Metaverse projects continue to receive significant investment from investors, with nearly 50% of this year’s venture capital funding being allocated to the nascent space.
A new report from DappRadar shows that in the first half of 2023, metaverse projects attracted investment from venture capital firms, totalling $707 million, representing 44% of all web3 investments.
The report also suggests that the augmented reality/virtual reality (AR/VR) industry could have a positive impact on the metaverse sector. It highlights an interesting observation that metaverse tokens, specifically SAND and MANA, saw a 5% increase in value after Apple revealed its Vision Pro headset last month.
“The industry continues to attract significant investments… this continuous funding and development hint towards an exciting future in the metaverse space,” DappRadar said.
Markets for digital land in metaverse ecosystems had a strong start in 2023, with trade volume and sales reaching record highs in Q1. However, during the second quarter, both trade volume and the number of trades experienced a substantial decline, which DappRadar attributes to the resurgence of memecoin speculation and increased interest in DeFi protocols.
A decrease in trade volume
“These alternative avenues within the blockchain ecosystem became more enticing, leading to a significant decrease in virtual world trading activities,” the report said. The decline in trade volume during the second quarter can largely be attributed to Yuga Labs’ Otherdeed for Otherside, a virtual world project. Its quarterly volume dropped significantly from $294 million to $44 million amidst turbulent conditions.
In comparison, Topia secured the second position with $2.7 million in trade volume, experiencing a 10% decline. The Sandbox ranked third with $2.5 million, despite a 44% decrease, while Decentraland followed with $679,000, reflecting a significant drop of 68%.
The floor prices of digital land projects have experienced declines from their all-time highs last year as well. The Sandbox and Otherside have seen drops of approximately 85% in land prices, while Decentraland has experienced a significant crash of 95%, with Topia plummeting by a staggering 99.6%.
Growing silently
Speaking with The Defiant, Yat Siu, co-founder of Animoca Brands, said that the majority of the metaverse industry continues to grow despite the recent dip in trade volumes. “The metaverse is not one entity and not one system but a multitude, and this aggregation is growing in various ways,” Siu said. “While specific aspects of the metaverse (eg, trade volume) may appear down, the industry is still large and growing.”
According to Gabby Dizon, co-founder of web3 gaming collective Yield Guild Games, in the same article, the revival of growth in the metaverse and GameFI sectors will be bolstered by the implementation of web3 identity solutions.
“Having blockchain-based identity and reputation solutions will be critical for anyone looking to build a future for themselves in the open Metaverse,” Dizon said. “While there are many projects solving for asset liquidity in web3, there are very few solving for reputational liquidity, and YGG believes this is the key to unlocking a user-owned internet.”
Isa Muhammad is a writer and video game journalist covering many aspects of entertainment media including the film industry. He's steadily writing his way to the sharp end of journalism and enjoys staying informed. If he's not reading, playing video games or catching up on his favourite TV series, then he's probably writing about them.
