Owning land in the metaverse is an expensive business. In recent times, we have seen individuals and corporations bid millions of dollars for virtual land, $2.4 million to be precise.
In an interview with indianexpress.com, EasyFi CEO Anshul Dhir talks about how digital lands in the metaverse can be purchased through loans, but without any bank involvement. He says the idea of owning land in the metaverse might sound strange and shocking to many people, but for those familiar with popular games like The Sims, Farmville, and Clash of Clans, it might not seem like a big deal. treatment.
Dhir also wants people to understand what the metaverse is before they own or even think about investing in digital lands. The easiest way to understand the metaverse, he says, is to understand what it’s not. He said: “Metaverse is not a new technology or new software, rather think of it as a combination of existing technologies, which complement each other to build something called ‘digital space’.”
For the uninitiated, the concept of digital space dates back to 1992, Neal Stephenson in his science fiction novel Snow Crash describes the metaverse as a computer generated virtual world made possible through software and a worldwide fiber optic network technology. .
Plots in the metaverse can reach over $4 million. To some extent, some say that buying real estate in the metaverse is similar to buying real estate in Manhattan in the 1940s.
This raises an important question: if virtual plots cost exactly like real-world plots and are so expensive, then why would one buy land in the metaverse? “The return on investment (ROI) is getting higher compared to real-world plots. In the metaverse, the ROI can reach 1,000 percent and in a very short time,” Dhir told indianexpress.com.
Anshul Dhir, CEO of EasyFi. (Photo: EasyFi)
He also believes that virtual real estate has an advantage over physical parcels due to its underlying blockchain technology, which makes it impossible for land scams to occur that are quite prominent in physical space.
Blockchain technology is essentially a distributed database, where every transaction is recorded, making every transaction transparent. “Blockchain minimizes any possibility of real estate fraud, such as forced cancellation, unauthorized sale, false promises, and even delayed possession.”
It should be noted that, just like in the real world, real estate prices in the metaverse are completely dependent on location, population, and the ratio of supply and demand, when there is an increasing demand for a parcel in the metaverse in an area determined. , then prices go up automatically.
Meanwhile, Dhir stresses that not all virtual pitches are expensive, and some can even start as low as a few hundred dollars. But just like in the real world, everyone wants to be a part of the best and most popular locations in famous metaverses like The Sandbox and Decentraland.
Some of the major metaverse projects that have attracted real estate are Sandbox (SAND), Axie Infinity (AXS), Decentraland (MANA), Enjin (ENJ), etc.
loan in metaverse
The purchase of virtual plots in the metaverse is only possible through crypto assets. This is because “fiat currencies incur huge transaction fees and would require the involvement of a third party to facilitate global transactions; however, cryptocurrencies can be traded globally.”
Any parcel of land in the metaverse could be purchased through cryptocurrency loans, and this is facilitated through decentralized finance (DeFi). But what is DeFi?
Just like the famous proverb, “Necessity is the mother of invention”, this also applies in the case of DeFi.
Dhir gives an interesting analogy: If you visit a bank and take out a loan not to buy a car or property, but to buy virtual real estate. Your application will most likely be rejected. “DeFi is touted as the solution to lower the barrier to entry for those who struggled to access bank accounts.”
It will not be correct to call DeFi similar to banks, because unlike banks, “anyone without the need of any KYC documents and (without any credit checks) can borrow crypto assets, all transactions are automated with the help of contracts smart”. he says.
DeFi is not centralized, so no one owns it. It works with blockchain technology. These products do not use third parties to facilitate crypto lending and borrowing. In DeFi, transactions are made without the need for any broker.
“Funds can be transferred instantly via a blockchain, so there is no waiting and no downtime. Transaction rates (at least for now) are much better than traditional banks, although transaction costs vary depending on the blockchain network,” adds Dhir.
NFT as a guarantee
Giving loans is not as easy as it seems. There are several factors involved in granting loans easily and safely.
To process any loan, DeFi requires collateral. “In the case of the metaverse, the collateral can be your cryptocurrency deposited in your crypto wallet or even an NFT that you purchased. Having a mortgage held against an NFT for $20,000 owned by an individual investor is always easier than putting $20,000 into real estate.”
MetaFi, the company’s crypto lending product in the metaverse, will facilitate lending for metaverse assets such as NFTs, virtual real estate, land, parcels, and on-chain gaming on EasyFi.
“Corporations are capitalizing on the endless possibilities offered by the metaverse, which could be a potential trillion dollar opportunity. It may seem like the price tags on a lot of digital real estate may already be in a staggering amount. Remember, there are still lots of parcels to be purchased, while some are still being developed. Without a doubt, the potential of digital lands is unimaginable, only if it is channeled correctly”, concludes Dhir.