Down over 90% in 2022, can these 2 metaverse cryptos rebound in 2023? | The Motley Fool

It was supposed to be the year of the metaverse, right? Remember the “can’t miss” $1 trillion market opportunity that brands, celebrities and tech companies seized on in 2021, hoping for a big payout in 2022? Instead, the two most prominent metaverse cryptos — The sandbox (SAND 0.01%) and Decentralized (MANA 0.28%) — are both down more than 90% for the year, and many investors have soured on the concept of the metaverse.

If these two metaverse cryptos hope to bounce back next year, they need to do something different to persuade more people to spend time in virtual worlds. Until they do, the crypto tokens powering these virtual worlds are unlikely to recover any time soon.

Metaverse or multiverse?

A good place to start is simply to figure out what the metaverse is supposed to be. The original concept of metaverse is a shared virtual world where people hang out, shop, learn, work and spend time together. Since this was a trillion dollar market opportunity, becoming a dominant player in the metaverse meant vast untapped wealth. That’s why hopes were originally so high for Decentraland and The Sandbox two years ago – those seemed like the obvious winners.

But the reality turned out to be quite different. Instead, a more accurate description of the metaverse might be the “multiverse.” It is a parallel universe of competing metaverse properties, in which any crypto can create their own metaverse world. Take for example, ApeCoin (MONKEY 0.71%)which now feeds the Bored Ape Yacht ClubThe metaverse world of Otherside is called Otherside. same room same shiba inus is getting in on the act, with its own virtual world called SHIB: The Metaverse. As a result, it is becoming increasingly difficult for Decentraland or The Sandbox to win over crypto metaverse investors.

Additionally, just about any video game platform can claim to be part of the Metaverse, blurring the line between gaming and the Metaverse. It’s very easy to see if you check out the nominations for MTV’s “Best Metaverse Performance” category, which debuted a few months ago. The nominations are a confusing mix of different video game platforms and tech companies, and neither Decentraland nor The Sandbox were part of the mix.

For these two cryptos to take off in 2023, they must demonstrate that they offer a unique value proposition to users. At the very least, they need to demonstrate that spending hours in their version of the metaverse is a better use of time than watching the latest netflix Pin up.

Utility for metaverse tokens

MANA, the token of Decentraland, and SAND, the token of The Sandbox, are the official currencies of these metaverse worlds. If you want to buy virtual land from Decentraland, for example, you have to pay for it in MANA, not US dollars. You can also use these currencies to pay for things like clothes for your avatars.

However, these tokens have almost no value outside of their respective metaverse worlds. It’s not like you can pay your monthly mortgage with metaverse tokens that you use to pay for virtual land. Even non-fungible tokenized (NFT) digital assets created in these worlds have very limited value outside of the metaverse.

From my perspective, these tokens would become much more valuable if they had more real-world utility. This is a strategy that ApeCoin has successfully executed. There is now a growing ecosystem of Bored Ape products and services where ApeCoin can be used for payment. Additionally, there are new investment opportunities for ApeCoin holders, including staking NFT for passive income.

Should I buy metaverse cryptos?

Ultimately, the Metaverse may one day deliver on its $1 trillion promise. But not in 2023. If you look at the usage figures, it becomes clear. At its peak in early 2022, Decentraland claimed to have 50,000 daily visitors and the upside potential seemed limitless. Now, Decentraland says, usage is down 80%. There are only 10,000 “core” users in this metaverse world. Despite all the hype this metaverse world has received, you can expect that number to be 10 times, or even 100 times higher.

So for now, I’m skeptical that either of these two metaverse cryptos can bounce back in 2023. The novelty effect of the metaverse has worn off, and now we need to see the numbers and the metrics to back it all up.