Tue. Dec 6th, 2022

Somnium Space CEO Artur Sychov’s webcam appeared to show a black lizard-like creature standing upright and emitting white and green light patterns across his face and chest when he turned it on for our interview. In my living room, bored and human, I was on the other end of the Zoom call and fascinated by the animated world I was peering into. When I called someone on a rotary phone, it was like FaceTiming them.

He then conducted the interview in Somnium, a hybrid video game and social space with its own built-in economy that aspires to be one of the first and most cutting-edge metaverse platforms that so many tech firms now strive to build. A few of his NFTs were shown off as well as a small video game made by one of the platform’s users. An atmospheric first-person horror game, it’s nestled inside Somnium as an original non-standard template. He told me the creator could sell their game to another user and let them monetize it as they see fit, which is exactly what I wanted to hear.

Somnium is unique in that it supports virtual reality, unlike most of the current in-development products. Using a headset and hand-tracking controllers, Sychov is able to move around the virtual landscape as if it were the real world, allowing him to experience the virtual world as if it were real. There are a variety of NFTs available in Somnium, including avatars, cars, and art projects, as well as interactive exhibits and games, like Sychov showed me. Sychov, on the other hand, has expressed concern about the virtual real estate aspect of the business.

According to Sychov, “I’m not a big fan of all the hype around prices or how they’re being reported right now” when it comes to virtual real estate speculation. Just fueling the FOMO and throwing more people into this dumpster fire of buying NFTs without realising why they’re doing it or that they can’t even really use them anywhere,” he writes. While virtual land and NFTs are important aspects of Somnium’s business model, Sychov explained to me that Somnium goes far beyond that. The company’s goal is to create the next-generation of a game like Fortnite or Roblox, assuming those two don’t succeed first.

Cryptocurrency and blockchain platforms are poised to revolutionise gaming and the internet for the benefit of everyone, and Sychov represents that optimistic side of the metaverse. It’s all about the money on the other side. Cryptocurrency speculation is at an all-time high right now, and nowhere is that truer than in virtual real estate.

‘I’ve been playing Ultima Online since 1999,’ Sychov said, referring to the classic massively multiplayer online game that helped pioneer concepts like expressive virtual avatars and in-game item and land ownership. A persistent virtual reality platform where people can create content, build things, and socialise together was the vision I had when I began working on Somnium.” A 7.5 percent cut of all aftermarket NFT sales on OpenSea is taken by Somnium, which Sychov claims helps the company and reduces speculation.

Somnium Space founder and CEO Artur Sychov is interviewed by Nick Statt

The gold rush of the metaverse
Property ownership in video games is nothing new; as Sychov pointed out, it’s been around since Ultima Online and Second Life. The idea of virtual economies began to take shape over time, often in obscure corners of the internet, alongside aftermarkets for other virtual video game goods like Team Fortress hats and World of Warcraft gold, with the vast majority of game developers content to simply look the other way. Entropia Universe user Club Neverdie sold a virtual nightclub on an asteroid for around $635,000 in 2010, quietly hinting at a potentially disruptive future for virtual real estate.

Only with the recent acceleration of the modern crypto movement, with the popularisation of NFTs and more recently the hype around the metaverse, would the concept of investing in virtual land go from being incomprehensible to the next big gaming gold rush. That said, Somnium is one of a growing number of metaverse platforms that have recently made headlines due to the staggering amounts of money they have been raking in. Another “Big Four” in the metaverse real estate market is formed by SoftBank-funded The Sandbox, Decentraland, and Cryptovoxels.

Many companies see this as the new American frontier of the internet, ripe for the taking if you buy the right land at the right time for the right price, and they are positioning themselves to take advantage of this opportunity. Real estate on metaverse platforms sold for $500 million in 2021, according to CNBC, and prices have risen by up to 500 percent in the last few months.

Some of these companies, such as Republic Realm, which just received $60 million in funding led by Andreessen Horowitz, have spent millions on artificially scarce virtual land parcels, as has Tokens.com. Like real-world developers, these companies plan to build luxury virtual condos for the tech-savvy and ultrarich, as well as commercial spaces for brand activations, shopping malls, and entertainment venues, all within competing metaverse platforms that could be years or decades away from mainstream adoption. Decentraland, Somnium, and others limit the supply of land, even though it’s made of code.

