Editorial: The Licensing of Wearables in Decentraland Could Lead to a Creative Bottleneck

Watching the various blockchain-based virtual worlds evolve, and comparing and contrasting their decisions on how they wish to operate with longer-established, non-blockchain-based virtual worlds such as Second Life, has proven to be quite interesting.

Many of the eager cryptoinvestors who have bought NFTs (non-fungible tokens) such as virtual land, avatar names, and avatar wearables in places like Cryptovoxels, Decentraland and Somnium Space like to tout that their possessions cannot be taken away from them, or censored, revoked or restricted by any central authority, even by the companies running the platform.

For example, they point out that if a user runs afoul of Second Life’s Terms of Service, they can have their account suspended and lose all their virtual possessions. In contrast, the adherents of blockchain-based virtual worlds claim that they can evade such restrictions by simply selling their items on the open market (one such example is the popular OpenSea collectibles marketplace).

Limited-edition wearables (i.e., avatar clothing) which are bought and sold on the blockchain are already proving quite popular both in Cryptovoxels and Decentraland, but the two platforms are taking distinctly different approaches in their implementation. While Cryptovoxels is using the open market approach already proven as successful in places like Second Life, Decentraland seems to be opting for a more restrictive licensing approach, which at first glance seems rather at odds with its “open, decentralized” advertising.

Forcing creators to sign licenses to be allowed to make and sell content, and having investors vote on who will and will not be allowed to create content, stifles the creativity of an free and open marketplace, and seems to go against the “decentralized” nature of Decentraland.

According to an announcement made Monday on the official Decentraland blog:

The creation of wearables for Decentraland is a complicated process requiring a lot of support. To ensure user-generated wearables look great and function properly in Decentraland we will need to make the tools to support this process.

It will take time to develop the workflow and build the equivalent of an SDK and Builder tool for wearables so during this process we will work with small teams of developers from the community that we are confident can deliver quality products and the feedback and communication we need.

Once the workflow is in place and the quality at the high level you’d expect, we’ll implement Stage 2 of the initiative.

This involves opening up the application to create wearables to the entire community. It will take the form of licenses being granted to teams and individuals by the community, through the DAO.

The DAO (short for Decentralized Autonomous Organization) is a relatively new mechanism to allow Decentraland’s investors to vote “on the policies created to determine how the world behaves: for example, what kinds of wearable items are allowed (or disallowed) after the launch of the DAO, moderation of content, LAND policy and auctions, among others.” (More information on the DAO can be found here.)

I have seen a lot of virtual worlds come and go in my time, and one thing that I can tell you is this: imposing any kind of licensing on the creative process can lead to a creative bottleneck, and potentially drive away content creators.

One reason that Second Life continues to be the most commercially successful and popular virtual world, is that Linden Lab had, very early on, decided to create a free and open market, where creators could set up stores and sell their content to whoever was willing to buy it, retaining the rights to their creations and earning income.

Linden Lab has never licensed stores or creators in Second Life, and never will. The workload associated with such an enterprise, in a market with many millions of items for sale, would be impossible to scale upwards as the economy grew. Yes, Linden Lab will step in if a DMCA copyright complaint is received from a competitor, and they will also shut down stores which sell illegally-copied content when it is pointed out to them, but otherwise, they very wisely stand aside and let the market decide what people want.

And while stores open and fold with astounding regularity in Second Life, the fact that they have approximately 900,000 regular monthly users means that they must be doing something right (even if it was all a happy accident which to date still has not been replicated by any other platform). Those virtual worlds that look on with envy at SL’s success, and wish to snatch that mantle of success for themselves, need to pay attention to what works, and what doesn’t.

It would appear that, going forward, Decentraland will be focusing on a licensing process for all avatar wearables, letting its investors vote, instead of letting anybody who wants to, simply create and sell avatar clothing and accessories for the DCL marketplace. While some see this as a necessary effort to impose and refine a high-quality workflow, others see it as a means to restrict market access, and reward those who have the deepest pockets and the best connections. (Some commentators have complained about the opaque process by which the initial five wearables creators were chosen.) Time will tell who’s right and who’s wrong here.

