Virtual real estate and NFTs are driving the development of the metaverse. The document analyzes trends in the sector including the popularity of virtual worlds and gaming, the rise of NFTs, and increasing virtualization. It identifies opportunities and challenges for tech incumbents and discusses blockchain-based games, social metaverse platforms, and AR/MR gateways. The document also outlines the virtual landowner workflow, job categories, tech solutions, and important criteria for investing in virtual land and infrastructure companies.

1. Virtual Real Estate + NFTs
Technology Landscape
Q3 2021

2. DISCOVERY
● Interviews with a diverse group of industry
participants
● Participating in conferences, virtual events, and
virtual communities on NFTs and metaverses
● Reading industry reports, protocol whitepapers,
and other filings
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Methodology
Field Study Participants
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2
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HYPOTHESIS TESTING
● Database of virtual land companies and tech
companies serving the metaverse market
● Distillation of learnings across discovery channels
SYNTHESIS & RECOMMENDATIONS
● Identifying high-value tech solutions across
relevant industry workflows
● Recommending investment criteria
Crypto retail
investors
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SECTOR TRENDS
How is technology driving the industry?
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4. It is an exciting time for metaverse land plays
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5. But first: what is the metaverse?
The metaverse is commonly referred to as the “successor to the internet.” Here’s how virtual RE will help drive it.
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Sources: Matthew Ball, industry expert interviews
The metaverse will…
Metaverse gateways
• Span both the physical and digital worlds
• Be a fully functioning economy
• Offer unprecedented interoperability
• Be created and operated by an incredibly wide range of
contributors
• Virtual or simulated worlds
• Digital economies
• Games
• User-generated content platforms
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6. Virtual Real Estate sits at the convergence of three tailwinds
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Popularity of virtual world
gaming
Opportunity:Theglobalgamingmarketis
expectedtogenerate$175Binrevenuein2021.
Amongthese,virtualworldplatformsdrivenby
user-generatedcontentareespeciallypopular,
suchasRobloxandMinecraft.
Challenge:Ascentralizedplatforms,corporate
ownershavethepowertodeleteaccountsand
destroyassets
Meteoric rise of NFTs and
emerging use cases
Opportunity:NFTpopularityhassurged
exponentially,with$2.5Bspentinthefirsthalf
of 2021alone—a131xYoYincrease.
Challenge:NFTadoptionisstilllow,leadingto
unprovenusability.Asaresult,thetrendiestNFT
types—collectibles,art,avatars—haveexhibited
extremevolatility.
Increasing virtualization of
physical world
Opportunity:AR/VRtechnologyisalreadyused
inphysicalrealestateforvirtualtours,
constructionstaging,commerce,and
advertising.
Challenge:Digitalpropertyrightsarenottiedto
physicalpropertyrights,leavingownersunable
tocontrolormonetizeallactivity
Sources: Primary market research, industry expert interviews, Newzoo, nonfungible.com 9