“Imagine if you came to New York when it was farmland, and you had the option to get a block of SoHo,” Michael Gord, a co-founder of the virtual real estate firm The Metaverse Group, told the New York Times last year. As far as I’m aware, there isn’t a block of SoHo real estate for sale right now. In the metaverse, the same thing will happen.” At Tokens.com subsidiary, Gord believes Decentraland could become “the most populated city on Earth” and perhaps the best-valued real estate in the world, according to an interview with Motherboard last month.

SuperWorld and Upland are two other startups using augmented reality to sell real-world addresses and landmarks as virtual parcels that can be adorned with ads, art or anything else you might be capable of viewing through a phone screen or future AR glasses. SuperWorld and Upland My colleague Janko Roettgers reported earlier this month that it’s a kind of cyberpunk-themed twist on Pokémon Go with a dash of Monopoly, and the legal implications are decidedly up in the air.

“Brands re-evaluating their physical footprint may find a more appealing (and less expensive) alternative in emerging metaverses like Decentraland and The Sandbox. In Newzoo’s blockchain gaming trends report last month, analyst Mihai Vicol wrote, “These virtual locations can act as venues for events or highly realistic virtual shopping experiences for digital or real-world goods.” It is possible for a single metaverse location to reach a larger percentage of customers than most physical locations.

Combating rumours and conjecture

They are on edge, not only because the public image of the market they operate in is being tarnished but because it could turn away the everyday players these platforms are trying to attract. Additionally, Mythical Games, another Andreessen Horowitz-backed company, runs its own Blockchain-based Game, Blankos Block Party, which lets players own, buy and sell NFTs as well as develop technology and tools for other companies to do the same.. For the time being, the company is staying away from virtual real estate and cryptocurrencies as well.

There are no virtualized tokens in our system.” With a stable currency, it’s already difficult to maintain the balance of a game. A lot of game studios entering the space are doing it wrong and could face regulatory issues this year, Mythical CEO John Linden said. A “get-rich-quick” scheme isn’t going to feel good or authentic to you. “However, when you have both authenticity and value creation, it’s an incredible experience.”

Axie Infinity and other popular blockchain games like Somnium don’t have any upfront costs. There are a lot of competing platforms that are becoming speculative hot spots, and he fears that the current gaming and social media users the metaverse is supposed to be built for may be crowded out by them.

“We live in a free and open world. Visitors to our facility are not charged a fee. You can attend any event, visit any museum, and participate in any other activity. We do not want to be constrained in any way, nor do we want to charge you for anything,” he stated. If you want to start building, owning a space, or minting avatars, you have to pay a small fee in Somnium Cubes.” As a crypto token built on Ethereum, Cubes serve as the game’s in-game currency.

It could get even more exclusive with virtual land. Decentraland plot purchased by Metaverse Group for $2.4 million last November will be used as part of the company’s growing digital fashion business. While Republic Realm paid more than twice as much for land in The Sandbox, the company has already opened Metajuku, a shopping district in Decentraland inspired by Tokyo’s famed Shibuya district, and operates an archipelago-like gated community with 100 private virtual villas on islands in The Sandbox. In the real world, each villa can be purchased for upwards of tens of thousands of US dollars.

It all raises the question: Who is this for, and why is it so important?

Companies investing in virtual real estate appear to be at odds with the technology and infrastructure providers themselves.

If the only other people in Decentraland don’t play the game and instead check the value of their NFT villa on OpenSea to see if they can sell it for a profit, how valuable is an Adidas-themed virtual shoe shop in Metajuku? These platforms are currently only accessible through web browsers, which limits their usefulness and appeal. Wired reported in December that Decentraland, which opened to the public in February of 2020, is “largely empty,” while the graphics and gameplay look and feel like a decade-old product.

To Republic Realm’s credit, it doesn’t appear to be concerned about the situation. Last month, CEO Janine Yorio told Motherboard that “there are plenty of people who also think bitcoin is a scam.” Crypto investors, meanwhile, are “driving around in Lamborghinis and living the high life.”

“The metaverse is inevitable and it’s just a matter of having the right pieces in place when it eventually takes shape,” she said. When it comes to the exact time of its arrival, we have no idea. According to Yorio, “we have no idea who will come out on top. It is, however, a given that this is the next step in the internet’s evolution.

Sychov, on the other hand, is a little more pessimistic about where all this virtual land might lead if the right products aren’t built on top of it. Today, there are many so-called “metaverses” that offer real estate or products for which we do not yet have a working product. “Somnium is more than just a virtual land,” he asserted. There is only a small portion of virtual land. In the short term it will remain relevant, but I don’t expect to see the hype because virtual land costs something only if it’s used by people.”

By Adam

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