The First Successful Metaverse Stablecoin Predates Crypto (and Tilia Gets Investment from J.P. Morgan)

The first successful metaverse stablecoin actually predates crypto! (photo by CoinWire Japan on Unsplash)

In a five-minute YouTube video which dropped today, Amy Jo Kim speaks with Linden Lab’s founding CEO, Philip Rosedale, about a stable digital currency that powers a vibrant metaverse economy—and has kept it running for almost two decades! Of course, I am talking about the Linden dollar.

As I often like to say on this blog, Second Life is the perfect mature, fully-evolved model of a working metaverse which newer entrants to the space would benefit from studying! And whether or not you are already familiar with Second Life, Philip is always a good interview: insightful, personable, understandable, and articulate. Highly recommended!

In related news, were you aware that Linden Lab’s financial subsidiary, Tilia, has recently secured a strategic investment (amount unnamed) from J.P. Morgan Payments? According to the official press release:

Tilia LLC, the all-in-one payments platform, today announced it has secured a strategic investment from J.P. Morgan Payments. Tilia’s solution, built for game, virtual world and mobile application developers handles payment processing, in-game transactions, as well as payouts to creators by converting in-world tokens to fiat currency including USD, which serves as the backbone of any functioning virtual economy.

Drew Soinski, Senior Payments Executive, Managing Director, J.P. Morgan Payments said “We believe that contextualized commerce – such as virtual economies within games and virtual worlds – is an area perfectly positioned for innovative payments solutions to play a critical role in the coming years. We’re delighted to invest in Tilia LLC, a market leading provider of software gaming payments tools, to develop solutions for these new and exciting marketplaces.”

Tilia’s virtual payment system easily and securely converts in-game tokens and currency into fiat currency. Built from the ground up to power Second Life and its creator-based economy, Tilia was developed over several years to build its unique capabilities. Tilia has secured the required money transmitter licenses in the U.S. to support payouts, allowing for secure transactions on a large scale. Tilia provides developers with the tools to enable thriving, profitable in-world economies that empower their players and users to buy and sell virtual goods and services and facilitate robust play-to-earn programs.

“Virtual economies represent a huge financial opportunity particularly for game, app and virtual world developers,” said Brad Oberwager, Executive Chairman of Tilia LLC. “J.P. Morgan Payments, a worldwide leader and recognized innovator in payments, is the right partner as we continue to expand capabilities in line with these rapidly growing creator-based economies”.

Charlie Fink of Forbes writes:

Tilia has been running Second Life’s $650 million dollar economy for the past seven years. Financing for the new company is coming from their strategic partner, JP Morgan. “It’s very important virtual worlds have the instantaneous settlement Tilia provides,” said Brad Oberwager, Executive Chairman of Tilia, and acting CEO of Linden Lab. “We can handle very high transaction volume at very low dollar amount that even with USDC, the systems aren’t built for that kind of stuff. We move one 250th of a dollar sometimes.”

In addition to the investment, Tilia is also working with J.P. Morgan Payments to increase payout methods and expand the number of pay-out currencies. Perhaps most importantly, partnering with the world’s largest bank will enable Tilia to scale to the potential size of the putative metaverse.

Dean Takahashi of Venture Beat adds:

Oberwager sees his company as crucial for the metaverse.

“Tilia is money into the metaverse. It’s money moved into the metaverse and money moved out of the metaverse,” said Oberwager. “And why this is so important is because you cannot have this concept of the metaverse without a social economy. It is both the social aspect and the financial aspect. Those two things must work in harmony. To do money, you need some virtual token to make money work.”

He added, “Money has to be rock solid. That is JP Morgan. That’s the partnership. What’s the value of Tilia? You can’t build a metaverse without user-generated content. You can’t build a metaverse without social interaction. You can’t build a metaverse without some sort of financial token that allows people to build a world.”

The company will use the funds to expand its business and go into new markets.

“We are moving money in the metaverse,” Oberwager said. “It’s a real thing. that’s where the investment is going. We have a customer list and people are coming to us.”

Tilia fuels commerce in Second Life, which generated $86 million in payments in the past 12 months. The Second Life economy is still measured at $650 million nearly 20 years after its founding. Tilia has about 48 employees.

Oberwager said the deal took about a year to work out with J.P. Morgan Payments. During that time, Tilia made sure it could be interoperable with J.P. Morgan.

Fellow metaverse blogger Wagner James Au provides a bit of context:

Finance giants like J.P. Morgan make strategic investments like this on the expectation they’ll be accessing a larger market down the road, i.e. burgeoning metaverse platforms with less experience than Linden Lab handling international payments/virtual currency.

On the other hand, Tilia has been a standalone company since 2019 and only counts Second Life and below-the-radar metaverse platform Upland as its major consumer-facing clients. (Despite a partnership with Unity in early 2022.) But with JP Morgan as a backer, I’d expect other customers to come along soon.

I agree with Wagner; I’m pretty sure that this partnership will lead to more metaverse platforms using Tilia to implement their in-world economies! (By the way, this news has absolutely zero impact on Second Life. Everything stays the same.)

Liked it? Then please consider supporting Ryan Schultz on Patreon! Even as little as US$1 a month unlocks exclusive patron benefits. Thank you!