The Virtualist | Parcel's January 2022 Monthly Wrap-Up

February 14, 2022

The Virtualist | January 2022

A note from the editor

Parcel (@ParcelNFT) is pleased to present a new-format monthly wrap-up in collaboration with mal1k.eth (@Maliki888).

The Virtualist is intended to educate those interested in virtual real estate and share major news from the prior month related to this nascent but dynamic market.

Don't worry, you can still expect Parcel's weekly newsletter every Friday morning.

We are still early ...

Virtual real estate (VRE), like the broader NFT market, shifted closer to the mainstream in 2021. While interest was strong throughout the year, activity levels picked up following the late October announcement about Facebook’s rebranding to Meta.

And, just like that, seemingly everyone knew about the metaverse, and NFT purchases soared.

Breakout Year!

Virtual worlds like Decentraland and The Sandbox came out of obscurity and these types of headlines dominated major media outlets at the end of 2021:

Big Money Pours into VRE

The promise of the metaverse has brought in considerable institutional capital, which has helped to expand the marketplace and further enhance visibility.

Through this “gold rush”, two major developers have emerged – Metaverse Group and Republic Realm (now Everyrealm).

Metaverse Group is a subsidiary of Tokens.com, a Canadian operation that is publicly traded on the NEO Exchange. The company has made sizable investments in various worlds including Decentraland, Sandbox, Somnium Space and SuperWorld.

Metaverse Group spent an eye-watering $2.4 million on a 6,000 square foot estate in the Fashion District of Decentraland, in a bid to build the 5th Avenue of the metaverse. This property will host the first Metaverse Fashion Week in March 2022!

Republic Realm, which recently pulled a Facebook and re-branded as EveryRealm, is a private entity that has developed an impressive portfolio with holdings in over 20 worlds including Axie Infinity, Nifty Island, Wilder World and Treeverse.

One of its main holdings is Metajuku, a 16,000 square foot development in Decentraland that is inspired by a district in Tokyo known for its street fashion.

Hmm. Seems to be an emerging theme around retail and fashion!

But There are Still Plenty of Opportunities for Retail Investors

To give some perspective on the relative adoption of real estate NFTs, NonFungible.com reports there are approximately 73,250 unique wallets with metaverse NFTs.

We are early.

Andrew Kiguel, Chairman and CEO of Tokens.com, has compared buying land in the metaverse to buying land in New York City 250 years ago. Imagine being in that position.

As in the real world where, despite the presence of large institutional investors, retail investors have amassed sizable private portfolios, there are opportunities for individuals to invest in VRE. Parcel currently lists four of the major virtual worlds – Decentraland, The Sandbox, Cryptovoxels and Somnium Space – and will be onboarding many more in 2022.

Further, there are a host of emerging decentralized investment opportunities including:

Started in December 2021, is a tokenized REIT ($MREIT) that aims to provide passive income to investors

($MOS token), launched in January 2022 with the aim of making VRE available to the average investor. They have focused on The Sandbox to start.

A DAO that invests in a variety of NFTs including VRE (has holdings in NFT Worlds, Decentraland, The Sandbox; and even owns a Bored Ape).

Some upcoming/recently announced DAOs are:

Imperio DAO is a decentralized reserve currency protocol based on the $IMPR token. Each $IMPR token is backed by a basket of metaverse real estate in the Imperio treasury.

Governed by the community, Pangea is a Metaverse land investment cooperative structured as a DAO with the goal of creating more equitable virtual worlds.

MetaLand claims to be democratizing the next revolution of Web3 by creating a future that allows you to autonomously earn yield through virtual real estate profits

Metaverse Mortgages

A thriving mortgage market helped provide liquidity and fueled the real estate market in the real world.

And now, we have mortgages for VRE as well.

If you have been short of funds or have been looking to take advantage of leverage to build your portfolio, you now have access to lenders who are providing financial services related to NFTs, in particular VRE. A few lenders who have emerged are:

Vera, a decentralized protocol that facilitates collateralized renting and lending on NFTs. Presently, all financing is provided by sellers; however, there are plans to provide Vera-financing in early 2022.

TerraZero develops, acquires and finances Metaverse projects. Last week, the company announced that it completed its first ever Metaverse Mortgage on a VRE purchase in Decentraland! TerraZero will be the registered owner of the parcel until the loan is paid off; however, the purchaser can develop the land and operate on it as long as the mortgage payments remain current.

Arcade.xyz is built on the Pawn Protocol, an infrastructure layer for NFT liquidity that enables the financialization of non-fungible assets, commonly referred to as non-fungible tokens, or NFTs.

reNFT‘s vision is to bring any asset that has a rentable use case whether in the digital or physical realm on-chain with an NFT for trustless, secure, and quick rentability.

Let’s Talk Numbers

MetaMetric Solutions, a metaverse data provider, reports that land sales at the four major four worlds (outlined above) totaled just over $500 million in 2021. By comparison, sales exceeded $85 million in January 2022 and, accordingly, are projected to exceed $1 billion for the year.

As awareness and interest in VRE has grown, land prices have increased. The table below outlines the change in floor prices at each of the major worlds between August 2021 and end of January 2022:

Looking Ahead

The metaverse is in a nascent stage with an evolving vision. It has enthusiastic supporters and adopters that see it as a way of enhancing their life experiences. On the other hand, there are those who question having more technology in our lives.

What is clear is that the metaverse provides opportunities for more immersive experiences. The use cases thus far have primarily been gaming and entertainment (e.g. concerts and theme parks).

However, the metaverse has the potential to support a wide range of other uses including but not limited to education, retail, fitness, construction, and art. The metaverse can make a significant contribution to support the burgeoning creator economy, a cultural movement supported by Web3.

As technology evolves (such as AR and VR headsets) making the metaverse easier and less expensive to access, adoption should follow. And there will be an ongoing need for creators and architects to facilitate this process.

To that end, a recent report from BrandEssence Market Research projects the VRE market to grow at a 31% CAGR from 2022 to 2028.

We indeed are early.

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

Malik has interest in the following projects: The Sandbox, Decentraland and Superworld

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