In 1848, a carpenter named James W. Marshall was hard at work, building a lumber mill on the American River. In the water wheel, a shiny metal caught his eye, and he plucked the glinting material out of the water. Tests determined that the shiny metal was gold, and soon rumors of gold in the California hills were spreading like wildfire. A brand new chapter of history had officially begun- the California Gold Rush.
The California Gold Rush attracted hundreds of thousands of individuals with a dream of striking it rich. The California economy boomed as a result, and quickly evolved to serve the needs of these miners. Clever entrepreneurs saw unfulfilled demands, and profited hugely off building businesses dedicated to serving the 49ers. As the saying goes, during a gold rush, sell shovels. Some of these Gold Rush era businesses still exist today. Businessman Levi Strauss used blue denim and rivets to create tougher pants suitable for the physical labor of mining, blue jeans. Shipping experts Henry Wells and William Fargo built a successful business capable of delivering mail cheaper than the United States Post Office. The pair also conducted money orders and pioneered traveler’s cheques. By the end of the gold rush businessmen like Strauss, Wells, and Fargo walked away with more money than the vast majority of miners that formed their customers.
Sensing generational opportunity, forward-thinking crypto enthusiasts have left behind Web2 to explore the blockchains of the rapidly evolving metaverse.
As of today, there is admittedly not a whole lot of things you can do in the metaverse. I am reminded of the Ethereum ICO era, where an endless deluge of projects launched with nothing more than a sketchy whitepaper. Metaverse games have put out a roadmap and raised millions of dollars from investors by selling a dream, and I expect that a significant chunk of these projects will never amount to anything more than a roadmap.
That being said, I am confident the metaverse is more than just a silly trend. Since the invention of the Internet, users have been onboarded to the digital world at a rapid rate and after joining, the overwhelming majority of these users stay. Users today interact with digital worlds through a screen. They sit in chairs and peer into the digital world, forced to rely on crude devices like keyboards and mice to interact online. Future users will be able to seamlessly manipulate digital worlds. The idea that one needs a mouse and a keyboard will be laughed at the same way that phones without a touch screen are today. The road to a mature metaverse is a long one, and the journey has only just begun.
Some P2E games have already enabled some successful pioneers to leave their 9-5 jobs behind forever- these fortunate individuals have managed to pull life-changing amounts of money out. Games like Axie Infinity, Wolf Game, and Defi Kingdoms have proven that billions of dollars are up for grabs, and early users of these games were rewarded with larger slices of the P2E pie. I believe that these individuals are very similar to early miners during the Gold Rush. Whether by luck or exceptional foresight, these pioneers were able to amass sizable digital asset fortunes before meaningful competition arrived. Kudos to this first generation of metaverse users! May we follow successfully in their footsteps.
While I feel that early users to successful metaverse protocols will continue to be rewarded handsomely, I believe that the next wave of wealth will go to protocols serving these users, mirroring the California Gold Rush. This is a common theme that has already played out multiple times in crypto.
Example: Protocols like Compound, Uni, and Sushi allowed Ethereum defi users to earn yield on their assets for the first time. Early users manually added and removed liquidity across various protocols, in a never ending search for the juiciest yield. Then yield aggregators like Yearn arrived, automating the entire process. Yields were maximized, gas was minimized, and users happily paid Yearn a management fee in return. Yearn became a defi powerhouse, with YFI peaking at over $80,000, putting Yearn just shy of 3 billion in market cap.
Currently, metaverse land holders are very limited in what they can do with their land. They can either use it as intended, hold it, or sell it. That’s incredibly lame in my opinion.
What if these holders could take out a loan using their land as collateral? What if holders could use a smart contract to lease out their land to renters? What if holders could tokenize their land and set up a DAO with it? The DAO could decide how the land should be used. For example, a DAO could build a metaverse business on top of the land and return earned profits back to DAO token holders. Or maybe you don’t want a full blown DAO, you just want co-ownership to exist so you can own metaverse land with your friends.
These issues don’t just hurt holders, they hurt outside investors too. By tokenizing land, the metaverse becomes a lot easier to invest in. Tokens function like stock shares, allowing everyday people the opportunity to invest with you. Tokenizing also allows more complex financial products to be built on top. Want to invest in real estate on Decentraland without having to buy an entire piece of land? No problem, there’s an easy solution: just buy some tokenized land instead. Think going all in on Decentraland is too risky? Just invest in an Established Metaverse Land ETF consisting of tokens from four metaverses: Decentraland, Sandbox, CryptoVoxels, and Somnium Space.
These things don’t have to apply to just land either. Let us imagine that there is a MMORPG metaverse that has taken over the world the same way World of Warcraft did close to 20 years ago. Now imagine that you have just been blessed with an exceptionally rare weapon drop. Stat-wise, your weapon is one of the best in the entire game, but because of class restrictions you can’t use it. You can’t trade it for a weapon that you could actually use because there are so few weapons of equal power in existence. You could sell it, but then you wouldn’t be the owner of an ultra rare item anymore. You’d just be a rich dude, and there’s a lot of rich dudes out there. You’d also being missing out if the weapon goes up even higher in price for whatever reason. Well here’s a solution: Imagine being able to lend out your weapon to a top tier PVE guild, and collecting a share of all profits made using your weapon.
These are just a trifling of possibilities that are currently lacking in the metaverse. I am exceedingly confident that the metaverse will continue to generously reward pioneers, and that this trend has only just begun. The budding metaverse economy is far from finished, but it will soon scale and mature products will quickly be assembled on top. Generation-changing money remains unclaimed on the table and lots of work remains to be done to unlock it. Metaverse builders following in the footsteps of Levi’s and Wells Fargo are building as you read this article.
A new world awaits: The Metaverse Gold Rush is upon us.
-ct_zpy
Disclaimer: I was compensated for this article by DOKO, a protocol working to bring DeFi into metaverse real estate.