The Different Ways To Invest In Metaverse

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Disclaimer: Crypto is a fast-paced economy and things change quickly. Information on this post might be outdated even if written today. Do your own due diligence and stay safe. I might get affiliate commissions for purchases made through links in this post. Read the disclosure.

What Is Metaverse?

Facebook Meta isn’t a metaverse. Metaverse isn’t one single thing but a network of things. Metaverse is a digital economy. Metaverse might be thought of being a digital-only universe, but is it? Metaverse wouldn’t have value if you could not transfer the wealth from the digital world back to the physical world. 

Would Axie Infinity be such a success if you wouldn’t be able to pay your rent with the earnings you made from the game? Probably no. The reason why Metaverse is inevitable is that it’s starting to blur the line between the physical and digital world.

Metaverse seems to be a place of the digital economy where the wealth of you’ve gathered can be put to use in the real world (IRL – In Real Life). There have been years where you’ve bought something in-game for example, and you’ve only been able to benefit from it inside the game.

This model is not being disrupted by mechanics by which something you buy in the digital world, can massively benefit you in the real world. Metaverse can thus be seen as a digital economy.

Play To Earn (P2E), Play And Earn (P&E), And GameFi

Axie Infinity is more or less the event that started the whole Metaverse concept. Metaverse as a concept has lived many years already, but only in the last few years have we truly seen it become something tangible (even).

Play-to-earn games are digital games where you can buy items and those items have real-world value. It’s not anymore about buying items that have value only inside the game, only benefiting you inside the game. It’s about GameFi (gaming finance), having a dollar value placed on the items that you have bought, used, enjoyed, and when it’s time, you can sell those items for a profit.

Play to earn, as the concept suggests is true. You can actually earn real money by playing video games, and no it’s not about esports or some other arranged tournaments in the real world. You can play in your home coach casually and earn a living.

While this concept might sound weird, unbelievable, and even insane. This is what cryptocurrencies and the metaverse have enabled for us. However, what is a new frontier in P2E is the slow transition to the Play And Earn model.

A quick intro to Play and Earn

Play to earn can be seen as something of a job to do in order to get paid. This is basically playing to earn, but not playing to enjoy and have fun. Thus we have a narrative of play and earn. While it is a subtle change in naming, it amplifies the importance of why we play games. It’s for the fun and achievements, but what if we could also earn money as a by-product of having fun.

What will be interesting to see is how the big players like Take-Two Entertainment, EA, Epic Games, and other big gaming studios will transform themselves for blockchain gaming. Blockchain-based gaming is making waves currently, and when players and investors realize that they can turn their passion and interest for money, things change rapidly.

The question remains though. How do we create decentralized gaming that looks and plays as good as God Of War Ragnarok or Horizon Forbidden West and make money at the same time? Or is it that we shouldn’t care about graphics and fine-tuned gameplay at this point in time?

One answer could be Render Token (RNDR), but we are too early to say how this all will play out, but if anything is pretty sure is that blockchain-based gaming is here to stay.

Examples of popular play to earn games:

  • Axie Infinity (AXS)
  • Sandbox (SAND)
  • Defi Kingdoms (JEWEL)
  • Illuvium (ILV)
  • Crabada (CRA)

Investing Strategy

As we don’t know which games will fly and become the next Axie Infinity, investing in games is pretty risky. It’s a bet early on that the game you’ve chosen will become popular and something players are eagerly waiting to play.

More than often we see games announced, but the moment players can actually play the game comes years after the announcement (Chumbi Valley, Sandbox, Illuvium) on top of that crypto and blockchain innovation moves at the speed of light so things get pretty risky investment-wise already at the beginning.

The following list is the things you should look out for before making your investment decision:

  • The hype surrounding the game
  • A passionate team developing the game
  • The size of the community and loyal fans
  • Game mechanics and playability
  • Strong tokenomics and the utility of the token
  • Possible transaction fees
  • Long and detailed roadmap and future outset
  • The appeal to a broader market of players (the topic of the game)
  • The likely hood of a working product in the near future

While this list is applicable to many coins out there, still only a select few games will become a success in the blockchain and crypto industry. When a project is able to create a loyal fan base around its game, the more likely it is to succeed even before a working product.

