The virtual real estate market suffers a heavy blow, and the development prospects of the Metaverse have sparked heated discussions.

At the end of 2021, a wave of "land speculation" swept through the virtual world, but with the burst of the bubble in the first half of this year, the future of virtual real estate and the Metaverse has once again attracted market attention.

Data shows that due to a decline in user interest and a sluggish cryptocurrency market, the price of virtual land significantly dropped in 2022. From six major Ethereum Metaverse platforms, the average price of a digital plot decreased from about $17,000 in January to about $2,500 in August, a decline of nearly 85%.

At the same time, unfavorable macroeconomic conditions have led to an overall decline in the cryptocurrency industry, further dragging down the market valuation of Metaverse platform tokens by over 80%. On average, the land transaction volume of the six major Metaverse projects has dropped from a peak of $1 billion in November 2021 to about $157 million in August 2022.

Virtual real estate from "popular" to "collapse"

In the second half of 2021, the concept of the Metaverse became popular worldwide, leading to a wave of "land speculation." Unlike the virtual spaces in regular games, the land in Metaverse projects has the following characteristics:

1. Scarcity and Liquidity
2. The platform has its own economic and governance system.
3. Real Estate Attributes
4. Possess parallel spacetime dimensions
5. Support for building offline scenarios

These characteristics have redefined virtual space, attracting widespread attention. By the end of 2021, transactions of various digital land plots reached new highs, with land on multiple virtual world platforms sold at high prices. At the same time, various brands, institutions, and governments have also entered Metaverse platforms to carry out various activities and services.

However, since 2022, market enthusiasm has plummeted, and the speculation in the virtual world has gradually faded. From high prices to complete neglect, the entire Metaverse project market has entered a bear market. Data shows that the trading volume and transaction amount of mainstream Metaverse projects have significantly declined compared to the beginning of the year.

Reasons for the Burst of the Virtual Real Estate Bubble

1. Global Cryptocurrency Market Bear Market

In 2022, the international economic and political situation was turbulent, and the cryptocurrency market continued to decline. Major cryptocurrencies experienced significant drops, with market capitalization shrinking by nearly 50% compared to the beginning of the year. The NFT market was also severely affected, with a sharp decrease in trading volume, transaction value, and active user numbers.

2. Lack of Desolation and Immersion

Virtual real estate, like physical real estate, relies on planning, design, and foot traffic to determine its prosperity and value appreciation. Currently, virtual real estate has not yet established a prosperous ecosystem, and foot traffic is also unsatisfactory. Most Metaverse projects are in the "pioneering stage," with limited playability and explorability within the platform. In addition, the lack of immersion is also a significant factor, as the sensory dimension remains a common issue among mainstream Metaverse platforms.

3. The Loss of Monopoly and Scarcity

The construction of the Metaverse also relies on the power of capital, as capitalists gradually monopolize the construction and rule-making of the virtual world. At the same time, with the emergence of more and more Metaverse projects, the scarcity of land has come into question. The homogeneity among various platforms is severe, making it difficult to maintain the value of land.

4. Choices Between Reality and Ideal

Although the virtual real estate market continues to decline in the short term, it still has very large development potential in the long term. As the digital economy becomes the trend of development, Metaverse projects have become an important portal. Virtual land, as the experimental field of the Metaverse, is currently the product closest to the concept of the Metaverse.

The construction of the Metaverse is not about creating a utopia, but about exploring new forms of human civilization while blending the virtual and the real. Although monopolies and restlessness in the real world are difficult to avoid being brought into the virtual world, the scalability of the Metaverse gives us choices, allowing humanity to switch between different Metaverses in search of and building ideal habitats.

Whether in reality or in ideals, the exploration of the Metaverse platform will become an important outlet for us. With the continuous advancement of technology and the richness of application scenarios, the virtual real estate market is expected to regain vitality in the future.