The Flickering Future of Decentralized Virtual Reality: Mass Adoption Remains Elusive Despite Apple’s Entrance
Although the metaverse became very popular in 2021, however, the “aura” that existed was almost entirely dispersed by the end of 2022, causing the top projects in the space, Decentraland (MANA) and The Sandbox (SAND), to lose 95% of their capitalization.
The most important reason for the huge drop was the fact that they failed to increase their active users.
However, the metaverse is taken for granted that it will come back into the limelight at some point in the future. For example, as announced by Apple, it will release its own virtual reality equipment in the spring of 2023, and this development alone has caused a positive impact on Decentraland’s MANA and The Sandbox’s SAND, which saw double-digit price increases.
And yet, despite evidence of positive buying volume supporting the rise in both tokens, the weakness seen in both as far as their fundamentals are concerned casts doubt on whether this rise in their prices can continue.
Taking things from the beginning, Facebook’s intention to enter the Metaverse industry dynamically has been one of the most important catalysts for metaverse tokens. The idea that led to the development of Decentraland The Sandbox was that a decentralized metaverse would “flourish” more than the centralized version of the Meta.
However, metaverse technology has yet to become popular with the masses of the world. For example, in 2022, the percentage of VR users among Steam players was less than 2%.
In fact, since then, usage has yet to increase. This fact is undoubtedly discouraging about the potential for mass adoption of the technology, as the gaming sector was the first to embrace it and everyone expected that it would be the one to take it off the ground and keep it up.
Most experts say that VR technology suffers from a fundamental problem, as VR headsets are unsuitable for long hours of continuous use. Studies have shown that prolonged headset use can cause mental health problems.
However, the recent news about Apple’s intentions for VR has caused a rise in metaverse tokens, however, this rise is not a result of the success of these projects (Decentraland, The Sandbox).
We should note that Samsung and Oculus already have VR devices on the market, which raises the question of how much of a positive impact on mass adoption of VR is likely to be caused by the fact that Apple will release theirs as well.
Arguably, the euphoria for the Metaverse peaked when Facebook renamed itself Meta. However, the usage statistics of the two most popular metaverse platforms, The Sandbox, and Decentraland, remained unimpressive throughout their token price increases.
To illustrate, less than 5,000 unique active wallets (UAW) interacted with smart tokens at the price peak on both platforms.
Since then, usage has declined even further, with less than 1,000 UAWs per day, which is a very negative performance.
Furthermore, while token prices have risen significantly, sales of NFTs for virtual land in The Sandbox have not improved, confirming once again that activity across the platform remains lackluster.
Decentraland is on the list of creditors of Genesis, which declared bankruptcy last week.
According to court filings, the lending company that declared bankruptcy owes Decentraland $55 million. However, according to Decentraland’s Discord, Genesis owes it only $7.8 million.
A spokesperson for Decentraland’s community said: “Our finances remain healthy and the amount of credit does not represent a significant portion of our fund.”
The issue with Genesis has been known for a long time. Therefore, it is likely that the organization has absorbed the shocks from the issue. However, it will likely affect the growth rate of the Decentraland ecosystem, which is small for now.
On the other hand, SAND suffers from the risk of losing a significant portion of its value due to monthly token unlocks, a process that will last until the end of Q3 2024.
Despite the difficulties currently facing the Metaverse industry, as long as there is a possibility that the technology will become part of our everyday lives in the future, the market will reward those who are pioneers in the space.
However, this philosophy is more conducive to long-term investments in the space rather than short-term price rallies.
Therefore, Nansen’s data shows that inflows to the exchanges for MANA and SAND were $8.4 million and $12.6 million, respectively. This data shows that more investors moved to sell their tokens rather than buy.
MANA’s recent price rise was supported by a healthy trading volume, according to data from analytics firm Santiment. However, MANA will need to “break” the resistance and support area of $0.735 to continue its uptrend.
Something similar applies to SAND, whose resistance is around $0.93. If buyers “break” this level, then the rally is expected to continue.
Read Also: What Is The Metaverse — Everything You Need To Know
