There’s plenty of evidence for the potential of NFTs to create great value. You only need to look at the fervent fandom generated around Web3 communities to see that they are something worth getting excited about.
Poking our heads out of the Web3 niche, NFT strategies by brands such as Gucci, Coca-Cola, LVMH, and Nike have proved that, with the right branding, content, and community structure, NFTs can be made appealing to mainstream audiences.
Nevertheless, we’ve all seen the teething pains suffered by burgeoning NFT markets in the last year. Today, many once moon-bound NFTs sit at rock-bottom valuations. The cause for this is simple; past any initial launch hype, there has almost invariably been a lack of genuine utility behind most NFTs. This has resulted in short-term shelf lives for many NFT projects, and disappointing (to put it mildly) returns on investment – often, unfortunately, exacerbated by bad cases of fraud and deceit.
This is a situation that many Web3 communities and brands are trying to fix, namely by innovating on the way that NFTs can be given long-term utility within broader value-generating Web3 ecosystems that are transparent, collaborative, and genuinely worth participating in. It is a difficult, long-term challenge that must be overcome for Web3 to leave its setbacks behind and make its way into the mainstream.
We see virtual experiences having a huge part to play in this, and it is a central objective in our work with Web3 leaders, Yuga Labs.
Let’s take some time to explore how virtual experiences will maximise the value and utility of NFTs and host communities that encourage meaningful long-term engagement.
What makes NFTs valuable?
At its core, Web3 is about community building – and NFTs are a vehicle for doing just that. Today’s most popular NFT projects are creative, vision-led ecosystems that encourage continual community participation. These can be anything from narrative-led roleplay communities, games, and metaverse platforms to real-world networking groups and financial apps. Within these ecosystems, assets tied to NFTs could include game items, avatars, artworks, digital real estate, or keys to exclusive content, depending on the context and purpose of the community. Ownership of these assets gives users an instrumental part to play in the growth of the ecosystem and, crucially, an unambiguous and certified sense of belonging.
Every day, new communities are springing out of the fertile grounds of Web3, founded on compelling stories, product lines, games, and applications that combine to form ecosystems worth participating and investing in. Users invest in NFTs as a means of engaging with like-minded members of the community, having a stake in its growth and flourishing, and thereby maximising the value and utility of their own investment.
The more that Web3 ecosystems can encourage this kind of community-led value creation, the higher the value of individual assets will go. This is why, for these digital-native communities, social virtual experiences could be so critically important.
How social virtual experiences boost the value of NFTs
Social virtual experiences are explorable 3D environments where people can interact with one another and with virtual assets.
For a long time, innovation in virtual experiences was led by the gaming industry, where they have enabled a range of incredibly popular narrative, competitive, and social experiences. Now, thanks to developments in technology that are making it exponentially easier to create and share virtual experiences – not least by hosting them on browsers rather than requiring large downloads by each user – they are being adopted for a variety of community-centric uses beyond just gaming. These can range from social hubs and marketplaces to all manner of events, meetings, and retail spaces.
The increasing flexibility and accessibility of virtual experiences presents an excellent opportunity for brands and communities interested in Web3. Here’s how.
5 ways that virtual experiences can maximise the value of NFTs:
#1 Enhancing the utility of NFTs
First of all, NFTs can be more than static digital collectables. In virtual worlds, they can come to life.
Virtual environments create a space for NFTs to serve a functional purpose. For instance, owning a specific NFT might grant access to exclusive virtual spaces, goods, or special events, and serve as a technical vehicle for decentralised virtual economies, interactions, and social dynamics. In doing so, NFTs have greater scope for facilitating the transparent, dynamically collaborative, and equitable behaviours that Web3 communities aspire to, as well as creating genuine value that penetrates into the mass market by offering real solutions to mainstream needs and interests.
By serving as a gateway for participation in increasingly engaging virtual ecosystems, NFTs accrue value beyond their aesthetic appeal, thus making them more attractive to potential buyers. As these virtual world ecosystems continue to expand, even reaching into the real world with in-person events, community-created product lines, and brand partnerships, NFTs will only have more opportunities to grow in utility.
“The whole point about this ecosystem … is that we’re trying to see if we can grow the pie bigger rather than dominating it ourselves, which is more Web2 thinking. If the pie grows bigger, then we will benefit … on the assets that we have at the same time.”
Daniel Alegre, CEO of Yuga Labs (source: bitcoin.com)
Ultimately, though, this depends on the ability to build virtual spaces in which people want to spend time, build community, and create value in the first place.
