And Does That Matter?
Cryptovoxels is the Manhattan of the nascent NFT art metaverse or at least a burgeoning SoHo. If you’re not familiar with Cryptovoxels my blog post here provides a tour of sixteen really cool galleries among the approximately 110 in this metaverse. Maybe comparing Cryptovoxels to SoHo isn’t really a good comparison at all if one is imagining the “artist’s Disneyland” Manhattan SoHo of 2021 but maybe more of the SoHo of the late ’60’s when Donald Judd moved to Spring Street before it was known as SoHo. Once I saw the artist Alotta Money on YouTube giving a tour to Josie on her Behind the Art Series I thought now that’s the place to be to discover cool new cryptoart and cryptoartists, a cool place to hang out with others interested in NFT art, and a cool place to just wander from gallery to gallery to look at the art and appreciate this moment in art history. It’s the art that caused my virtual world attention to gravitate heavily to Cryptovoxels.
101 Spring Street, Manhattan Image: NY Landmarks Preservation Commission
Let me back up one second before proceeding with Cryptovoxels. I actually came to NFTs through the door of the Upland blockchain game because I was trying to understand the potential for blockchain beyond cryptocurrencies and DeFi. Shortly after this it felt like everything exploded for me. Beeple. NFT art. Finding out that it would be possible to own an NFT art gallery in the metaverse. To be a participant in this exciting, rapidly evolving moment in art history. Even reading Snowcrash for the first time. My head felt it was exploding on a daily basis tumbling down the rabbit hole. An experience many of us have shared even if the specific details vary by person. So much to absorb. But I knew I wanted to pursue the dream of owning an NFT art gallery in the metaverse, of being involved in the cryptoart space on a daily basis. The details were and are fuzzy and being refined daily. My first question was what are the best places cryptoart is being presented in the metaverse today and for me the most intriguing of these was and is Cryptovoxels.
Image credit: Ben Nolan, founder of Cryptovoxels, from this early Medium article on Selling land on Cryptovoxels with OpenSea, an interesting read from the early days of Cryptovoxels in 2018.
I spent a week to ten days exploring Cryptovoxels, listening to Ben Nolan, the creating of Cryptovoxels, here and on Josie’s Behind the Art episode #14. I listened to Andrew and Matty’s review on NFT Investor Hub where they discuss artists being on the forefront of property development in the metaverse, mirroring real world gentrification. I spent time poking around the Cryptovoxels Wiki and Discord channel learning about the weekly parcel auctions on OpenSea. What I couldn’t do was get a good sense of a measure of the value of a parcel in the weekly auction for a place on a new island away from Origin City where there are a number of established builds. Just like in the real world being close to the good stuff, to the greater concentration of activity, costs more. Sounds simple enough but I couldn’t really map that out in any sort of meaningful fashion in Cryptovoxels.
Origin City in Cryptovoxels, the center of this virtual world.
Allow me to state up front that I’m no fan of the sizable place auctions have in the NFT marketplace currently. Personally I don’t purchase NFTs in this fashion and while the auction takes advantage of the current bull market and newly minted cryptowealth I don’t think that the auction is a model which leads to widespread adoption of a virtual world based upon my comparative experience between Upland and Cryptovoxels. Auctions increase friction in the user experience and increased friction creates frustration and kills momentum for growth. I’m not going to do a deep dive comparison of these two virtual worlds here but I do want to focus the reader’s attention on the significant differences between the two in terms of the ease with which a new user, with little to no pre-existing knowledge of cryptocurrencies or the metaverse, can enter the virtual world, lay claim to a parcel of virtual land, and begin investing financially and emotionally in the success of that virtual world. While auctions may have served the early days of price discovery for Cryptovoxels well I question its continued viability as an economic model for sustainable growth as an increasing number of individuals begin to explore the metaverse.
