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How do I start a business in the Metaverse?
17/01/2022
The Metaverse, which offers its users the chance to access a new and untapped world, purchase real estate and create, buy and sell NFTs verified by the blockchain, has been rapidly growing in popularity over the last several years. With each passing day we are seeing more and more well known companies establishing a presence with the Metaverse. For example, Samsung released the largest brand led immersive experience on Decentraland. Louis Vuitton, Adidas and other highly recognisable brands have also taken the plunge and established a presence in the Metaverse.
The Metaverse is constantly evolving and we are currently seeing new cities appearing in which you can buy almost anything. For example, inhabitants of these cities can purchase land upon which you can build a property. This property can then be filled with pieces of art (i.e. NFTs the owner has purchased), and wear an outfit that has been supplied by a real world designer or shop. Concerts are also an attraction in the metaverse. To attend a concert, you have to purchase a ticket, which comes in the form of an NFT.
The Metaverse allows people to interact, make real transactions, own assets, build property and companies, create intellectual property (IP), as well as so much more. This flexibility and variety has become an attractive proposition for businesses looking to take the next step in their development.
What are some of the most popular Metaverses?
Metaverses are essentially virtual worlds made up of plots of digital ‘land’ This land can be bought or rented by users, who can then build a virtual experience on their plot. Virtual experiences can be anything, ranging from an art gallery to a business office.
The Metaverse is a place where players can own land, build items and businesses, and then monetize their assets. A Metaverse operates on the blockchain and makes use of their own utility token, which can be used to purchase items within the Metaverse. Users can create and build digital assets, in the form of Non-Fungible Tokens (NFTs). These NFTs can then be uploaded to the Metaverses marketplace and sold, allowing other users to purchase and use them for their own needs.
One important aspect to consider is that the utility token for the most popular Metaverses can be bought and traded on some of the leading exchanges such as Binance and Coinbase.
The current most popular Metaverses include the following:
The Sandbox:
The Sandbox operates on the Ethereum blockchain and makes use of their own utility token, SAND. Users can monetize their time on the platform, by selling their NFTs on the marketplace, users keep 95% of the SAND made from the sale. There is a finite supply of 3,000,000,000 SAND.
Decentraland:
Decentraland allows its users to have full ownership of their land and any digital assets they create or own. Much like The Sandbox, Decentraland operates on the Ethereum blockchain and their utility token is called MANA.
Decentraland employs a system called the Decentralized Autonomous Organization (DAO). The DAO owns the most important smart contracts and assets within Decentraland e.g. LAND Contracts, the Estates Contract, Wearables, Content Servers and the Marketplace. The DAO is controlled by the Decentraland users who create and control the policies in force within Decentraland. The DAO will propose and vote on any policy updates, future LAND auctions and NFT contracts which are to be allowed within Decentraland.
My Neighbor Alice:
My Neighbor Alice is slightly different to The Sandbox and Decentraland as it offers a narrative-driven story. However, players are able to purchase land and create NFTs.
In addition to being able to purchase NFTs, My Neighbour Alice has a built-in lending and borrowing economy system. This system allows layers to lend or borrow NFTs in exchange for a fee. This is backed up through the use of Smart Contracts.
My Neighbour Alice has their own utility token called ALICE which runs on Ethereum.
What are the main characteristics of the Metaverse?
The Metaverse is becoming increasingly popular with businesses and general users alike, but what is so intriguing about the Metaverse? The Metaverse offers the following unique characteristics:
Persistence: The Metaverse will exist regardless of time and place. This means the Metaverse isn’t affected by real life issues such as global pandemics or political instability. This has the effect of creating a stable environment for users and businesses alike.
Synchronicity: Metaverse participants are able to engage and interact with each other within the Metaverse in real-time. Users can react to their virtual environment and one another as they would in the physical world. There have been examples of people getting married, holding their office parties and even performing concerts within the Metaverse.
Economy: Metaverse users, including business and enterprises, possess the ability to exchange goods and services in exchange for a recognised currency (e.g MANA in Decentraland or SAND in the Sandbox). These exchanges rely on constantly evolving technologies such as distributed ledger technology, smart contracts.
Interoperability: A Metaverse user will be able to use their virtual possessions across several Metaverse experiences. For example, a cross-platform user experience may allow a car unlocked in a racing game to be used in a different adventure game, or a piece of apparel purchased on the Metaverse to be “worn” and utilized in games, concerts, and any other virtual environments available.
Opening a business in the Metaverse
With the rising popularity of the Metaverse, companies are now looking to explore this sector and establish a presence there. Over the past few months we have seen consulting firms open an office in the Metaverse, major brands such as Louis Vuiton and Adidas have also opened stores for purchasing their goods as well.
How can I open a business in the Metaverse?
As mentioned above, The Sandbox, Decentraland and My Neighbour Alice are 3 of the largest and more developed Metaverses. However, there are a plethora of other options for your company to consider.
Companies must remember that each Metaverse has its own access, membership, monetization rights, and formats of creative expression. As a result, the business practices and technical specifications greatly vary between each Metaverse. This means that a business established in Decentraland will not exist or be present in The Sandbox for example.
There are however examples of different Metaverses collaborating together. For example, My Neighbor Alice, underwent a unique partnership with The Sandbox. As part of this partnership, avatars from My Neighbor Alice were fully compatible within The Sandbox.
Which Metaverse should I start my business in?
Given that the Metaverses user base is constantly growing, there is limitless business potential. Companies can promote their products and services through methods not possible in the real world.
When looking to start a business in the Metaverse, it is important to consider the following issues.
Should I rent or purchase land in the Metaverse?
When looking to launch a company in the Metaverse, much like real life location is important. Each Metaverse is made up of a map containing a variety of different areas. Some areas and plots of land may be more popular than others, and have a lot of visitors and traffic. Businesses will of course want to set up their entity in an area which is popular with other users. However, purchasing land in these areas will be very expensive.
If purchasing land in your chosen Metaverse is not an option, there are opportunities to rent a plot of land instead. Renting land in the Metaverse allows the user to have access to land and provides the opportunity for them to build their asset on that land. While each Metaverse has different rules, normally when someone who rents a plot of land on the Metaverse owns 100% of the asset that is built on top of rented land. The person who owns and is renting out the land has no ownership over the experience built upon it. When a plot of land is rented, it cannot be sold on or rented to someone else until the smart contract governing the lease is terminated. Upon termination of the contract the former assets will be withdrawn from the land.
How do I build my business in the Metaverse?
Once you have decided which Metaverse you would like to open your business in and acquired your desired land, it is time to decide on how your business looks in the Metaverse. The Metaverse allows its users to design and build anything they like. Samsung recently released a virtual experience in Decentraland. They modelled their land on the real physical Samsung 837 flagship location in New York City.
Users can either build their own experience or there are numerous agencies who specialise designing and building your Metaverse location.
In conclusion
While the Metaverse will continue to grow and unlock many new and exciting opportunities for businesses, it does come with both pros and cons. The Metaverse is still in a very early stage of its development and is currently without a fully developed legal system in place, meaning there are bound to be issues and teething pain. In order to maximise your businesses chances of success in the Metaverse, why not see how the Belaws team of experts can help you.
If you are interested in learning more about how your business could get involved with the metaverse, why not book a Consultation with one of our Blockchain experts here.
Please note that this article is for information purposes only and does not constitute legal advice.
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