Centraland?
The Concentration of Ownership in the Metaverse
There is an irony resting near the core of the Metaverse — something it seems to me that more people are becoming cognizant of. Even though it was formed within an online culture that had explicit ambitions to shatter centralized authorities, the Metaverse itself has become concentrated in the hands of relatively few people. By this, I refer specifically to the space — the “land” — that it is composed of. I think most people would be surprised at the extent to which virtual real estate markets have become centralized. It certainly caught me off-guard when I first became aware of it. This article explores the current state of its ownership, as well as the trends it has drawn over time and my conclusions about how best to proceed.
Note: All of the data used in this article was provided to me for free by MetaMetriks so that I could finally write some conclusions about this subject, which has been on my mind for months. If you find this information useful, please consider visiting their website and looking into their service.
The Current Situation: The Top Metaverses, In Order of Concentration
4.) NFT Worlds
Interestingly, the newest entrant to the top tier of metaverses is also the least concentrated. Here, 14.2% of the landowners together own half of the parcels available on the platform, which is indicative of dispersed ownership, especially relative to its peers. Moreover, only one person on the entire platform currently has more than 1% of all the land, an owner with 211 “worlds”. Nobody else is particularly close. As you will see in the forthcoming paragraphs, this is actually remarkably well spread out for a metaverse in early 2022.
While I can’t be absolutely certain of its causes, I imagine it has something to do with two things: the way in which the land was initially distributed, and the sheer size of each parcel. NFT Worlds is the only metaverse I’m aware of to have initially given all its land away for free. Everyone on its whitelist got at least one parcel. Aside from it basically being a bunch of free money for anyone smart enough to have been on the whitelist, this has resulted in much more dispersal initially. This also appears to have had an interesting effect on their ownership numbers over time, bucking the trend displayed by every other platform I’ve examined. I’ll talk more about that at the end of the full list.
NFT Worlds is also distinguished by the fact that it really doesn’t seem necessary for anyone to have more than one parcel to be able to build out their project. Each plot of land is enormous — far bigger than you likely expect. To illustrate the point, just one parcel is significantly larger than the entirety of The Sandbox. Compare this to Decentraland, where each individual parcel is a mere 16x16 meters, and one could reasonably argue that they shouldn’t really even be in the same category. NFT Worlds is perhaps more like a platform of 10,000 individual metaverses than it is a metaverse unto itself.
3.) Cryptovoxels
Cryptovoxels is next on the list and significantly more concentrated than NFT Worlds, with 6.6% of the owners holding half of the land in their hands. One might imagine that, with Cryptovoxels’ real estate being priced more affordably than the others, you’re bound to have speculators snatching up parcels en masse. However, I believe that CV’s system of releasing parcels in smaller “island” packets may have had the effect of spreading their ownership out a bit more. It also may be the reason their pricing has stayed relatively more stable than the others’. Could this be a model for the best practice of how to release land? Perhaps. It would be interesting to see someone eventually crunch numbers in such a way that they could to make this determination.
2.) Somnium Space
Somnium Space is next. And, as you can see, the curve is pretty similar to Cryptovoxels’. Here, the top 5.8% owns 50% of the land. But, once again, even the largest landowner doesn’t quite have 2%. I would have expected someone to hold more, since the platform has relatively few parcels overall. This level of concentration may be part of the reason that the CEO of Somnium Space (Artur Sychov) has publicly tried to pull on the reins of land speculation in his metaverse. When responding to data from MetaMetriks on the growth in value of real estate relative to other asset classes, Sychov tweeted “This is such a wrong attitude to take towards Virtual land. It’s no coincidence that people don’t take it seriously. Does this space need more speculators? No. [The] Metaverse needs more people actually building real content. So rather than promoting % gains we should promote usecase.” I have doubts that this pushback makes much of a difference, though. People tend to speculate wherever they believe they can turn quick profits, regardless of how the person running the operation feels about it.
1.) The Sandbox
In the number one slot we have The Sandbox, in which just over 2% of the population owns half of the parcels. This came as a surprise to me. If you look at the map of the Sandbox, it seems so broken up and diverse. How could it be true that so few have so much? It’s important to bear in mind, though, that there are over 100,000 units to distribute. It’s a large number. This makes it possible to be in the current situation: one in which you have concentration, but within a band of individuals rather than just in the hands of a select few oligarchs.
Note: If you analyze the Sandbox for yourself, you may notice that there are some wallets out there that hold an extremely high number of parcels. However, these are performing functions for the platform, such as holding land in reserve. They don’t actually belong to any landholding individual, and for that reason, these wallets and their holdings have been excluded from this data. Failing to do this would skew the results wildly.
??.) Decentraland
Decentraland is a complicated case, so I felt it was better not to rank it. The data on MetaMetriks indicated that within this metaverse of over 90,000 parcels, approximately half of them belong to .5% of the full owner population. This would make it the most centralized of all by far! This number is a bit misleading, though. An owner with multiple connected parcels can fuse them into an “estate” and effectively swap all their land NFTs for a single estate NFT. This changes the math. At the moment, the majority of the total plots available are actually in estates and not individual lands. So, the chart above effectively indicates only the ownership of the Decentraland plots that have not been fused into estates. In that category, it’s super centralized, but I’m not sure whether or not that would hold true when all land is taken as a whole. I’ll have to leave that for someone with better quantitative skills than my own.
