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.)

Editorial: Metaverse Madness Is Truly Upon Us (Caveat Emptor!)

It is wintertime here in Winnipeg, and in addition to the coronavirus pandemic (now in its 21st month), a strike by my union (now in its fourth week), and a stretch of some bitterly cold November winter weather, I have been fighting a nasty cold. (I know it is a cold and not COVID-19 because of my runny nose, itchy and watery eyes, and sinus congestion, plus I cannot stop sneezing.)

I am NOT a happy camper (Photo by Matthew Henry on Unsplash)

All in all, I am in a miserable, foul and cranky mood today. So I figure it’s the perfect time for me to write one of my patented snarky editorials. My target this fine and frosty day is the metaverse.

Not all of the metaverse, mind you. I have little to no problem with the actual metaverse platforms that are already out there and operating (and more power to you; you know who you are!). And I have no issue with the bulk of these social VR platforms and virtual worlds which have thus far resisted the siren call of the blockchain*. Yes, I am even willing to forgive Cathy Hackl for having the sheer audacity to rebrand herself the Godmother of the Metaverse on Twitter:

Godmother of the metaverse? Philip Rosedale and Adam Frisby would like a word 😉 but I must admit that this is a bold, nervy, and frankly savvy move. Go get that consulting coin, Cathy!

But what I do have a serious problem with, and what I want to focus on today, is the hothouse atmosphere created by the collision of the existing crypto/NFT/blockchain hype with the newer-but-no-less-hyperbolic metaverse hype triggered by Facebook’s recent rebranding.

This is getting completely out of hand, people

I have been writing this blog for four and half years now, and I have seen a lot of sketchy stuff during that time, but I have never witnessed as much absolute, unadulterated, utter bullshit out there as I am seeing and hearing right now. The number of schemes, scams, and outright cons out there, seeking to profit off of gullible investors who have not done their due diligence, is frightening. The grifters are out in full force!

I am a member of various Discord servers relating to blockchain-based virtual world projects, such as Decentraland, Cryptovoxels, and Somnium Space (all of which, I hasten to add, I have little to no issue with, since they are all actual, working products which you can visit today). Because of that, I am inundated with DMs from people wanting to sell me on the latest and greatest get-rich-quick NFT scheme. Here are examples of two messages which I deleted (and reported as spam) just this morning:

Last night, I went and visited a couple of metaverse communities on Reddit (namely, r/metaverse and r/Metaverse_Blockchain), and I was staggered by all the johnny-come-latelies who are piling on, shilling for this or that pet project. Almost all of them involved cryptocurrency, NFTs, or the blockchain in some way or another. Here’s a couple of sample videos to give you a flavour of the overall feeding frenzy:

You get all that jargon? There will be a quiz later… 😉 Here’s another example:

My eyes rolled so far back in my head that I could see myself think! What’s worse to me, though, is the number of cryptonewbies who are asking questions and seeking advice on where to invest in these Reddit communities. Lambs to the slaughter!

These past few days, I have also spent many hours hanging out in several metaverse-related discussion rooms on the social audio app Clubhouse (or, to put it another way, rooms with “metaverse” in their title), where various people were actively shilling for any number of sketchy, dubious, and frankly harebrained schemes, seeking to part the unwary and the ignorant from their hard-earned money. No, I am not naming the names of any guilty parties in this particular blogpost, but I listen, I worry at the amount of misinformation and disinformation circulating out there, and I shake my head.**

I fear that we are going to see a LOT of people lose a LOT of money on these projects. Just because a project name-drops terms like “blockchain” and “crypto” and “NFTs” and now the latest buzzword in the mix, “metaverse”; and/or the project has an active Discord or Telegram or Clubhouse rooms full of true believers and yes-men; and/or the project has a slick-looking website all ready to accept your crypto wallet credentials—NONE OF THESE THINGS ARE ANY SUBSTITUTE FOR YOU TO CAREFULLY DO YOUR OWN RESEARCH, AND YOUR OWN DUE DILIGENCE, BEFORE YOU INVEST A PENNY.

Do your research before you invest a penny (Photo by UX Indonesia on Unsplash)

And if you can’t do your own homework because you don’t know enough, then take the time to learn what you are doing before you spend any money on any scheme—no matter how wonderful it sounds. Ask someone you trust for their opinion. And then ask again, and again, and again, until you feel you know enough to make an informed decision. If you have any doubts, pull out! Steer clear of anyone who is using the Fear Of Missing Out (FOMO) to try and sell a project, or who appeals to your greed with rash promises of lofty returns on your investment.

For example, there are now about 600 people on the Discord, with actual experience in dozens of social VR platforms and virtual worlds, who are my personal team of metaverse bullshit detectors! We learn from each other, we help each other, and we rely on each other to spot and avoid precarious schemes and outright scams.

I shouldn’t have to say any of this, people, but as I said earlier, I have NEVER seen so much bullshit out there as I do right now about the metaverse. So forewarned is forearmed.

Photo by Goh Rhy Yan on Unsplash

*I will make an exception ONLY for those crypto/blockchain projects which already have an actual social VR/virtual world platform which you can currently visit, namely: NeosVR, Decentraland, Cryptovoxels, and Somnium Space.

**Note: I am not talking about the MetaWhat? The Metaverse Show rooms on Clubhouse, which I am often a part of, enjoy participating in, and which are not devoted to selling you on any particular projects.