As humanity entered the crypto rabbit hole, there were a few things that we could all imagine ending up on-chain. The crypto community as a collective has matured and grown to accept DeFi and its associated innovations such as flash loans, synthetic assets, AMMs, or atomic swaps but also NFTs, which began with the so-called “jpegs,” which arguably differ in rarity.
So here is the thing. How do you marry DeFi to the convenient versatility that NFTs can provide? Enter the digital real estate in the metaverse. If you understand property markets in the real world, you might also have a chance to make it in the metaverse. However, as with all innovations, the volatility that you might experience could mutilate your virtual senses.
But how can virtual real estate be valued?
Firstly, what needs to be understood is the metaverse’s role, especially in the context of billions of people being “forced” to confine within the physical world of their homes. The metaverse, which, for those familiar with gaming, is an open-world environment where “virtually” (pun intended) anything could take place. You want to visit a museum to learn more about the latest NFT art pieces, check. You need to get the latest fashion designer clothing for your avatar; check. You need to purchase land to build your mansion, check. You want to attend a Snoop Dogg concert, check.
So virtual real estate fits into this new parallel universe where anyone has the chance to build what they always wanted in real life and hope to be able to live in it one day as augmented reality and virtual reality advance.
That’s not it, though, because virtual real estate won’t sell itself, and here is the irony: you might require real estate intermediaries such as consultants, agencies, and marketers to help you with the purchase or sale.
Subsequently, as the traded value grows, it would make sense to aggregate this value under REITS (Real Estate Investment Trusts), which are real estate funds backed by these assets. Today this is already possible. Fractionalizing NFTs is not only a meme, although it’s best known as of now solely as that.
This last consideration is exceptionally crucial for asset management protocols because the interplay between traditional real estate and virtual real estate will boost the lagging returns delivered in the past two years in the real world.