As I see it, Decentraland already has some daunting obstacles which stand in the way of attracting and retaining your average, non-crypto virtual world user to their platform: the many steps required to set up a crypto wallet and purchase ETH and convert it to MANA; the need to purchase even things as basic as a username; and the prohibitively expensive virtual land, its price driven up by speculators. Placing licensing restrictions on who can create items such as avatar wearables could become another such obstacle.

Decentraland should study the history of its competitors carefully, to glean a few pertinent lessons on how to run and grow a virtual world. There’s no need to reinvent the wheel here, folks.

Photo by Jon Cartagena on Unsplash

Exploring (and Building) in Cryptovoxels

While I was home sick with a cold this past week, I spent a little time wandering around Cryptovoxels (which is very easy to do, since it all runs in your web browser). Here are a few pictures I took on my travels:

The Rose Nexus Gallery (blogged previously here)

There are already quite a few impressive builds, including this huge sphere, guarded by a couple of massive heads:

You might not know that Spidymonkey kindly gave me a parcel of virtual land to build on in Cryptovoxels (thanks, Spidymonkey!). He even went so far as to create a three-dimensional version of my profile picture to place on it!

And (after a bit of troubleshooting), I was able to build my first creation on my own land. My first wall!

You can choose different designs for your blocks, and you can delete previously placed blocks to make things like windows:

The way that Cryptovoxels handles colour is interesting. Essentially, you have to buy colour using cryptocurrency (or have it gifted to you). According to the documentation:

Color is a limited resource in Cryptovoxels. Any land owner can build in black and white and greyscale for no extra cost, but if you want to use color voxels or color images, you need to add some $COLR. There are three ways to get $COLR.

– Build something cool and get $COLR as a reward
– Purchase $COLR from Uniswap using Ether
– Have someone in-world add some $COLR to your parcel to say thanks

(And yes, before you say anything about my building skills…I’m a blogger, not an architect. Be kind.)

UPDATED! Cryptovoxels and Decentraland: More Money Is Being Exchanged for Blockchain-Based Assets Than You Might Suspect

You’d be surprised by the amount of cryptocurrency changing hands for blockchain-based digital assets like virtual land and avatar wearables
(image by WorldSpectrum from Pixabay)

I have been observing the goings-on of what I consider to be the top three blockchain-based virtual worlds (Cryptovoxels, Decentraland, and Somnium Space) for quite some time now. I find it endlessly fascinating.

You might not be aware that all three worlds have assets for sale via OpenSea, which is the world’s largest marketplace for digital goods, including collectibles, gaming items, digital art, and other digital assets that are backed by a blockchain like Ethereum (ETH for short). According to their FAQ, there are over four million items on the OpenSea market, but according to one of my sources, it’s closer to 10 million now.

When discussing these worlds, you will hear the term Non-Fungible Token (NFT) thrown around a lot. An NFT is a unique, distinguishable, indivisible blockchain-based asset which has some sort of monetary value, usually denoted in a cryptocurrency like ETH.

The classic example of an NFT is Cryptokitties, a passionate phenomenon which utterly baffles me. (Then again, I have never understood why breedables became a thing in Second Life, which is the closest non-crypto analogy I can give for NFTs.) The information contained within a non-fungible token is unique to that token, like the colour and design of the stripes on a Cryptokitty, or the location coordinates for a parcel of LAND in Decentraland. This means that one non-fungible token can never be simply swapped, or exchanged, for any other token. Each is unique.

Cryptokitties for sale on the OpenSea website
(and no, I still don’t get the appeal)

All three of Cryptovoxels, Decentraland, and Somnium Space have both virtual land and virtual items as non-fungible tokens. And you might be as surprised as I was today when, out of idle curiosity, I investigated and discovered just how much money is trading hands per week in these virtual worlds!

