There's no shortage of hot trends that have the potential to deliver double-digit growth throughout the decade. Cybersecurity, cloud computing, cannabis, and telehealth, are just some examples of sustainably fast-growing trends.
However, there's arguably nothing hotter right now than the discussion surrounding the future of the metaverse.
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All eyes are on the "$30 trillion" metaverse
The metaverse is effectively the next iteration of the internet. It's a 3D virtual world that'll allow users to interact with their environments, including other users.
Aside from providing entertainment, the metaverse is expected to create its own mammoth ecosystem. According to Matthew Ball, CEO of venture-capital company Epyllion, the metaverse is a "$10 [trillion] to $30 trillion opportunity that will manifest in a decade or decade and a half."
An up-to $30 trillion dangling carrot is more than enough to get investors excited about the metaverse. However, the big question is: What companies, organizations, or people will be behind shaping the metaverse?
On one hand, Meta Platforms (META -1.12%), the company formerly known as Facebook, spent $10 billion on metaverse-related investments last year and plans to spend successively more in subsequent years. Meta is the company behind the popular Oculus virtual-reality devices. Given the company's deep pockets and impressive cash flow, it'll have a real shot at becoming a key player in the metaverse.
On the other hand, investors have taken note of a handful of cryptocurrencies that are busy creating a decentralized metaverse. The idea of putting the future of the metaverse in the hands of users has sent investors piling into the following three cryptocurrencies.
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The Sandbox
Just how insatiable has the appetite been for metaverse-focused digital currencies? The Sandbox (SAND -0.83%) is one of the top-performing cryptocurrencies since the beginning of 2021, with a gain approaching 13,000%, as of Jan. 14.
What makes The Sandbox and other decentralized blockchain-based gaming platforms so intriguing is their complete 180-degree turn from traditional gaming. Whereas game developers on consoles or PC-based gaming retain ownership of all creations, The Sandbox allows users to own their creations as non-fungible tokens (NFTs).
An NFT provides irrefutable proof of ownership for a digital asset stored on blockchain. This makes blockchain-based gaming a powerful play-to-earn tool, which will undeniably draw in users.
The Sandbox is a play-to-earn game built on the Ethereum (ETH -1.85%) blockchain. SAND, the primary token of the game, can be used to buy digital plots of land, as well as purchase in-game goods or customize an avatar. SAND tokens can also be staked to earn passive income, which might be additional SAND tokens or other types of tokens required for asset creation (assets in the game include things like people, animals, and tools).
The Sandbox allows users a variety of ways to monetize their creations, including renting out their digital assets, creating games on their digital lands, earning rewards by playing games on other users' lands, or even selling assets in a digital marketplace.
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Decentraland
Another metaverse cryptocurrency that investors simply can't get enough of is Decentraland (MANA -0.47%). Investors holding the primary token (MANA) have "only" been rewarded with gains of close to 3,500% since the beginning of 2021.
Not to sound like a broken record, but Decentraland is built atop the Ethereum blockchain, with users interacting in a virtual world based on digital-land ownership. Although MANA is the primary token of the platform, LAND is the NFT that defines ownership of digital real estate on Decentraland.
The game is constantly evolving to include new user interactions and animations that encourage users to build out their land, as well as visit other users throughout the game. Similar to The Sandbox, Decentraland users have the ability to monetize their LAND tokens, which are priced in MANA, by selling them at a marketplace or exchanging them via in-game interaction.
The allure of this model is that Decentraland's software updates are executed through smart contracts (i.e., protocols that verify, facilitate, and enforce the negotiation of a contract). Therefore, these updates allow MANA holders to vote on any potential policy changes. In short, users really do have a say as to the future direction of the project.
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Axie Infinity
A third metaverse cryptocurrency investors simply can't stop buying is Axie Infinity (AXS). Among the three digital currencies listed here, it's been the top performer since the beginning of 2021, with a gain approaching 14,000%.
To complete the trifecta, Axie Infinity is also built on the Ethereum blockchain. However, its gameplay offers a different experience than The Sandbox and Decentraland. This play-to-earn game involves users collecting, raising, breeding, upgrading, and fighting monsters known as Axies. A user needs three Axies before they can go to battle, with the winner receiving experience points that can be used to upgrade various aspects of their Axies.
Just as digital land is stored as an NFT on The Sandbox and Decentraland, each Axie is a unique NFT that users own. As noted, Axies can be used in gameplay or monetized by selling them in a marketplace.
In terms of decentralized application (dApp) protocol revenue, Axie Infinity has been running circles around its peers. According to data provided by TokenTerminal.com, Axie Infinity has brought in $1.18 billion in dApp protocol revenue over the trailing-180 days (through Jan. 14). That's second behind only Ethereum, which generated $5.71 billion in dApp protocol revenue over the same period.
Given that investors have a strong tendency to overestimate the adoption of new technology, it's quite possible these metaverse cryptocurrencies fizzle a bit after such stellar gains. Then again, there's no denying the potential of the metaverse when pundits are dangling a $30 trillion carrot.