I participated in a Cryptovoxels auction on OpenSea the week of March 28th through April 3rd. This is my first issue with the process: the amount of time it takes for an individual ready to join the Cryptovoxels community to actually do so. How many users are willing to devote that much time for the possibility but not even the guarantee that at the end of that time frame they will be a successful landowner in Cryptovoxels. I devoted over two weeks to the idea of becoming a landowner in Cryptovoxels and at the end of that time frame I came up empty-handed. Compare this with the time frame it takes to purchase a piece of land in Upland. Now before the Cryptovoxels very loyal tribe takes me to task on the vast differences between Cryptovoxels and Upland in terms of what you can do with that land once you’ve purchased it please understand that is not the focus here. The motivations for what someone wants to do with land in the virtual world will vary but what I’m focused on in this blog post is the ease of making that first property purchase by which a new user becomes financially and emotionally invested in a virtual world.
My second issue with the process of purchasing a parcel in Cryptovoxels is the lack of information by which to evaluate different property values based upon location, size, proximity to landmarks or commercial hubs etc. If, as @Stellabelle said in a Clubhouse chat recently, Cryptovoxels is a 3D website, then do the aforementioned elements need to factor into pricing and is it really only about the square meters and build height and not about location within this virtual world? From an artist's perspective @Stellabelle indicated that having a parcel in Cryptovoxels addressed 99% of the issues around making her art visible online because she had full control of the how, when, and what of her art being seen.
On the first day of the auction which I participated in the above parcel for a 159m2 plot went for the equivalent of approximate $14.85/square meter as Ben Nolan, the founder, accepted an offer. As this was in line with my own estimations given that this was a new, undeveloped island in Cryptovoxels I felt confident that the 79m2 parcel I had my eye on would come within my budget. Alas it was not to be as after two offers in this initial range no other offers were accepted by Ben until the auction process was completed with parcels going for an average of closer to $50/square meter. A price per square meter that I had seen in sales on the Cryptovoxels much closer to the center of Origin City and developed areas. What my failure to secure a parcel in this auction did was rid me of the FOMO I had in wanting to dive in right now and immediately start building in the wonderful art community that had developed in the Cryptovoxels virtual world.
I think the ambitions of virtual worlds and their investors these days is more about the expectations of the economic potential within these virtual worlds than what is already established within them. However, it’s hard to discern the plans for the Cryptovoxel economy as it doesn’t even have a token unlike Upland’s UPX, Sandbox’s SAND, Decentraland’s MANA, and Somnium Space’s CUBE. Will this matter? I don’t know about the tokenomic value a cryptocurrency might have for Cryptovoxels but I want to establish a cryptoart gallery where there is the potential of significant virtual foot traffic generated by an active in-world user base. With Upland one also can see a roadmap to get sense of where the development of this virtual world is and where it’s headed in the near term. I haven’t found that for Cryptovoxels. Stepping back from my FOMO I see a lot of uncertainty around the near term growth of Cryptovoxels compared to other virtual worlds in the metaverse.
Recent sales figures for Cryptovoxels from Nonfungible.com indicate that in the week ending April 10th there were 83 unique active market wallets and 71 sales made in the primary auction. For the sake of argument let’s round this to 100 unique wallets and say that these were all first time buyers. If this number were annualized the growth for Cryptovoxels would be 5200 new users. Compare the 83 active wallets in this seven day period to the 16,458 active daily unique wallets in Upland and you get a sense of the difference in economic activity of the two virtual worlds. When with my limited resources I’m reviewing different virtual worlds with the idea of opening a cryptoart gallery the number of daily unique wallets matter. Retail is always about location, location, and location. Unless one is content with a 3D website that relies heavily on marketing external to the virtual world it exist in a business in the metaverse wants to be where the virtual foot traffic is to facilitate discovery by new clients.
Virtual land prices today are premised upon significant future growth of the metaverse which raises the question of scalability. How rapidly can a metavese world onboard new users? Is that ability or inability to scale reflected in current land prices? In this bull market probably not as FOMO, cryptowealth, continued social distancing due to COVID19, and macroeconomic conditions (retail investors poured more money into the stock market in the last five months than in the last twelve years) mask to a great extent these scalability issues. Early investors may be anticipating that while there may be various hurdles and points of friction within a virtual world that these will be worked out in time to ride a wave of mass adoption. Savvy investors would do well to keep in mind the anatomy of a virtual world as detailed by Outlier Ventures in their research on Building in the Metaverse.