Here is a screen capture of the trading volume of the past seven days for both Cryptovoxels and Decentraland, two virtual worlds which have consistently appeared in the OpenSea top 5 list by trading volume:

US$54,000 trading hands in a week is nothing to sniff at (although I suspect significantly more money is still being exchanged in Second Life on a weekly basis). I can now begin to understand how Cryptovoxels’ lead developer, Ben Nolan, can work full-time and be supported financially by his platform! There’s some money to be had here.

In fact, the distributed nature of blockchain ledger-keeping allows anyone to see at a glance how well (or poorly) sales are doing on any blockchain-based platform. Unlike Second Life sales volumes, which are considered confidential, proprietary corporate information by Linden Lab (aside from the occasional statistic tossed out on anniversaries), you can’t hide the information; it is available to anybody who wants to look at it!

(You might be interested to know that the 7-day trading volume in the third blockchain-based platform I mentioned up top, Somnium Space, is about 7.9 ETH, which works out to US$1,134. I am willing to predict that investment in Somnium Space will increase during 2020 to a level comparable with Cryptovoxels and Decentraland. They simply have too much potential to be overlooked, given their planned feature set.)

So do not be tempted to dismiss the blockchain-based social VR platforms and virtual worlds so lightly. People are already avidly buying and selling virtual land, and virtual items such as avatar wearables!

Cryptovoxels wearables (including a sword, a cellphone, a baseball cap, and a boombox) for sale on the OpenSea website

Am I tempted to participate in these markets? Absolutely not. Blockchain/crypto still seems like voodoo medicine to me. My major achievement last month was to successfully transfer a minuscule amount of ETH from one crypto wallet to another, to cover the transaction fee (or “gas”) in order to set up a custom username on Cryptovoxels! (Yes, like Decentraland, you gotta pay. But not as much.)

But it is fascinating to watch all this from the sidelines, nonetheless.

UPDATE Jan. 11th, 2020: Jin has alerted me to a brand-new resource by OpenSea, called The NFT Bible: Everything you need to know about non-fungible tokens, which is an excellent starting place for the newbie to learn all about non-fungible tokens in much more detail than I have covered here.

There is also a bar chart in this section of the report that shows you the top non-fungible tokens by trading volume over the past six months:

The market for non-fungible tokens is still quite small, and somewhat harder to measure than the cryptocurrency market given the lack of spot prices for assets. For the purpose of this analysis, we focus on secondary trading volume (i.e., peer to peer sales of non-fungible tokens) as an indicator of market size. Using this metric, we estimate the current secondary market to be roughly $2 – $3 million USD in volume per month. In the last six months, the following projects led the charge:

In this “top ten”, the red arrows point out the trading volume for:

  • Decentraland (roughly US$1.5 million in trading volume)
  • Decentraland Estates (i.e. parcels larger than a single piece of LAND; about a quarter of a million dollars in trading volume)
  • Somnium Space (approximately US$250,000)
  • Cryptovoxels (also approximately US$250,000)

Editorial: My Social VR/Virtual World Predictions for 2020

Photo by Jen Theodore on Unsplash

Now that I am (finally!) finished my annual holiday tradition of utterly ransacking all the Advent calendars and December shopping events I can find in Second Life—the better to clothe my small army of alts with fashionable freebies!—it is time to turn my attention to predictions for the coming year.

Let’s start with a look back at my predictions for 2019, shall we? I said then:

  • That Second Life would “continue to coast along, baffling the mainstream news media and the general public with its vitality and longevity”, and that “the ability to change your first and last names in SL will prove very popular—and also very lucrative for Linden Lab”. Well, I am going to stick to that prediction. Implementing avatar name changes in SL turned out to be a thornier problem than Linden Lab anticipated, hence the delay, but they now have eight years of pent-up demand for this feature, and I anticipate that it will still prove popular—and profitable—for Linden Lab. I myself upgraded one of my alts to Premium to be able to change her legacy name of Bumbly Rumpler. (I know. I know. I don’t know what I was thinking at the time!) I also snagged her a lovely new riverside Victorian Linden Home in the process.

