Cryptocurrencies linked to projects dedicated to the metaverse have been hit hard in the current crypto crash that has wiped out more than $1.2 trillion in the digital currency market since November.
It also has been a rout for native coins linked to decentralized finance (DeFi) projects, which are supposed to be the future of financial services. Most DeFi projects want to eliminate the middlemen.
The prices of Decentraland and The Sandbox, two platforms that are leading the push to make virtual land a hot commodity, have collapsed since their November highs.
Mana, the native token of Decentraland, has dropped 15% on a seven-day timeframe. The price is now down 61.7% from its Nov. 25 high. A decentralized virtual reality platform powered by ethereum, Decentraland allows users to buy virtual plots of land to create and monetize content as more users move through the online space.
The Sandbox has seen its price declining 13.1%, while its market cap has collapsed 59.3% from its Nov. 25 high as well. The Sandbox is built around blockchain and non-fungible token (NFT) technology. It’s about ownership and wants to let players monetize in-game resources, a key piece of the metaverse.
The losses are deeper for Axie Infinity, an NFT-based online video game, which uses ethereum-based cryptocurrencies. The platform is one of the world’s fastest-growing play-to-earn games. Its market cap has shrunk by 72.5% since Nov. 11. The price is down more than 34.7% over the past seven days.
Repeated Incidents, Hacks
The frenzy around these platforms seems to be waning as investors realize that the world portrayed with a lot of buzz and marketing may still be a long way off.
The metaverse is an alternate digital reality that has been receiving a great deal of attention. Humans will interact through three-dimensional avatars that can be controlled via virtual reality headsets.
Through the metaverse, users can engage in virtual activities such as gaming, virtual concerts or live sports. The concept got a huge jolt when social media giant Facebook changed its name to Meta Platforms (FB) – Get Meta Platforms Inc. Class A Report.
But critics have warned that the metaverse is getting wildly overhyped, and companies are applying the tag to any old project that involves gaming, virtual reality or NFTs.
It is a near-identical story for DeFi, considered an excellent way for investors to bet on the potential real-world utility of blockchain technology.
Chainlink, an ethereum-based oracle network designed with the goal of improving smart contracts by automatically inserting real-world data into online systems (for example, notifying an insurance company when an accident has occurred), has fallen 22.3% over the past several days. It has lost more than 70.1% of its market value since its May record.
Avalanche, which is popular for companies looking to streamline their contracts, is down more than 55% since November, while Solana, dubbed the Visa of crypto, has fallen 65.1 from its record.
Aave, which allows users to lend digital assets through liquidity pools in return for interest that varies based on demand, has tumbled almost 80% from its all-time high, while Cardano, which allows you to send and receive its token or transfer it in exchange for goods and services, has seen its market value decrease 67%.
Uniswap, which allow users to swap crypto tokens without having to rely on an intermediary, is down 77% from its May record.
In addition to the general skepticism surrounding the sphere of cryptocurrencies, DeFi also suffers from repeated incidents and hacks on certain platforms.
For example, Solana was impacted recently by a “network instability” incident that disrupted transactions last week.