Non-fungible Tokens (NFTs)

Non-fungible Tokens (NFTs) are the things you see the most when “entering” the metaverse. NFTs can be anything really, music, drawings, game items, or a real-world house for example. Basically, there are no limits to what an NFT can be or hold inside. NFT is ultimately a certificate of ownership. 

NFT represents something in the digital world or in the metaverse. With that NFT you can do various things, own, sell, buy, transfer, and interact.

The reason why NFTs are so important is that they enable a plethora of options and use-cases for the real world and not only for the digital world. NFTs became popular through digital art (Beeple and his $69M NFT sale) and the insane deals the very first digital artists were able to get in the metaverse.

Currently, we see a plethora of algorithmically created art collections like Azuki, Bored Ape Yacht Club, CLONE X – X TAKASHI MURAKAMI, and Mutant Ape Yacht Club. All of these have been designed by an artist or a group of artists and then with the aid of a computer algorithm pieced together to create a massive collection of avatars.

Avatars in the metaverse have a few different use cases, a showcase of wealth (CryptoPunk pixel-image for $24M), and the feeling of belonging and community. When you wear a certain NFT or ana avatar you are creating a statement of sorts. Having this or that avatar shows that you are part of the community and on top of things.

Top collections in OpenSea

But not all collections strive and create waves in the NFT marketplace like OpenSea. And when it comes to investing in NFTs, it’s harder to do than say.

Here’s however a list of things to notice with NFTs:

  • Azuki – Quality artwork and a promise of utility for the NFT
  • Bored Ape Yacht Club – “Ape into or Apeing” in crypto is a theme inside the crypto community and what a better way to show that habit than owning an ape, that’s a bit gimmicky.
  • The Doge Pound – Pretty much riding the Doge token wave. Fans of doge token can be interested in the doge pound avatar
  • Degenerate Ape Academy – Making apes (gorillas?) look awesome and worth owning.

While NFTs gained massive popularity through avatars and digital art, NFTs are more and more implemented to the DeFi space too. At a growing pace, we are getting NFTs that can earn us passive income, just by holding and owning a specific NFT. This neat little upgrade to digital art creates a whole new NFT narrative for the crypto space.

Metaverse Blockchains And Infrastructure

Ethereum blockchain is where it all started. Ethereum and its ERC 721 and ERC 20 standards enabled a massive array of games and NFTs to be created to create the first version of metaverse inside the crypto space. With the massive growth in the Ethereum network, came network congestion (high transaction fees and slowness).

When Ethereum started lagging, gaming companies started to find alternative ways to get players to the crypto space. Ethereum is way too expensive to use and way too slow, so the conclusion was to create dedicated blockchains for crypto gaming and for the metaverse.

Efinity

Efinity as the website states is a cross-chain superhighway bringing NFTs to the Polkadot chain. Efinity (EFI) is a next-generation blockchain dedicated to NFTs and is created by the Enjin blockchain company. Enjin is one of the biggest players in the whole metaverse space and has made some significant partnerships with some of the biggest companies in the world like Microsoft. Enjin’s vision for Efinity is to create a scalable, cross-chain token network for NFTs, so that the trading, adoption, and usage of NFTs would be faster and more affordable.

Things to notice:

  • Relies upon that the Polkadot ecosystem grows and gains adoption (which at the time of writing hasn’t happened yet).

Elysium

Vulcan Forged (PYR) is building its own blockchain, to create THE chain for the metaverse. Vulcan Forged is an NFT gaming studio and a dapp incubator. This means that Vulcan Forged is a company that has created many different games and not just one single game, what for example Sky Mavis and the Axie Infinity represents. Now that the company is expanding its business area into blockchain development and creating a dedicated blockchain for the metaverse, things are getting big for the company.