  • That OpenSim would move on implementing virtual reality support, but (as far as I can tell), that work has stalled or been abandoned. To be honest, I have barely set foot at all in OpenSim this past year, so I regret that I am not in any position to make predictions for 2020!

  • That “one or more blockchain-based virtual worlds are going to fold”—a prediction which has come true, at least for MATERIA.ONE, which has not officially folded, but is currently on an indefinite hiatus. The landscape is littered with various blockchain-based projects that are either dead, moribund, or stuck in pre-development hell: Aether City, Ceek, The Deep, MARK.SPACE, MegaCryptoPolis, The Sandbox, Stan World, SuperWorld, Terra Virtua, and VIBEHub. And yet, somehow, new crypto projects keep appearing, hoping to become the next Bitcoin.

    However, three blockchain-based virtual world projects appear to be doing well—Cryptovoxels, Decentraland, and Somnium Space—and I expect that they will all continue to do well in 2020. I note that both Decentraland and Cryptovoxels have tended to rank in the Top 5 in sales volume on the OpenSea marketplace (this screencap is from a tweet made Dec. 27th):

I’m already working on a predictions blogpost for the various social VR platforms and virtual worlds in 2020. Among my predictions is the following: if Linden Lab cannot find a way to increase the overall number of users in Sansar within the next 12 months, even with a pivot to (and an exclusive focus on) live events, then the company will do one of three things:

– convert the existing Sansar code to open source and let the community take it over (which I think is the least likely option);

– sell Sansar to another company and keep Second Life running (or perhaps sell off Linden Lab and all its assets entirely to another company); or

– shut down the Sansar project completely (which I think is the most likely option).

In case you haven’t been paying attention, the honeymoon period for Sansar is OVER.

I am increasingly worried (even heartsick) over the future of Sansar.

  • That “the Oculus Quest VR headset will ignite the long-awaited boom in virtual reality”. I think that we can agree that the Oculus Quest has been a runaway success. Facebook is apparently selling the units as fast as they can make them, and they are now backordered until late February 2020. (The Valve Index is also selling well, and also similarly backordered.) I do predict that this will bring many more people into those social VR platforms which can natively run on the standalone Quest headset, such as VRChat, Rec Room, and AltspaceVR.

  • That “Linden Lab’s launch of Sansar on Steam will likely have only a modest impact on overall usage of the platform”. I deeply regret that this prediction has come true in spades. I said at the time that Linden Lab ditching its SandeX and launching Sansar on Steam would be a terrible mistake, and I take no pleasure in being proven correct. Sansar has been pummeled by negative reviews by Steam gamers, adding to the general sense of malaise about the platform in the past year, especially since approximately 30 staff working on the project were laid off by Linden Lab a couple of months ago, in an attempt to trim their continued financial losses. This was a move which was probably imposed on CEO Ebbe Altberg by the Linden Lab board of directors, who are probably very worried that if Sansar tanks, it will take down Second Life with it.
Photo by Drew Beamer on Unsplash

O.K., now that we’ve looked at how well my predictions for 2019 have fared, now it’s time to peer in my crystal ball and make some new predictions for 2020.

First, all current social VR platforms and virtual worlds will struggle with a key problem: effective promotion. Getting the word out to the public about the various platforms is proving to be more and more difficult in an age of social media overload and short attention spans.

We can expect to see more partnerships between various platforms and influencers (such as Sansar’s continued partnership with the VR vloggers Cas and Chary, and my own recent sponsorship and advertising deal with Sinespace). By the way, my partnership with Sinespace is not exclusive, we can still see other people 😉 and I am still actively looking for other advertisers and sponsorships for my blog and the Metaverse Newscast show (hint hint).

Second, every single eye will be on Facebook as they launch their new social VR platform, Facebook Horizon, early in the new year. It’s disgusting to me how even the smallest Facebook announcement gets oceans of fawning mainstream press coverage, and you can certainly expect Horizon to suck up all the oxygen in the press room when it gets closer to launch date. If Facebook Horizon, backed by the almost limitless resources and reach of its ambitious parent company, fails to take hold in 2020, then that will be the clearest indication yet that the nascent social VR industry is in trouble (and that I might be out of a job!).

