https://twitter.com/mrjasonchoi/status/1499825764467838977
We spoke to 50+ Web 3 metaverse companies in the past year.
My takeaways, summarized.
1/ "Web 3 metaverse" refers to digital virtual worlds, often with some element of user-ownership via tokens or NFTs.
Every project we came across fell into one of 3 categories:
- Infrastructure
- Experience layer (in-world)
- Value-add layer (out-world)
2/ A common analogy for metaverses = games.
The more appropriate one is Layer 1s.
Like L1s, they are platforms on which developers create experiences + services.
And like L1s in 2017, we met more people creating them than building on them 😂
3/ While the addressable market for open-world MMORPGs is sizable, my view is that the largest metaverse will encompass far more than a game.
Similar to "Fat Protocols", the winning metaverse substrate layer will be worth far more than any individual app.
More later.
4/ Many companies we spoke with + invested in are building what are essentially enhanced, user-owned MMORPGs.
@AxieInfinity
@illuviumio
@staratlas
@decimated_game are a few examples - i.e. familiar game experiences + ownership of in-game items via NFTs.
5/ "Games" sound trivial but are not to be scoffed at!
To put in context, in 2021:
- 61% of the $8.8B revenue for @ATVI_AB came from in-game purchases. Co. was recently acquired for $68B
- In 2021, $AXS generated $1.3B in revenue and is valued at $14B today
6/ P2E games present a massive opportunity, and has already spawned infra companies (eg. $LOOKS $GF $GUILD), tooling (eg. @CrucibleNetwork ), and a $550M guild market (eg. $YGG $MC).
And with 1M players across 11K guilds, guilds are arguably the largest examples of DAOs today.
7/ While P2E games are exciting and can evolve into more, the $1T moonshot opportunity lies in creating a virtual world on which games are only one of many use cases.
Think a generalized virtual world - with permissionless creation + commerce, defined by immutable digital rights
8/ Similar to how Facebook replicated our social experience on one digital platform, the winning metaverse will bundle multiple use cases into one open virtual world.
We already see companies offering metaverse events and storefronts as services, though many are years too early.
9/ A few projects have already been building a generalized substrate for this vision to play out, but we're probably 5-10 years away from the thesis completely maturing.
- @Decentraland
- @theSandboxGame
- @SomniumSpace
- @cryptovoxels
- @NFtworlds
- @TheTreeverse
10/ The moonshot opportunity is create an open alternative to what Meta is attempting to create.
i.e. a platform on which any developer can build social, entertainment, work, education & commerce experiences in-world, that any user can access.
But we're early!
11/ For instance, today, while you can explore + play games on @decentraland , the experience is barebones.
Most shopping in metaverses we see are for NFTs still and often are just redirect links to @opensea .
A few projects we spoke to are doing in-world PoS and storefronts.
12/ Ambitious as they are, metaverses also face the cold-start problem:
How do you incentivize devs to build on top of a new metaverse when more value can be captured by building their own? (see $LOOT forks).
How do you get users to join an empty virtual world?
13/ One solution we've seen is to lower barrier for creating in-world experiences.
e.g. @nftworldsNFT uses Minecraft, instead of Unity - to create their worlds. This taps into a behavioral suite that >130M MAUs already are familiar with.
14/ Since most virtual land owners are still passive speculators, world renting will catalyze development as well.
Users could rent out land for dev shops to build in return for a fee.
This is currently done in-game with @nftworldsNFT , but can be generalized via new DeFi rails.
15/ A third common solution we see is specialization.
Instead of starting a generic metaverse, some teams choose to bootstrap within a niche community.
e.g. @Cryptovoxels began as an art-focused metaverse, but there's no reason why it can't expand into other domains.
16/ On bootstrapping - most of the metaverses we came across raise capital via a token sale or land sale.
My initial hunch was that at maturity, lands should be worth more than the in-world transactional currency.
Today, this is not the case surprisingly.
17/ All in all, I believe that over time digital experiences trend towards immersion, and as such a metaverse is inevitable.
The fact that Facebook is willing to burn $10B making this happen not only increases its likelihood, but also the need for a user-owned alternative.
18/ The current state of metaverse projects reminds me a lot of Web 3 in 2017.
Lots of ideas that are out of touch with today's technical constraints, but also many anecdotal evidence that suggests product market fit is just around the corner.
https://twitter.com/mrjasonchoi/status/1484917521518108674
fin/ The idea of a Web 3 metaverse might be 1, or 5, or 10 years away...
But we're committed to doubling down our efforts and help figure this out together. Slide in the DMs if you're building anything cool in the colored stacks!
Disclosure: have direct/indirect exposure to a few projects mentioned in the thread; not an endorsement to invest in anything!