Looking back, it feels like 2021 was something of a watershed year for the digital asset sector. Within the last year, we’ve seen a new all-time high for the markets, the long-awaited institutional acceptance of crypto, continuing expansion of the DeFi segment, and NFTs soaring into the mainstream.
However, even in the first weeks of 2022, it’s apparent that 2021 was simply laying the ground for what’s to come. This year, Web3 and the metaverse seem to be eating the world. Web3 refers to the growing ecosystem of blockchain-based applications and services whereas metaverse is an umbrella term encompassing 3D virtual worlds developed by both centralized firms and blockchain developers.
Venture investors are continuing to pour money into Web3 and metaverse initiatives. On February 8, this investment category pulled in a staggering $650 million in two rounds in a single day. Layer 2 platform Polygon raised $450 million from a token treasury sale while Web3 development company Alchemy secured $200 million in a Series C.
Meanwhile, tech recruiters are reporting that high-flying executives and developers are fleeing Silicon Valley firms like Facebook, Amazon, and Lyft to join crypto giants including Circle, Gemini, and NFT marketplace Opensea.
So how is all this investment and activity likely to advance the development of Web3 and the virtual metaverse? Based on current activity, here are three key trends that seem set to play out over the coming months and years.
NFTs Penetrate Social Media
In January, Twitter became the first social media network to integrate NFT support. Users of the premium Twitter Blue service on iOS can connect their crypto wallet and upload their NFTs to their profile. While the launch is somewhat limited right now, it seems only a matter of time before Twitter makes it available to all users on multiple operating systems.
While it may seem like a fairly superficial use case, the trend towards using NFTs as profile pictures is actually part of a broader shift, where people are increasingly using NFTs as a way of building their online persona and identity. For example, NFTs are also being used to generate digital fashion and accessories for metaverse avatars.
As these developments progress, it also seems likely that there will be an increased demand for secondary marketplaces where people trade their non-fungible digital assets when they want to upgrade or release some cash.
P2P Community Building
NFTs are set to become a powerful tool for Web3 community building, with the earliest adopters showcasing the potential. The Bored Ape Yacht Club is perhaps the best example. While many outsiders scoff at the idea of people paying over $3 million for a digital cartoon ape, this perspective fails to grasp that people aren’t just purchasing an image. BAYC is a private members club that’s only open to those who can afford the entry fee. Thanks to the high cost of entry, it’s become one of the most exclusive and thus sought-after clubs in the world.
The savviest influencers are already wising up to the potential of using NFTs to build their own communities of superfans. Last year, Chinese crypto influencer Irene Zhao came up with the idea of social collectibles and launched a platform allowing content creators to monetize their content.
However, in January, acting on a suggestion from a fan, Zhao launched her own collection of NFTs – a sticker pack featuring images of Zhao to use on the Telegram messaging app in her community group. She dubbed the initiative IreneDAO, a nod to decentralized autonomous organizations, stating that she wanted to use the NFTs to help “align incentives between her and her followers.”
As 2022 progresses, we can expect to see more brands, celebrities, and influencers leverage NFTs to identify their most loyal supporters and create exclusive benefits and perks for those willing to hand over the cash to participate.
Metaverse Gaming Spawns a New Creator Economy
Andreessen Horowitz is known for being one of the shrewdest investment firms in the world, so when it predicts a trend, it’s worth paying attention. Last year, it published a blog post declaring that the creator economy is coming for gaming. It pointed to the massive gap between supply and demand in the gaming sector, with a small handful of developers and game studios releasing content for a vast, global gaming market worth over $500 billion.
The idea is to outsource part of the game building to a community of developers who receive rewards for their efforts. It’s an approach that’s spawned the massively successful Roblox game, which has over 43 million players worldwide.
Metaverse games like The Sandbox, Decentraland, and many of their up-and-coming rivals are already generating opportunities for game developers and other creators to make their mark. The projects themselves provide the infrastructure and basic tools needed to establish the metaverse environment itself. However, individual content creators will be the ones to fill it with material, such as clothing, weapons, accessories, or other in-game items that attract users.
In the decentralized Web3 world, content creators are rewarded directly by consumers, making it easy for them to see which types of content generate the most returns so they can create more of it to reach demand.
Perhaps the most intriguing element of the transition to Web3 and the metaverse is that many of these trends will converge. The social collectibles of the kind issued by IreneDAO could soon be in-game items in metaverse games or something you want to display on your social profiles. With no physical boundaries, the only limit is the imagination.