The Metaverse has the potential to transform various types of businesses. Despite being an emerging industry, leading Metaverse platforms such as Decentraland, the Sandbox, Upland, Somnium Space, and Voxels offer numerous opportunities to generate passive income.
Pioneers are already taking advantage of these opportunities. Early adopters include Somnium Space landowners who earn a living from rental fees, Sandbox game creators, Decentraland advertisers who sell billboard spaces, and players who profit from idle gameplays in gamified Metaverses.
Let’s look at their stories through the lens of making passive income in the metaverse and explore approaches that are currently in use.
1. BECOME A METAVERSE LANDLORD
Chris Bell, an owner of approximately 100 land plots in the Somnium Space metaverse, reported earning $18,000 in rental income in 2021. Bell’s strategy entails assessing the current value of a property by analyzing recent secondary market sales on OpenSea and then renting the property to tenants for an annual fee that equals 10% of the property’s current value, with the goal of achieving a 10% annual return based on the current value.
Becoming a metaverse landlord is a popular means of generating passive income in the metaverse, as it creates a mutually beneficial situation where tenants can build their own experiences on rented plots, which, in turn, generate additional income for them, as discussed in the following section.
Leasing land is allowed in all of the most popular metaverse projects. However, a common limitation is the requirement to exit the metaverse’s marketplace to close deals, which can create security concerns. Consequently, new business models have been developed to streamline the process. For instance, the partnership between LandWorks and the Voxels metaverse (previously known as Cryptovoxels) facilitates secure searches for Voxels’ lands by connecting landlords with tenants through a decentralized marketplace using a permissionless lending protocol. At present, the marketplace is also integrated with Decentraland land plots.
Decentraland, the leading metaverse platform, has also introduced built-in land rentals, enabling leasing without exiting the Decentraland marketplace. Landowners can directly list properties on-chain by approving the smart contract for rent, thereby allowing tenants to use the land on their behalf, and then signing the listing prompts.
2. Create Your Own Metaverse Experiences
Generating passive income in the metaverse is possible for both landowners and tenants. One strategy is to create experiences on land plots and collect entry fees from visitors. Various options are available, such as launching mini-games, putting on shows, building art galleries, dioramas, interactive tours, and building shops. It is not necessary to develop these experiences yourself, as you can hire developers and designers to do so for you.
The Sandbox metaverse provides an especially rich ecosystem for such experiences, equipping builders with a suite of tools to create unique experiences on virtual lands. As a result, game publishers can charge players for visiting their plots and playing games. Furthermore, the Sandbox offers two funding programs for game makers and creators who design game assets. Many talented and experienced game artists, designers, and agencies create Sandbox experiences, which can be customized for you.
Similar opportunities are available in other metaverse projects, such as hosting immersive events like Blake Hotz, who offers horror houses and try-on shopping experiences in the Somnium Space. Expanding metaverse lands through experiences can also benefit landowners by increasing the value of the underlying plot. Admix, for example, develops buildings on lands before renting them out to clients. In collaboration with L’oreal, the company built an oversized perfume bottle display in Decentraland. According to founder Sam Huber, this business model can generate profits as high as 70%.
3. BUILD METAVERSE BILLBOARDS TO EARN PASSIVE INCOME IN THE METAVERSE
In the metaverse, just as in the physical world, businesses seek to advertise their services in high-traffic areas to increase brand recognition and reach new customers. As a result, earning passive income through advertising on metaverse billboards is another lucrative option.
Forward-thinking virtual real estate companies exemplify the potential of metaverse billboards. They invest in desirable land parcels and construct advertising spaces on top of them. Decentraland Architects provides three types of billboards in Decentraland, with a minimum booking period of one month, while Metaverse Billboards focuses on Voxels and has over 250 billboards. Some firms, like Lemma, a provider of large-format ads, create billboard solutions that combine physical and virtual worlds. Billboards are simple to produce. Individual investors, whether they own or rent a metaverse property, can follow the same path as these businesses to put their investments to work. Leveraging metaverse land assets to generate passive income opens up a wide range of possibilities. However, there are two more options available to explore.
4. TAKE ADVANTAGE OF STAKING AND OTHER INTEREST-EARNING OPPORTUNITIES
Major metaverse projects issue their native cryptocurrencies, such as MANA for Decentraland and SAND for the Sandbox. As users must spend these currencies to participate in metaverse experiences, the demand for cryptocurrencies of popular metaverse projects remains high. This constant demand creates opportunities for interest-earning through DeFi, such as staking and yield farming. By investing in the metaverse’s native cryptocurrency and locking the tokens within a liquidity pool for a fixed period, users can earn interest at the end of the period.
These programs are sometimes offered by the metaverse projects directly or by popular central exchanges like Binance. Keeping track of the official channels of the metaverse project of interest is the best way to learn about opportunities in a timely manner. Additionally, there are opportunities for NFT staking, such as the case of Axie Infinity, where in-game asset owners can stake their NFT assets and take on loans up to 30% against their value.
Upland, a monopoly-like metaverse mapped to the real world, offers an interesting case where owners of newly-minted Upland properties can earn up to an annual yield of 17% of the mint price of that property. These yields are paid in UPX, the primary currency of the metaverse, and users must level up in the game to convert Upland yields to USD. The crypto space is constantly launching similar programs, so users must remain informed about these opportunities.
5. COLLECT GAME TOKENS TO UNLOCK REWARDS
In gamified metaverses, users can collect both fungible and non-fungible tokens while playing games, creating novel opportunities for generating passive income. For instance, Alien Worlds has integrated a token mining process modeled after cryptocurrency mining. Once players set up the necessary tools, the process becomes a form of idle gameplay, allowing them to accumulate the game’s native currency, Trillium (TLM), which can then be exchanged for other cryptocurrencies with real-world value.
Other metaverses have implemented similar play-to-earn mechanisms that require minimal effort, such as item fusing or breeding. By merging two existing assets, players can create new and improved NFT items, which they can then sell on secondary marketplaces for profit. My Neighbor Alice offers another interesting option for passive income through NFT collaterals. When users buy an NFT, a percentage of the purchase price goes into their collateral account, which is paid back to them when they sell the NFT back to the system.
Play-to-earn initiatives continually develop unique ways to reward players, making it essential to invest sufficient time exploring these opportunities.
The future of passive income in the Metaverse
In the future, the metaverse is expected to be an immersive environment, powered by AI, AR, VR, and hologram technologies. The convergence of these technologies offers significant opportunities for businesses to explore novel revenue streams through passive income strategies. This includes transitioning between multiple realities and creating virtual experiences that are entirely separate from the physical world.
As the metaverse continues to evolve, it is expected that Web2’s typical business models will progressively adapt to the metaverse. This means that proven methods of making profits, such as creating online courses and dropshipping, will also find new forms of income in e-commerce.
Other low-effort strategies to generate income include placing ads and recommending products in social media posts. With the metaverse’s merging with decentralized social media apps, we can expect to see variations of these revenue models adapted to the new internet.
It is worth noting that living off passive income requires hard work regardless of what the future holds. While unexpected monetization methods, such as teleporting, may be on the horizon, it is essential to remain focused and committed to exploring new opportunities in the ever-evolving metaverse.