Things to notice:

  • New blockchain (which requires in-depth blockchain development and engineering knowledge) isn’t easily created for success
  • At launch, 5 internal validators, in the future nodes will be open for community
  • PYR as the main token for the blockchain
  • Rust as a programming language (security advantage over Solidity)
  • Substrate framework (Polkadot is built with this)
  • 1600-2500 TPS (transactions per second)
  • 2.5-6 second transaction finality (this is the thing that counts)

Ultra

Ultra (UOS) describes itself as the first entertainment platform providing a variety of games industry services under a single roof, accessible through a single login: discover, buy, and play games, watch live-streaming feeds, interact with your favorite influencers, participate in contests, compete in tournaments and much more (definition from the website).

Ultra is a blockchain that seems to be rivaling Valve’s Steam platform, trying to create a fairer place for game developers. Creating a platform where the developers would get a fair share of money for their effort of bringing a new game for the players to enjoy inside the Ultra platform.

Ultra acts kind of a distribution platform offering a distribution fee of only 15%, compared to Googles’ 30% and Valves’ 30% e.g. This is to incentivize game developers to move from the popular Steam platform to Ultra.

Things to notice:

  • 15% distribution fee, -3% referral bonus = 12% distribution fee
  • Worldwide PC game market, $32B
  • Developers earn roughly 21% more money from game sales
  • Porting games from Steam, XBOX, and Playstation to Ultra is easy with Ultras’ universal SDK
  • 11,000 TPS (transactions per second), scalable to 100,000 TPS
  • 3-second transaction finality
  • Eco-friendly low energy consumption

Gala Games

Gala Games is one of the biggest metaverse, GameFi builders in the crypto space, but as with others, Gala Games users have noticed how Ethereum based games are more or less usable and annoying because of the high gas fees. Yet again, we see a gaming company going for their own blockchain and thus there’s a project called GYRI from Gala Games.

The GYRI (codename for the project at the time of writing) blockchain is made not only for games but also for Listen-to-earn, Watch-to-earn concepts. While the blockchain is first and foremost built for gaming and taking the needs of gaming into account while designing the chain, the chain is seen to be a lot more than just about gaming.

Things to notice:

  • Gradually giving functions to node operators, at first, the chain will work as permission-based.
  • Decentralization over time

Polygon

Polygon is a layer 2 scaling solution for Ethereum. While many projects started in Ethereum, many have moved to Polygon like OpenSea. This is because of the ever so many times mentioned high gas fees present on Ethereum.

Polygon ecosystem is a massive one and has some of the biggest names in the metaverse industry such as Decentraland (MANA), Sandbox (SAND), VulcanVerse, and OpenSea. Polygon also has big plans to grow its ecosystem such as the Polygon Nightfall. A privacy-focused project that combines Optimistic Rollups with Zero-Knowledge (ZK) cryptography.

What we can notice is that, while Polygon has plans to grow its ecosystem and while there are many projects using Polygon as its base solution. Projects, studios, and companies are starting to move into their own blockchain solutions (like Gala and Vulcan mentioned above).

So the question soon becomes, are Ethereum, Polygon, Binance Smart Chain, and other older technologies a thing of the past when it comes to metaverse building and growth?

Whenever a massive demand comes for a chain, whether it be Avalanche, Polygon, or Ethereum the gas fees and chain speed start to become an issue. This was evident when even the Polygon network started to lag. This only solidifies the idea of building theme-concentrated blockchains to deliver theme-specific outcomes. Gaming chains for games, music chains for music, video chain for videos, etc. Currently, the approach has been more or less one chain to rule them all.

Supporting Metaverse Infrastructure

We have covered gaming tokens, NFTs, use-case-specific blockchains, but what a token like RNDR. The Render Network is the leading provider of decentralized GPU-based rendering solutions, revolutionizing the digital creation process. This is what is stated on the website, but what does it mean.

The above video shows the unbelievable way the Render Network is able to render graphics with its distributed GPU rendering technology. Render Network has partnered with some of the biggest names in the whole world like Disney.

Things to notice:

  • Powered by Ethereum
  • Use cases: Media, Industry, Augmented reality, Mixed reality, Gaming, Medical, Virtual reality, Metaverse as a whole
  • RNDR token is used to use the rendering services
  • The rendering process requires Octane plug-in
  • Feels like it’s for the bigger companies to benefit from
How the Render token works (image source)

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Written By Juha Ekman

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