#2 Hosting events
Virtual worlds have already been used to host concerts from some of the world’s biggest artists (see: Travis Scott on Fortnite, Lil Nas X on Roblox). Increasingly, through spatial computing and augmented reality, they are merging with the real world to enhance events there too.
These kinds of experiences will be a great boon to the digital-native communities of Web3. Social virtual worlds can host engaging and buzz-creating concerts, conventions, watch-alongs, and influencer events, specifically tailored to the passions and purposes of each community and accessible to all members in virtual or hybrid spaces.
Events like these foster communities of like-minded individuals. Attending them creates a visceral, in-the-moment sense of belonging and shared interest that brings communities to life and enables social relationships to build that would not otherwise happen.
Finally, virtual experiences enable this sense of connection to be extended to global communities of remote participants, driving enthusiasm and demand for NFTs associated with the virtual space. This also lays the groundwork for more sustainable ecosystems that require less travel, physical manufacturing, and shipping to foster participation and generate value.
#3 Creating places people want to spend time in
Key to all of the above, virtual spaces created around NFTs must be spaces that people want to spend time in. First off, from a technical standpoint, this means ensuring a consistent user experience, free of bugs, lag, or crashes. Next, the virtual world must encourage users to have meaningful interactions, both through their actions and through the personality expressed by their unique avatars. This means:
- Individual rendering of avatars – particularly if they are to be based on user-owned NFTs.
- Ownership – NFTs allow users to take provable ownership of content within the experience, such as items, spaces, or events, and to be rewarded accordingly.
- Intuitive and accessible tools for creating and sharing content within the experience, giving communities the ability to express themselves and exercise a sense of agency.
- Effective governance to determine the level of protection needed against toxicity, harassment, or age-inappropriate content, and to institute safeguards accordingly.
User Generated Content (UGC), personalised interactions, and community-centric values are central to creating spaces that reengage users on a consistent basis. This is a truth borne out in the popularity of online multiplayer gaming and the meteoric rise of UGC-led virtual ecosystems like Roblox and Fortnite, both of which offer an evergreen user experience thanks to their focus on spontaneous interaction and creativity.
Fortunately, these are principles that lend themselves perfectly to Web3. By implementing these principles intelligently to make virtual spaces that people are consistently compelled to reengage and spend time in, Web3 brands will gather stronger communities, help to promote the community-centric ethos of Web3 as whole, and grow in value in the long-term.
#4 Use data-driven insights to make better NFTs and experiences
Data is the north star for any brand in the digital world. Its importance cannot be overemphasised; it’s the difference between intentional and accidental success. In Web3, data will be critical for cutting through the volatility and unpredictability of markets, and for creating strategies that address genuine user needs.
Web3 communities can use virtual experiences to get real, organic insights into how people are using and interacting with NFTs and the ecosystems built around them. This allows them to optimise, improve, and gain inspiration according to the preferences of the community. NFTs can, in turn, be used as a verifiable asset through which to reward users for creating and sharing data in virtual worlds – a strategy that aligns well with the Web3 ethos.
Ultimately, data from virtual worlds enables a more informed strategy for building value through engaged communities around NFTs, offering unique and critical insights on community behaviour that would not be achievable otherwise, and rewarding users with value accordingly.
#5 Spread the word
NFTs will not gain value if no one knows about them. Web3 communities have become adept at encouraging members to share experiences online and take an active role in attracting new community members.
Virtual worlds can be the perfect meeting places to introduce guests, and to showcase all the reasons why they would want to join in and participate. For this to be as seamless as possible, pixel streaming can be used to make virtual experiences accessible on any device, wherever they may be.
Making it easier to onboard, learn, and join in with community initiatives will help to form stronger communities, and thereby boost the value of associated NFTs.
Conclusion
Social virtual experiences are reshaping the Web3 landscape, offering exciting possibilities for brands and creators to enhance the value, utility, and impact of their unique assets. Whether it’s through enhanced interactivity, onboarding, community building, utility, or monetisation opportunities, the synergy between NFTs and social virtual experiences is poised to unlock new dimensions of value in the next iteration of the internet.
As the Web3 ecosystem continues to mature, it’s essential for creators, collectors, and investors to explore the potential of these virtual spaces and embrace the opportunities they offer. Whether they’re an artist looking to showcase their work, a collector seeking unique experiences, or a developer creating the next generation of virtual worlds, the fusion of NFTs and social virtual experiences promises an exciting journey into the digital communities of tomorrow.
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