Third, as I have said above, I am extremely worried about Sansar. The Sansar website has recently had a complete redesign to focus almost exclusively on live events:

It would appear that Linden Lab is going all-in on Sansar as a platform for live events, to the detriment of other features such as avatar customization (I don’t expect anything new this coming year). However, competition in the live events market in 2020 is likely to be intense, with the following products also planning to focus on hosting such events:

  • Microsoft-owned AltspaceVR (which has also recently announced a pivot to live events);
  • VRChat (which is already home to popular talk shows such as ENDGAME, and many other regular live events);
  • Wave (which has already pulled off some spectacular musical events such as the recent Lindsey Stirling concert);
  • Upstarts such as Ceek and Redpill VR (which are in various stages of pre-development and may or may not launch in 2020);
  • Not to mention that Facebook will also want to muscle in on this extremely lucrative territory (with Oculus Venues, and probably Facebook Horizon, too)—and Facebook will not hesitate to ruthlessly use every tool and tactic at their disposal to achieve market dominance (including “hiding” posts about competing platforms in their Facebook, Instagram, and WhatsApp social network users’ newsfeeds). Facebook also has deep pockets to ink deals with major talent, locking them into exclusive deals to appear on their platforms.

Expect many skirmishes on the live events battlefield in 2020, and also expect some causalities to occur.

Fourth, Second Life will continue to coast along as it always does, still boasting approximately 600,000 regular monthly users in recently released statistics by Firestorm, and still making millions of dollars in profits, both for its content creators and for Linden Lab. It’s the gift that keeps on giving, and I see no sign of it stopping anytime soon. I predict that SL will still be around five years, perhaps even ten years, from now, and that people will still be logging in, and still merrily ransacking Advent calendars 😉 …and I will continue to blog about steals, deals, and freebies in Second Life!

Fifth, we can expect to see the upcoming Educators in VR International Summit as an example of an increasingly important use of social VR platforms in 2020: conferences. This is a natural fit, and one that saves precious resources (such as airline fuel) in an increasingly environmentally-conscious world. We can expect to see more conferences and meetings hosted in VR as an alternative to real-world meetings (although, as High Fidelity found out, the remote workteams support marketplace isn’t quite there yet, since the vast majority of companies still expect their employees to show up to their offices rather than work remotely from home). I think it’s going to take another generation for that shift to take effect in any widespread fashion.

Sixth: those social VR platforms which currently lack an in-world economy, currency, and a marketplace for user-created content, will be moving towards implementing those features. VRChat already has a booming off-world economy in the creation and sale of custom avatars. We already know that both VRChat and Rec Room are making plans in this area, based on job postings on their websites, but we can also expect other platforms to take this step, taking their cues from the continuing success of the mature, fully-evolved in-world economy of Second Life.

Platforms where people can make money tend to attract droves of new users, appealing to their greed and the universal desire to strike it rich (Decentraland as a more recent example; although its continued success is not 100% guaranteed, investors have sunk a lot of money into it, and it will be interesting to see how this ultimate expression of virtual, cut-throat capitalism will evolve and grow over the next year).

Finally, at some point Apple (and other companies, including Facebook) will launch the first consumer-oriented augmented reality headsets. The over-hyped Magic Leap One has turned out to be rather underwhelming (and underselling) so far, but who knows? Perhaps future AR products may ignite consumer interest, and have an as-yet-unknown impact on the current crop of social VR platforms.

Perhaps the big bet we all placed on virtual reality has been misplaced? We won’t know the answer to that hypothetical question until at least another decade has passed. Of course, some social VR platforms may decide to extend support to whatever AR/MR/XR hardware becomes available in the future, too. Anything can happen.

So these are my social VR/virtual world predictions for 2020. Please check back in a year, and we’ll see just how accurate I was!

Image by Jim Semonik from Pixabay