first NFT emerged approximately 10 years ago, but it wasn’t until late November 2017, following the introduction of the ERC-721 standard on Ethereum, that they started garnering widespread attention.

Effectively, we are only about seven years into the era of true digital ownership of virtual items.

Considering another significant change in perspective, Apple launched the iPhone in June 2007, transforming the landscape of personal communication and computing. Although smartphones were already around, it was the iPhone that served as a pivotal moment for the tech industry and beyond. Google later acquired Android, which popularized and mainstreamed smartphones through a wide array of appealing, diverse, and often affordable devices.

Apple exclusively offers content and software for iOS devices via its App Store, a closed system that they report sales data for. This makes it rather straightforward to estimate comparisons due to the transparency. Also, iPhones are often viewed as luxury items or even status symbols, which aligns with some people’s perceptions about pricy NFTs. However, it’s important to note that most NFTs aren’t extremely expensive; at present, their average sale price over the past month is approximately $136.

2013 marked a significant milestone for the App Store, as it was approximately 6 and a half years since the iPhone’s initial release. During that year, Apple reported a staggering $10 billion in total sales through the App Store, with an impressive $1 billion of those sales recorded specifically in December.

By the year 2024, approximately seven years since NFT technology became widely adopted, the total value of NFT sales for that year reached an impressive $8.9 billion. Moreover, during the month of December alone, the sales volume amounted to a significant $892 million.

The value of true digital ownership

Non-Fungible Tokens (NFTs) predominantly benefit creators and owners, making them the main recipients of profits from their creations, instead of platforms. This advantage extends not only to initial sales but also endlessly, due to the continuous royalties or fees given by NFTs to creators over time.

As an analyst, I can say that when creators offer their works as Non-Fungible Tokens (NFTs), they typically retain a significant portion of the sales revenue, barring a small commission charged by the marketplace platform (typically around 2.5%) and any gas fees involved in the transaction. Furthermore, the original creator stands to benefit from royalties or creator fees whenever their NFT is resold in the future.

Recent: Pudgy Penguins’ PENGU token rallies 13% despite declining NFT sales

For those using a Web3 network, who often own the network’s fungible tokens, there are additional perks: they get compensated for adding value to their networks. In 2024, this group was rewarded approximately $14.9 billion through airdrops.

In stark contrast to the traditional Web2 platforms, these new decentralized platforms are designed to fairly compensate creators, contributors, and users. For instance, in their most recent financial report (Loud and Clear), the leading music streaming platform, Spotify, disclosed that they paid out over $9 billion to artists in 2023. Remarkably, 1,250 artists received at least $1 million, 11,600 artists got at least $100,000, and a significant 66,000 artists earned at least $10,000.

In 2023, it’s estimated that approximately 78,850 artists earned a substantial annual amount ($10,000 or more) from streaming their work on Spotify. This is a small fraction considering there were about 11 million artists and creators on the platform at that time. So, less than 0.7% of these artists made a significant income through Spotify, while listeners using the platform did not receive any payments.

It’s no wonder that the well-known artist Grimes, who has built a career in the conventional IP field of music, disclosed that she earned more from Non-Fungible Tokens (NFTs) than throughout her entire music career. This disparity between traditional and emerging Web3 industries in creator compensation is quite evident.

AI and the metaverse

During my TED Talk, I discussed how blockchain technology is set to enhance intellectual property protections as we move into an era dominated by AI. Previously mentioned, AI and blockchain are intrinsically linked, with increasingly autonomous AI agents relying on blockchain for validation and cryptocurrency as the means of transaction. By 2024’s second half, this trend was noticeable, and I foresee it serving as a major catalyst for growth in open metaverses over the coming years.

The dream of the metaverse

2023 was a challenging year for me as a crypto investor, with one disaster after another hitting the open metaverse. However, despite these setbacks and a prolonged slump, I’m glad to say that the open metaverse is not only still here but also continuing to grow and thrive. It may have taken a knock, but it’s showing resilience and promise for the future.

At Animoca Brands, our immersion in and interactions with the Web3 sector provide us with an unusually favorable perspective on this emerging realm. Over the past year-and-a-half, it’s been quite inspiring to observe the dedication of Web3 companies in constructing their foundations during challenging times, positioning them well for future growth. As we concluded at the end of 2024, Animoca Brands’ most recent financial update revealed a robust financial status.

In the realm of Web3, numerous instances of successful debuts and advancements can be found. Within our corporate family and investment scope, I’ve observed projects like Pixels, Xai, The Sandbox, Anichess, and Pudgy Penguins (PENGU token) in gaming; Open Campus and the EDU Foundation in education and edtech; and Mocaverse and the Moca Network contributing to our broader ecosystem.

2025 is anticipated to mark a significant stage of expansion and transformation for Web3 and the open metaverse, as we witness an increase in the pace of change towards ownership rights within our digital existence. The development of the open metaverse since my TED Talk approximately a year-and-a-half ago has been remarkable, considering the challenges that have arisen along the way.

Once merely a dream, digital ownership today is steadily becoming a reality.

Yat Siu, who co-founded Animoca Brands and chairs its operations, manages numerous NFT ventures such as F1 DeltaTime, The Sandbox, MotoGP Ignition, and the REVV token and ecosystem. Yat’s ambition is to extend digital ownership and play-to-earn opportunities to over 2.7 billion gamers and beyond. He actively supports various NGOs, is a BAFTA member, and sits on the board of directors for the Asian Youth Orchestra.

This piece serves as a source of broad knowledge rather than offering legal or financial guidance. Please note that the perspectives shared within this text are solely those of the writer and may not align with the views of CryptoMoon.

2025-01-14 11:39