The internet is rapidly evolving in front of our eyes. What began with digital images of apes, cats, and 8-bit faces has sparked a revolution that has the potential to revolutionize every aspect of our lives.
When we think of the internet in the modern era, we immediately think of the services we use: Facebook, Google, Instagram, Twitter, and Spotify, to name a few. However, this does not accurately depict how the current digital landscape is interacting with our developing virtual and augmented realities (e.g., 3D Game apps, interior decorating apps, etc). These technologies have sucked us into the screen — not literally, but it feels that way — and we are encountering reality in a completely new way.
Digital tools have manipulated our auditory and visual senses, and it is bound to increase in the near term. Thus, what term best describes the future of the internet? A future in which novel social connections and sensory experiences exist? Indeed, you may have heard of it previously. That would be the metaverse.
As the metaverse builds out, we’ve seen people across the globe use collectible NFTs as an expression of their virtual selves. The top 10 PFP collections have generated a total trading volume of US$ 7bn+ and have ~100k buyers.
As AR/VR worlds develop, avatars are going to become 3D representations of ourselves. They will be able to replicate our expressions and gestures, thereby making interactions come alive. We will potentially have multiple avatars: a photorealistic one for work and school, a stylized one for hanging out with friends, and a fantasy one for playing video games.
At Woodstock, we believe the profile picture(PFP) movement should be seen as metaverse fashion 1.0. For centuries, fashion has been a strong form of expression and social signaling. Let us visualize how fashion will evolve as we step into the metaverse.
People living in the Amazon region wear long clothes to protect themselves from the insects in their surroundings. In Mumbai, people don raincoats during the monsoon season to avoid getting wet.
Why should people pay money for pixelated clothes? Fair question. We answer this in two parts:
- Clothes: value beyond protection
- Luxury brand, LVMH’s 2021 revenue numbers give us a great launchpad for the answer. Customers spent US$ 70.7bn on luxury goods out of which US$ 34bn was on fashion goods.
- In addition to their protection utility, clothes are used to indicate status and are an expression of one’s identity. We extend the same argument for accessories.
- Pixels: value accrual in virtual worlds
- We see the metaverse as a persistent virtual reality, which will get blended in with the real world. As users spend more time in the metaverse, they will assign a significant value to their digital assets.
- There are a few historical case studies for this behavior of digital worlds accruing value:
- Time: Second Life residents had spent more than 1 billion hours in the virtual world back in 2019.
- Money: Fornite players spent US$ 1bn for in-game characters, weapons, and parachute skins in 2021.
With this thesis, we start looking into how digital wardrobes are shaping up and what role will NFTs play in this evolution.
Apart from opening up new design paradigms, virtual wardrobes will allow customers to have access to global fashion houses without traveling to hubs like Milan and Paris. These coveted pieces can then be displayed to a wide audience in the metaverse, instead of limiting oneself to those physically around us. Furthermore, by cutting down logistics costs digital couture solves the problem of fast fashion and allows homegrown brands to engage with their customers. Depop is a strong example of customers wanting to have a personalized and community-driven shopping experience. As more people spend time in the metaverse, new customer behaviors will emerge and the fashion industry must keep up with these trends.
MAKING NFTs FASHIONABLE
NFTs are a data standard to represent unique assets on the blockchain. They are a natural fit to embody fashion items in the metaverse. This solves the problem of counterfeits and promotes resale. To understand the demand and impact of resale we look at the physical world where resale services like Vestiaire have 550k new listings every month, TheRealReal has saved 1.19bn liters of water and ThredUp has displaced 1bn lbs of Carbon Dioxide emissions. Similarly, clothing rental is filled with logistical hurdles – however, smart contracts will enable this behavior with one click.
THE ROAD AHEAD
The metaverse is in its nascent stages and faces a chicken and egg problem: users don’t spend time in these spaces because they are not bustling with experiences and peers; creators are not spending resources on building an empty virtual world. However, metaverse companies are building the infrastructure for the creator economy and Gartner’s research suggests that by 2026, 25% of digital native people will spend at least one hour per day in the metaverse. Drawing parallels from trends we saw during the rise of virtual worlds like Sims and Second Life, we try to understand why will this time be different?
It is the existence of stronger foundations that give the virtual worlds a better chance this time around. With high penetration of the internet, evolved hardware devices, and a gradual shift to a digital life – the metaverse will have exciting ramifications for the traditional world of fashion. We conclude with a snapshot of metaverse adoption by top-performing brands.
See you in the metaverse!
Neel Daftary, Research Lead, Woodstock drafted an insightful article titled “Smart Forest DAO” highlighting how community governed mechanisms can be used by leveraging blockchain and smart contracts to preserve social goods. The article talks about the unique concept of “Forests and Trees owning the land they are grown upon ” which is intriguing and innovative at the same time. Read more on the blog.
WOODSTOCK IN THE NEWS
- Yourstory Metaverse Summit powered by Woodstock was held on March 25-26. It was a virtual summit, which saw participation from top web2 and web3 startup founders, various VC institutions, and a large part of the Indian developer community.
- Woodstock hosted a series of meetups in cities including Bangalore, Mumbai, and Delhi, which drew a large number of entrepreneurs, venture capitalists, and thought leaders for some open and candid discussions about Web3 and regulatory frameworks in India.
- During the event-packed week in Dubai last month, we organized Woodstock Oasis where we try and invite the best minds of the Web3 ecosystem and jam on the possibilities of a decentralized and equitable world. The event saw 200+ people and was widely appreciated by the guests.
- On March 31, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) approved provisions to Europe’s Transfer of Funds Regulation that restricts Virtual Asset Service Providers (VASPs)
- MetaMask, one of the most popular Ethereum crypto wallets, has added support for Apple’s financial platform in an effort to expand into the ecosystem. iPhone users can now use Apple Pay to buy crypto on MetaMask.
- The Indian Finance Bill 2022, with new 30% crypto tax rules, was approved on 31st March by Rajya Sabha, the upper house of the Indian parliament, to make it a law, which will come into effect starting on April 1.
- The influential developer of projects such as Fantom and Yearn Finance, Andre Cronje announced on 7th March that he is leaving DeFi.
- The founder of Terraform Labs (TFL) and Ethereum competitor Terra Do Kwon has outlined plans to accumulate a whopping $10 billion worth of Bitcoin (BTC) to add to the project’s stablecoin reserves.
- Ronin – an EVM blockchain for play-to-earn games – recently fell victim to one of the largest hacks in the history of crypto. A whopping 173,600 ETH and 25.5 USDC were drained from Ronin bridge.
- Yuga Labs, creators of the Bored Ape Yacht Club (BAYC), confirmed it has acquired the intellectual property (IP) of the CryptoPunks and Meebits collections from Larva Labs thus granting IP and Commercial Rights to Individual Owners.
- HSBC, one of the largest European banks, with total assets of $2.4 trillion, announced its intention to buy a virtual plot of LAND within The Sandbox for an undisclosed amount.
- On March 18, Time announced the release of a full magazine issue that will be available as an NFT. This latest endeavor from the legacy publication marks the first time any digital or print publication has released an entire issue on the blockchain.
*Updated on 1st April 2022
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