Metaverses and blue-chip nonfungible tokens (NFTs) are the driving forces behind the dramatic growth in the NFT market. Projects like the Bored Apes, Crypto Punks, Azuki, Clone X and Doodles collections have steadily attracted collectors' interest in the past year. As a result, these NFT projects have helped the NFT market achieve a growth rate of over 20,000% and a sales volume of approximately $17 billion.
For an industry that once occupied a tiny sliver of attention within the crypto/blockchain world, it's clear that NFTs are here to stay despite earlier critiques of their ephemeral nature. However, given the recent lull in the NFT markets, investors and collectors alike are now seeking new frontiers where they can capitalize on the innovative application of NFT technology in different use cases.
On the other hand, innovators have come up with creative new ways to apply NFTs in various industries. These new applications have increased the utility of NFTs, and I expect they will drive the next phase of NFT adoption.
The NFT marketplace
One particular sub-niche attracting increasing interest in the NFT world is Metaverse NFTs. A report published by NonFungible.com, which was created in conjunction with L'Atelier BNP Paribas, indicates that Metaverse NFTs make up approximately 3% of the global NFT market value, a staggering $513 million.
As more companies build their brands within the Metaverse, the value of Metaverse NFTs will increase exponentially. Here are a few areas that will benefit from increased Metaverse NFT adoption.
Virtual real estate: Margaret Mitchell once said, "Land is the only thing in the world that amounts to anything, for 'Tis the only thing in this world that lasts, 'Tis the only thing worth working for, worth fighting for — worth dying for." Thanks to the blockchain, digital land can evoke the same emotion and utility as physical land.
For example, PARSIQ, a blockchain company, has created a platform where landowners in the Metaverse can earn rental income from their digital assets. The protocol mimics the behavior of physical land by ensuring both the landowner and the renter's obligations are negotiated, governed, and enforced by a series of smart contracts.
Virtual events: A few months ago, Snoop Dogg, the famous West Coast rapper, announced he would host an exclusive concert in The Sandbox's metaverse. The event utilized NFTs to grant concertgoers access to premium experiences within and outside the metaverse.
Subsequently, several brands began to explore how they could leverage advanced technologies to reimagine the boundaries of virtual worlds across multiple platforms.
Companies believe that by creating events that incorporate music, art and fashion within a corporate or conference environment, they can offer their fans unique experiences that will keep them in their ecosystem longer and extend the lifetime value of their customers.
Financial services: According to Trading Economics, the annual inflation rate in the United States rose to 8.5% in March 2022, representing the highest rate of inflation since 1981.
With investors feeling the squeeze from all sides, there's an increasing appetite for assets that can generate returns above the inflation rate. Protocols that offer decentralized finance services powered by NFTs within the Metaverse offer an avenue for investors to earn passive returns and other incentives.
Staking and yield farming are already popular methods of earning passive yields in the DeFi space, but they are relatively new within the metaverse. However, as they gain widespread adoption, they offer tremendous opportunities for early supporters of metaverse projects to make life-changing incomes.
It's an exciting time to explore these emerging use cases while the market is in a lull. Once the market exuberance returns, the early adopter will have extracted the alpha and most likely move on to the next untapped frontier.
