As the broader cryptocurrency market shows signs of recovery, it is not the same with metaverse projects and digital assets, Bloomberg reported. The launch of spot Bitcoin exchange-traded funds and endorsements from figures like Donald Trump have helped cryptocurrencies bounce back after the FTX collapse. However, the metaverse sector, once hyped as the next big thing in tech, is losing out all the action.
The Fading Promise of Web3?
Andrew Kiguel, CEO of a company once known as Tokens.com, reflects on the fading promise of web3. “We believed in the promise of web3,” Kiguel said, “but I started looking around and realizing that nobody was making money in this space, and I still would challenge anybody to show me a web3 company that’s making any money.”
When Tokens.com invested $2.5 million in a piece of virtual land in Decentraland, a metaverse platform that was regarded as a hub for innovation in 2021, the story grabbed national attention. The business compared this investment to purchasing land in a quickly expanding industry to develop and lease its holdings.
But as the cryptocurrency market as a whole fell in 2022, bringing Decentraland down with it, the optimism soon faded. According to Bloomberg, the network has lost almost 90% of its user base, and real estate prices have fallen by almost 95%. The value of Mana, the cryptocurrency of Decentraland, has decreased from over $5 in late 2021 to less than 30 cents.
Major Metaverse Projects tumbles down
Even big businesses have had trouble building their centralised metaverse platforms. The Reality Labs section of Meta Platforms Inc., which is in charge of the company’s metaverse goals, has disclosed an astounding $4.5 billion quarterly deficit. This emphasises how difficult it is for even the biggest IT companies, like Mark Zuckerberg, to make money in the digital age.
Tokens.com suffered significant losses. A strategy change was brought about by the virtual real estate portfolio of the corporation losing 80% of its value. After purchasing Simulacra, Tokens.com gave up on the metaverse, changed its name to Realbotix, and is now concentrating on creating AI-powered humanoid robots.
The problems facing the metaverse extend beyond Decentraland and Tokens.com. Project Airsim, an AI project that was a component of Microsoft’s Industrial Metaverse plan, was shut down lately. Furthermore, Microsoft has announced that it will be terminating the Azure AI-based service by December 15, 2023, and is also laying off project personnel.
These closures highlight the shifting priorities within tech giants like Microsoft, where attention has shifted towards partnerships like the one with OpenAI. The industry’s general unpredictability and difficulties in trying to establish itself in the post-crypto winter environment are reflected in the industry’s departure from metaverse projects.