Image courtesy of Outlier Ventures
This is not the blog post to do a deep dive into how Cryptovoxels addresses each element in Outlier Venture’s anatomy of a virtual world. It is sufficient to be cognizant of these elements in evaluating where a virtual world is in a path to mass adoption because there is a race to achieve the network affect. Currently investors are hedging their bets across multiple virtual worlds. Maybe if as Jamie Burke, CEO and Founder of Outlier Venture’s, suggests and "virtual worlds in The Open Metaverse are increasingly interoperable and interconnected to the point it will be hard to distinguish them as separate but rather different instances of a whole” it will not matter as much if I can shop for cryptoart in galleries in Cryptovoxels and then take that NFT art to display in my brownstone in Upland’s West Village of Manhattan. However, we’re still a ways away from that interoperability. Virtual worlds today are in a race to achieve the critical mass of the network effect to attract and retain enough active daily users to sustain a vibrant economy and individual users are going to go where their friends congregate. How many virtual worlds can they really be active in on a daily ongoing basis?
Donald Judd: 100 untitled works in mill aluminum. Image courtesy of the Chinati Foundation.
In the early ‘80s Donal Judd began creating and installing art in Marfa, Texas. Marfa today is a wonderful, wonderful town to experience Donald Judd’s artwork and that of many, many artists. My wife and I made the trip in 2013 and I would love to go back again one day. But the reality is that logistically Marfa, Texas is not easily accessible. While that is part of it’s charm and part of the journey to experience the art I would not open an art gallery there unless you had connections to top tier artists commanding significant prices. The real estate isn’t cheap and there isn’t a crowd most days of the year. Will Cryptovoxels be the Marfa of the virtual world? I don’t know. In a literal sense of course not since virtual worlds are but a click apart from each other on one’s device. And it’s a wide open exciting time and anything is possible. I only know from my own recent experience that I’m going to watch how Cryptovoxels develops, look for a roadmap to get a better sense of their development and in-world economic plans, and see how they smooth out the friction points for new users before I consider investing in a parcel.
Your Mileage May Vary
Readers are encouraged to try their own comparison of the experience of buying a parcel in Cryptovoxels and Upland (Note the link to Upland is a referral code providing you with a bonus UPX). One can get a sense of the ease of doing so without actually having to spend any of your hard earned cryptocurrency. To facilitate your comparison be sure to check out their respective official Discord channels: Cryptovoxels; Upland. To get a sense of land prices the best tools I’ve found are Nonfungible for Cryptovoxels and UPX.World for Upland. If you decided you did want to purchase virtual land in either of them today how easy would it be for you to do so? Maybe you are highly motivated to join one or the other or maybe not but I would encourage readers to try with an open mind to evaluate what the experience is like for just an average potential new user who has some casual curiosity about virtual worlds.
Recent Nonfungible Crytovoxel parcel pricing information:
Recent UPX.World Upland property pricing information. Note in UPX.World you can search by neighborhood within each city and see the floor price for the neighborhood, how many properties within the neighborhood are available on the primary market, how many are available on the secondary market, and how much on the secondary market is the market for each property.
As for me I’m now on to try Somnium Space which has a wonderful landing page full of helpful links including one to their Economy Paper.
UPDATE: Even as this blog post goes to press Cryptovoxels has made the following announcement on Twitter:
Perhaps to a degree this will relieve some market pressure and spread demand across a range of price points in the near term. For me the larger questions raised about how easily new users onboard, what is the development roadmap for Cryptovoxels compared to other virtual worlds, and how will the Cryptovoxels economy incentivize growth beyond land speculation, continue to give me pause about investing in a parcel. If I purchase a parcel in Far, Far, Away and Cryptovoxels itself becomes the Marfa of the metaverse is Far, Far, Away destined to become like Robert Smithson’s Spiral Jetty. And one cannot simply purchase a parcel in Cryptovoxels but must still navigate the friction of an auction system. I finally made the trek to the Spiral Jetty in 2015 and really love this earthwork but it’s not the place to set up an art gallery. Again, readers should take this opportunity to test for themselves the onboarding experience of each virtual world and review each in terms of how well it addresses the elements in Outlier Ventures Anatomy of a Virtual World as part of their due diligence.