What Happened: As two of the metaverse’s major players, Decentraland and The Sandbox have become the go-to channels for luxury brands looking to build out their presence in Web3. But a viral report, published by decentralized finance (DeFi) analytic firm DappRadar, suggests that the online giants are apparently not as popular as once thought; according to the study, The Sandbox has only ever hit a maximum daily active user count of 4,503 and Decentraland has yet to exceed 675. Unsurprisingly, conversations surrounding the numbers blew up on crypto Twitter and had the public questioning the very future of Web3. News reports have also outlined that Meta’s (formerly Facebook) Horizon Worlds metaverse is also suffering from low user numbers, low retention rates and glitchy experiences.
But what does the news mean for luxury? Decentraland currently has collaborations with Louis Vuitton, Burberry, Nike, and Sotheby’s, while The Sandbox has previously partnered with the likes of Balenciaga, Gucci, and L’Officiel. As crossovers like these continue to develop in the space, and as both platforms see a valuation at around $1.2-1.3 billion, the assumption would be that a much more active community would — and should — be present.
DappRadar goes on to state that as of October 10, Decentraland had just 30 active users in a 24 hours span. These shockingly low metrics, however, don’t disclose the full story, and DappRadar has begun rolling back on it’s calculations, to “recalculate”.
The Jing Take: The recent revelation might just deal another blow to an already wobbly Web3 industry, as luxury houses looking to buy or rent metaverse land for activations may opt to think again. Decentraland has since rebuffed the numbers, turning to Twitter to declare that, “Lately, there has been a lot of misinformation on the number of active users of Decentraland. Some websites are tracking only specific smart contract transactions but reporting them as daily active users DAU, which is inaccurate.” The company then goes on to post its September data, which equates to 56,697 monthly active users and 1,074 users interacting with smart contracts, alongside 6,315 wearables sold, 161 community events, and 148 DAO proposals.
DappRadar has also since clarified that its metrics come from the number of Unique Active Wallets, the number of transactions, and the volume of those transactions across different decentralized applications (DApps) — all of which are blockchain interactions that ignore off-chain activities, such as users simply utilizing the channel to explore the space. This confusion comes from defining “active participants” only as those making blockchain transactions on the platform, not considering more passive community members on the site as active users.
Decentraland and The Sandbox are often the starting points for many brands wanting to establish a digital foundation, meaning that education from both players is key. Luxury groups need to be open to learning and evolving alongside Web3-native communities. But cultivating a symbiotic relationship that has mass appeal is challenging, especially when the technology needed to move forward is evolving slower than the ideas.
As Daniel Langer, founder of luxury brand strategy firm Équité, reiterated during the Jing Daily X Équité Creating Luxury in the Metaverse webinar, “Crypto is the fastest adopted technology in history,” suggesting that these fashion labels need to be looking at Web3 through a patient and malleable lens. Those choosing to rush in without considering the importance of collaborative communities are not only at risk of a culture shock but also a financial loss, particularly brands that assume that their IP alone is enough to garner attention and sales.
As of today, the true value of Web3 doesn’t derive from the quick turnover of NFT collections — making headlines with some extortionate prices — but the ability to form direct connections with new audiences. With this in mind, platforms like The Sandbox and Decentraland should instead be perceived as workshops for creative brand expression rather than an end result. For metaverses built off the blockchain, numbers are far more assuring. Gaming platform Roblox, for example, reported having 52 million daily active users for Q2 this year, and 11.3 million monthly unique payers.
The early adopters across the luxury industry, who are positioning themselves in these respective worlds, are designing the visual language of the digital future in Web3. CitiBank predicts that the digital industry will be worth $13 trillion by 2030, but this number can only be achieved if companies understand that the success behind Web3 boils down to its interoperability. As groups like Decentraland and The Sandbox continue to ride out the turbulence, it’s undeniable that they are, at the same time, slowly but surely setting the precedent for a collaborative virtual future ahead.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.