With all the buzz around the metaverse, cryptocurrencies, NFTs and other digital collectibles have become critical elements of the Web3 space. However, there’s a need for crucial conversations about ownership in the metaverse, especially for digital collectibles and the real value they offer.
At MetaBeat 2022, a major highlight for attendees using the virtual Decentraland platform were the VentureBeat badges placed at random through the entire virtual landscape (the badges could be collected in exchange for a MetaBeat-exclusive NFT, which could then be leveled up through social interaction.)
In a fireside chat with Lewis Ward, research director of gaming and esports at IDC, Alun Evans, cofounder and CEO at Freeverse — the company responsible for the digital collectibles at MetaBeat — said Freeverse aims to reform speculation in the world of digital collectibles.
“Many people have heard of NFTs, and some people have an opinion of them. Many people think they are great, some people are very bullish on them. On the other hand, some people might think they are not so good. I share this idea that NFTs are only based on speculation. People collect things in the real world — they collect credit cards and guitars and stamps and fancy video games. But they are nothing more than collectibles. So, where is the real value in them?”
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He has a point there. Since speculations have waned, NFTs — the mark of digital ownership in the metaverse — have taken a hit. Analytics platform, Nonfungible.com, highlights the drop in the market over the last two quarters. It cited that “a massive 25% drop was observed in terms of USD traded between Q1 and Q2 2022 with a global volume of about $8 billion in Q2 2022.”
Speculation is bad, valuation is good
While some outrightly dismiss the notion of NFTs, Evans sees a similitude in the real world. “When you think about the size of the global economy compared to the size of the collectible economy, the collectible economy is a very small component and our vision of Freeverse asks the question, ‘can we make digital ownership in a way that is more than just collectibles?’ That way, the tokens themselves are valued by more than speculation as to how rare they are, and actually valued by how useful they are to other people.”
According to Evans, what often happens when people buy NFTs is that they own a token, get a private URL — which points to a private server somewhere. But the problem, he said, is that it’s a website and all the content associated with the NFT exists on that private server, which can be hacked, or taken down. “Yes, it can be changed; but also, the company may forget to pay their AWS bill. And so, the content might disappear tomorrow, in which case, if that happens, what is the value in it? It’s literally nothing,” he added.
Based in Barcelona, Spain, Freeverse wants to change the NFT valuation narrative, having developed a “fraud-proof layer-2-based technology,” capable of being deployed on the main blockchain networks — including Ethereum, Polkadot and TRON. Evans noted that Freeverse enables easy implementation of its technology by third-party apps and permits trading in fiat currencies like the U.S. dollar, without resorting to a cryptocurrency exchange.
Increasing the intrinsic value of NFTs
Evans said the tokens that Freeverse issues are non-fungible, but added that those properties can evolve and change based on how the token is used and what the owner actually does with it. As a result, the value that other people are going to pay for that token is dependent on how it’s been used.
“For example, you did have a free token so it is literally worth nothing starting off with, but it can be leveled up according to how it’s used. Therefore, the value that someone’s going to pay for that token is 100% dependent on what the owner has done with it, rather than artificial scarcity.”
A key example of how NFTs can evolve, appreciate and degrade, Evans noted, is seen in a game that Freeverse helped develop for the U.S. market. It ties the physical fitness of players to their training regiment and this affects how much they can be traded for. As the player’s avatar value improves based on training, it can be bought, sold and traded.
“The players are traded for real money — U.S. dollars, euros and pounds sterling — with other users from around the world. And suddenly there is retention, because you are playing the game and enjoying it. You are saying ‘if I don’t come back and train my players every day, I am going to lose money or at least potentially lose money. So you’re adding in the elements where just a little extra gameplay can make players stick around longer,” said Evans.
This evolving asset class can potentially turn things around for companies and businesses that intend to keep engagement constant on their NFT-facing games. It can be a whole game-changer as the metaverse comes of age, too. In each case, with living assets, Evans said Freeverse addresses a key issue of standard NFTs: “the state of every asset at every point in time is certifiable on-chain, not via external links to private servers that can arbitrarily corrupt this agreement.”
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