7. Assuming a shared blockchain
protocol, NFTs are useable in other
contexts (esp. through IP partnerships)
NFTs are the path to the open metaverse
NFT cannot be removed from crypto
wallet by anybody else, even if original
use (e.g. a game) is no longer functional
Interoperability
True Ownership
NFT assets cannot be duplicated
or copied; each NFT must be
minted anew
Demonstrably Scarce
Creators and owners can
monetize digital experiences from
their NFTs, such as advertising
Content Monetization
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1. Property Evaluation
Virtual lands that are undervalued based on
market comps or that have a unique market angle
can be capitalized on and flipped
2a. Development/
Renovation
Owners can act as a GP and “develop”
interactive voxel experiences
2b. Development Services
Teams of traditional architects, 3D game
developers, and analysts can provide build-to-suit
development services for brands looking to access
virtual platforms
3a. Monetization
(User Activity)
Income-generating developments such as games,
shops, and NFT access gating
3b. Monetization
(real estate)
Parcels can be fractionalized and sold as condos
or rented for advertising space and other uses
4. Disposition
Exit based on return profile (buy-and-
hold, fix-and-flip, merchant builder, etc.)
Metaverse land plays are
similar to physical real estate
investments, although the
trades involved are more
akin to web and game
development
Virtual Landowner Workflow
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“Traditional” Real Estate
• Virtual investor
• Virtual architect
• Virtual developer-for-hire
• Virtual transaction and capital brokers
• Virtual appraiser
New Categories
• Resource collector
• Token economist
• Community moderator
• DAO creator
• Curator
• Defi farmer
• Asset creator (wearables, furniture)
Job Categories for Virtual Real Estate
The emergence of metaverse land has already begun creating new jobs—both resembling traditional real estate and in entirely new categories
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TECH SOLUTIONS
Where is the whitespace and what makes a successful solution?
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Sources: Company websites, Techcrunch
Social media and
user-generated
content platforms
Democratization
of e-commerce
Virtual worlds and
spatial software going
mainstream
Decentralized and
remote productivity
tech and tools
Incumbents: Traditional Internet-Based Companies
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Facebook Apple Microsoft Google
Opportunity: Based on Zuckerberg’s
recent interview track, Facebook has
clear intentions to expand up and
down the stack and become the
primary platform on which users
engage with the metaverse.
Investments in metaverse-oriented
assets such as consumer hardware and
computing interfaces are growing.
Challenge: Has the most to lose, as the
metaverse can usurp it as a social
engagement platform. The only tech
giant currently stuck at the app/service
layer; troubled track record in third-
party development and user data will
be a barrier to breaking out.
Opportunity: Become the dominant
provider of access points to the
metaverse. Already investing in AR
devices and connective tissue such as
wearables and computing that will
easily translate to metaverse
applications.
Challenge: Building an open platform
for creation is antithetical to Apple’s
centralized ethos. Unlikely to be
operator/driver of metaverse.
Opportunity: Already a primary
driver in virtualized future of labor
and information processing.
Technical prowess in shared online
content/operations through LinkedIn
and Azure, and expanding gateway
experiences such as Minecraft, Xbox
Live, and HoloLens. Metaverse
gateway development beginning
with Mesh.
Challenges: Ability to maintain a
dominant role in the work economy
will depend on reclaiming
OS/hardware leadership that was
ceded during the PC to mobile
transition.
Opportunity: Remain market leader
in indexing both digital and physical
world, aggressively moving into
digitizing home, virtual assistants,
and more. Metaverse can unite all of
Google’s sprawling investments to
date.
Challenges: Limited success in
wearable computing opportunities to
date. Google’s bread and butter of
monetizing data faces threats from
both democratization and
regulation.
The metaverse will require infrastructure that does not currently exist. While tech incumbents benefit from massive resources and user bases, they will also be
resistant to cross-integrating systems and sharing data, which will devalue their current network effects. As a result, they are limited by their centralized
development models and relationship with users—leaving whitespace for more flexible startups to emerge.
The Role of Big Tech Incumbents
While there is ample space for tech incumbents to help build the metaverse, opportunities also come with threats
Sources: Company websites, industry expert interviews, primary market research 15

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Metaverse-native
blockchain games
Social/functional
metaverse platforms
AR/MR metaverse
gateways
User-Generated Content
Dev-first content
Sources: Company websites
Map of Blockchain-Based Metaverse Gateways
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14. Builds on the booming popularity of virtual economies and sandbox gaming:
In the current game market, centralized ownership and control over the trading of virtual goods
restricts the value of in-game activity. The value-add over incumbent gaming is true legal
ownership and reliable monetization.
Easiest entrance to the metaverse as gaming community is already fluent with virtual platforms.
Gaming incumbents have shown little interest in entering the blockchain in the short-term.
The majority of NFT games still rely on a core development team for most content. Some, such
as Sandbox, put user-created experiences and relationships with IPs first.
→
200M
Copies of Minecraft sold
$176B
Global games market
→
→
$38B
2021 IPO of Roblox
→
Metaverse-Native Blockchain Games
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Sources: Company websites, Newzoo, Statista 17

15. Platforms where the primary focus is on productivity or socializing (includes platforms
with no clearly defined purpose). Emergent uses include microblogging, networking,
retail, and limited gaming.
Thus far have attracted the most
media and early investor attention:
Currently, most platforms feature limited creation tools and a lack of content outside of
advertising, resulting in low return user engagement.
Strong legacy from existing social media and user-generated content platforms such as
Facebook and YouTube; as a result, also faces the strongest competition from these
incumbents entering the space.
→
→
→
→
Social/Functional Metaverse Platforms
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67% Of Virtual Land
Trading Volume
Sources: Company websites, nonfungible.com 19

16. These platforms map a virtual layer around the physical world. Maps are fractionalized
into NFTs that can host content such as objects, advertising, games, and events.
Strong reliance on mobile immersion, capitalizing on both AR/VR as fastest-growing
media content and mobile as fastest-growing gaming segment:
For customers not already fluent with crypto or virtual platforms, shallowest learning
curve in terms of user experience due to the tangible, online-offline component.
Most nascent segment of the three, with the fewest existing startups and no company
that has advanced beyond selling parcels thus far.
→
→
→
→
AR/MR Metaverse Gateways
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30%
YoY Growth of AR/VR
content
52%
Mobile Share of Games
Market
Sources: Company websites, Newzoo, PwC 21