Overall trends
Let’s look at these figures over time, since they have not remained the same. As time passes, a metaverse becomes more evenly distributed. Another way of visualizing this information is to conceive of it in terms of “average number of parcels per owner.” This number has been slowly decreasing. The sole exception to this that I have seen is NFT Worlds. Their platform has been growing slowly more concentrated, which probably has to do with their unique mint.
As stated earlier, worlds were initially given away for free to the people on their whitelist. It stands to reason that, after mint, the wealthier speculators would try to snatch up a greater number on the secondary market (i.e. Opensea) to maximize their future returns. My guess is that this dynamic explains the trend so far. This may not be permanent, though. While we only have a limited amount of data to go on, it seems for now that the “natural” progression is for a metaverse’s land ownership to become more dispersed over time.
At this point, it would be remiss of me not to mention “Horizon Worlds”, the metaverse developed by Facebook/Meta. In February 2022, Decentraland and Horizons Worlds had roughly the same amount of active users for the first time. This essentially puts them in a tie for the most used metaverse of all. We don’t really talk about Horizon Worlds within the Metaverse community, but they are the biggest player, and their real estate is completely centralized. That says something important about Metaverse ownership in general. I left them off the list because there is effectively zero ownership possible there, but given their prominence, skipping over them entirely would seem silly. The most active Metaverse is totally centralized. Make of that information what you will.
Potential problems
It’s relatively easy to think of some hypothetical problems that centralization could lead to. The first and most obvious would be empty landscapes. If you put yourself in the place of a spectator who has purchased a large number of parcels to resell, it seems that there would be no incentive to develop on them. A large number of speculators, then, could lead to an empty, boring world.
I could also see how a metaverse dominated by a group of individuals could find its voting protocols at risk. One could imagine a bloc of wealthy land barons using their leverage and influence to shape systems to suit their interests, even at the expense of everyone else.
Finally, we have the simple question of economic fairness. Virtual real estate is a very new asset class, but it is a form of capital — a means of production. We may find ourselves in the situation of having one class of users doing the labor to provide content for a “landlording class” to profit from. It strikes me as unfair that someone not contributing anything of value (besides access) could receive such outsized benefits. Why allow only the wealthy to have access to an asset that is potentially infinite?
But is it worth worrying about?
I should probably admit my own biases as a thinker at this point. As I may have unintentionally made clear in the previous paragraph, my own instincts push me towards the political left. I have a visceral aversion to “unfairness” in questions of economics, and my initial reaction to the data regarding virtual real estate ownership was a sort of mild outrage. But, this is an emotional reaction; not a rational one. Are these concerns borne out by the reality that we actually see in the metaverses? It seems to me that, if I were to assert that the centralization of virtual real estate is a problem, I would be taking on the burden of proof: I need to show that a problem exists.
Unfortunately for my instincts, the only problem I have directly noticed as a result of centralization seems to be a lack of development. It does, at times, feel as if parts of the world have been deleted when I’m exploring Decentraland or Cryptovoxels. There’s quite a bit of unused space. But, I don’t usually just run around aimlessly. I’m typically jumping from specific place to specific place, so this sparseness doesn’t really have an impact on my fun. The other concerns I have, which are about voting blocs or in-metaverse class separation, are more hypothetical than real. It could be that, at some point, they do become an economic or political reality. But for the moment, it’s only speculation.
So, I’m left only with my initial, emotional reaction: a feeling that the current ownership situation is “unfair”. I’ll admit I still feel that way, but I would be at pains to justify it. How could I have a standard for what constitutes a “fair” ownership curve? I don’t even have anything valid to compare it to! I couldn’t fairly contrast it to the distribution of real-world real estate, where each individual has housing needs. (No such needs exist in the Metaverse.) I couldn’t compare it to the distribution of the general wealth within society, either. Virtual real estate is just one, relatively small asset class. It’s absurd to suggest — especially this early on — that its distribution needs to be representative of the larger economy.
But, there are existing and apparent problems that we do have in the Metaverse. We do need better content, so as to motivate people to come to these platforms. We also need to make things simpler, so that the learning curve for new users is flattened. I would argue that we need lower prices as well, so as to provide people of all sorts with access to digital land. But, none of those things are demonstrably and directly the result of the centralization of ownership.
Let’s wrap it up. I may feel the way I feel: I don’t like how centralized the ownership of the Metaverse is. But, can I say it’s a problem? …No. The evidence just isn’t on my side for now. Altering the distribution of lands is therefore not a wise expenditure of our collective time and effort. We would be better served by focusing our energies on the above-listed issues, which are essential to the success of any new technology: compelling use cases, ease of adoption, and a competitive price point. Perhaps then we will have more people to spread ownership between anyway.
Thank you once again to MetaMetriks for the data necessary to create this article.
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