17. Zooming Out: Protocols and Infrastructure
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Value
Captured
Internet Blockchain
Application
Layer
Application Layer
Protocol Layer
Protocol
Layer
As a result, investing
in an app is also
placing a bet on its underlying
protocol and tokens.
The Fat Protocol Thesis: Unlike with the internet, where the majority of value is captured through
applications (like Google) vs. protocols (like HTTP), investing in blockchain apps directly fuels value at the
protocol layer.
Similarly, regardless of
which platforms
become the breakout
winners, all of these apps will rely
on a strong infrastructure of
supportive technology.
Sources: Joel Monegro, industry expert interviews 23

18. Component Purpose Examples
Avatar and Identity Digital identity and user branding
Artificial Intelligence Interface optimization and humanization for the
metaverse
Visualization and Digital Twin Enablement of 3D experiences
User Interface and Immersion Streamlining user interaction with metaverse
gateways, largely through hardware
Marketplaces Marketing and trading of digital assets
Developer Services Tools that enable NFT/blockchain ecosystems and
economies
Sources: Company websites, Pitchbook, Crunchbase
Foundational
Innovative
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The Virtual Real Estate Company Tech Stack
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INVESTABLE TRAITS
What do potential investors need to consider?
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20. Component Summary/Description Pros Cons
Invest in Equity of OpCo Directly buy equity in virtual land
companies
Most similar to traditional VC
investing
Also betting on underlying protocol;
DAO and governance concerns
Virtual Land Trading Monetize based on underlying asset value Can play like traditional RE with
regards to comps and valuation
Essentially a derivative instrument—
has to be exchanged back through
two token bonding curves
Virtual Land Development Monetize based on operating revenue Opportunities for passive and
recurring revenue
The most costly; requires upfront
development and active asset
management
Acquire Tokens Trade directly or participate in ICO
Gets voting rights in the DAO, can
use for token staking or yield
farming
Market and liquidity risk as well as
lockup periods
Infrastructure Companies Directly buy equity in
protocol/infrastructure layer companies
Regardless of who the winner in
the virtual land space is, all will
be reliant on certain tech stack
components
Reliant on broader market success
and expansion
Metaverse Funds Invest or partner with funds like Republic
Realm, Sfermion, etc.
Most diversified exposure to all
vehicles
Diminished upside potential vs.
investing directly
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Investor Options in the Virtual Land Space
Traditional VC Similar to Traditional RE
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OpCo Double Click: Investment Criteria
Needs to have a clearly-defined and well-executed purpose with content
beyond just advertising—whether meetings, gaming, or social.
While technical and crypto experience is a plus, founders benefit from
off-chain experience in media, gaming, consumer, or related fields.
Open market opportunity with minimal pressure from internet/media
incumbents to segment off the market or cluster IP.
Economy needs to be scalable and sustainable as new users are introduced
so that value is not accrued all up front.
Early signs of user governance; guidance, assistance, and continuous
support for retention and engagement of new users.
Community
Market
Product
Team
Tokenomics

22. Component B2B B2C Notes on Investable Traits
Avatar and Identity
● Proprietary solutions within platforms are a strong competitor
● Potential interoperability issues across protocols, leading to IP clustering
● Unclear how these apps will fit into the future of KYC/AML and cryptowallets
Artificial Intelligence ● AI infrastructure with broad market appeal to many different metaverse gateways
● Ease of on-ramp for users that does not feel uncanny
Visualization and Digital Twin
● Apps selling all-in-one turnkey experiences to brands can capitalize on strong
metaverse interest but limited fluency
● Robust business models with recurring revenue streams
User Interface and Immersion ● Nearly all metaverse companies will likely rely on mobile hardware and enablement
● However, these companies are asset-heavy and user adoption is currently very low
Marketplaces
● Underlying SaaS layer of discovery, analytics, comps, or other features will be key
to adding value for users
● Partnerships will largely be reliant on agreeing to smart contract royalty structures
Developer Services
● Issuance and management of social tokens; tokenomics and community
management tools
● Requires strong technical teams with expertise building in crypto space
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Infrastructure Companies Double Click: Investable Traits Across the Stack
Sources: Industry expert interviews, primary market research