Compiled by: Tim, PANews

Key Takeaways

It’s been four years since Mark Zuckerberg went all-in on the metaverse, and now the concept has been labeled one of the biggest flops in tech in recent years.

One of the main reasons for the decline of the Metaverse is the rise of generative AI.
Despite the overall downturn in the industry, some projects still maintain strong development momentum. Experts point out that this field is undergoing a process of eliminating the false and retaining the true, gradually squeezing out the false participants.

When Mark Zuckerberg laid out his vision for the metaverse in October 2021, the idea of a digital utopia in which people could connect and interact in immersive virtual environments sounded attainable.

The billionaire founder believes that the Metaverse is the next frontier of the Internet, and the company has begun investing billions of dollars to develop the technology needed to realize its Metaverse strategic vision.

Zuckerberg even renamed Facebook to Meta to reflect his new strategic ambition to build the Metaverse, a virtual world built on virtual reality and augmented reality technologies where people can interact, work and create.

Given the sheer amount of money Meta (which has invested approximately $46 billion in the metaverse since 2021) and other competitors have poured into the concept, it’s hard to imagine why the metaverse hasn’t taken off.

Artists including Sir Elton John and Travis Scott have performed concerts in the Metaverse, while people have begun to tour cities and visit art exhibitions in virtual environments.

Yet four years after Meta CEO Mark Zuckerberg’s strategic shift, the Metaverse has become one of the biggest tech failures in recent years. Billions of dollars of funding that once poured into the space have receded, and public attention has plummeted as it fails to deliver on its grand promises.

According to DappRadar data, in 2024, the transaction volume and sales volume of the Metaverse NFT project fell to the lowest level since 2020, with transaction volume plummeting 80% year-on-year and sales volume plummeting 71% from the same period last year.

Zuckerberg's $46 billion went down the drain? What happened to the Metaverse track?

 Source: DappRadar

AI "intercepts" the Metaverse

According to experts, one of the main reasons for the decline of the Metaverse is the rise of generative artificial intelligence (AI) chatbots such as OpenAI’s ChatGPT and Google’s Gemini.

“Generative AI enables immediate and scalable business impact,” Irina Karagyaur, co-founder and CEO of BQ9 Ecosystem Growth Agency, told Cryptonews.

Karagyaur, who is also an expert member of the United Nations International Telecommunication Union (ITU) Metaverse Focus Group, further stated:

Unlike the Metaverse, which requires high infrastructure investment, AI tools such as ChatGPT, MidJourney, and DALL·E demonstrate immediate availability. Enterprise users and consumers are turning to the AI field for automation process optimization and content generation efficiency improvement. The strategic shift in venture capital is particularly significant: capital is pouring into AI startups, while Metaverse-related projects are being downgraded.

Herman Narula, CEO of Metaverse venture capital incubator Improbable, revealed to Cryptonews that artificial intelligence played a significant role in the decline of the Metaverse.

He said that AI technology has seized the industry's attention as the "next generation of disruptive technology", resulting in a large-scale shift in the attention of the metaverse. In addition, this evolution also involves multiple other factors.

“The term ‘metaverse’ has drawn criticism for being associated with speculative cryptocurrency hype, with companies raising large amounts of money, selling large amounts of assets, and making a series of promises that ultimately failed to deliver,” Narula further noted:

“More importantly, early versions of the metaverse or prototype metaverses have failed to live up to expectations, providing closed and restricted environments that greatly limited user activities.”

After Meta (formerly Facebook) announced its entry into the metaverse, the prices of related tokens such as Decentraland (MANA), The Sandbox (SAND) and Axie Infinity (AXS) have risen sharply.

Today, as doubts about the future of the Metaverse dream continue to ferment, the price of related tokens has plummeted amid extremely low daily active user numbers.

Since hitting their all-time highs in November 2021, the prices of SAND, MANA, and AXS tokens have plummeted by more than 95% from their peaks. Among them, MANA once hit an all-time high of $6.96, SAND broke through $5.20, and Axie Infinity token AXS once reached a sky-high price of about $153.

However, a new on-chain data analysis from cryptocurrency research firm Glassnode shows that despite the volatile price movements, "convincing holders are steadily increasing their positions" in all three projects.

For example, Glassnode noted that the MANA token formed a significant chip concentration area around $0.60, reflecting an increase in market buying activity after the price drop. Similar chip accumulation patterns also appeared on SAND and AXS tokens.

Glassnode believes that: "The continued accumulation of chips in major metaverse tokens indicates that many investors view these projects as undervalued investment opportunities rather than failure cases."

Zuckerberg's $46 billion went down the drain? What happened to the Metaverse track?

According to CoinGecko data, as of press time, the native token of Decentraland platform, MANA, is currently trading at $0.27, down 2% on the day; The Sandbox platform token SAND fell 3.2% to $0.28; Axie Infinity ecosystem token AXS fell more than 1% to $3.43.

Hardware becomes a roadblock to implementation

Charu Sethi is an expert in the field of Web3 and the chief ambassador of Polkadot. In an interview with Cryptonews, Sethi said that the business model of the metaverse was not fully mature when its concept became popular.

“At the time, major brands launched NFTs and expensive virtual land projects, but almost no users gained sustainable value,” she said. “For example, Decentraland and The Sandbox have long hovered below 5,000 daily active users despite attracting millions of dollars in investment.”

Sethi also mentioned that the high prices of high-end virtual reality (VR) and augmented reality (AR) headsets and "complicated login processes" further hinder the popularity of the Metaverse.

Hardware devices are the key to enhancing the Metaverse experience.

“As a result, funding and attention have shifted to AI, which offers immediate ROI,” she stressed. “For many businesses, the rapid gains from AI dwarf the metaverse.”

As part of the Metaverse race, Meta and Apple have launched VR headsets that immerse users in virtual spaces.

With these hardware devices, people can do all kinds of things in the metaverse through digital avatars: games, social interactions, and even virtual offices. But these head-mounted display devices are a bit expensive.

Apple Vision Pro costs $3,500, and Meta Quest 3 headsets start at $500. In contrast, AI tools such as ChatGPT offer limited free services, and their $20/month premium membership version provides unlimited services without requiring users to purchase additional hardware.

Karagyaur, a metaverse expert at the International Telecommunication Union (ITU), pointed out that the VR headset market has stagnated because devices such as Apple Vision Pro and Meta Quest 3 "can only attract niche user groups and fail to open up the mass consumer market."

She said: "The high investment and high risk in the metaverse are becoming increasingly difficult to justify due to the failure to explore a sustainable profit model."

Kim Currier, marketing director of the Decentraland Foundation, pointed out that the Metaverse is not only a narrative for VR/AR hardware. "It is also about creating a virtual space for human collaboration, where users can socialize, explore and create new things together," she emphasized.

Currier went on to say that while Apple's Vision Pro and Meta Quest 3 "have set off a wave of innovation, consumers will still face the fact that it is not realistic for the vast majority of users to wear a headset all day long."

Currier is more interested in how AI and the metaverse can bring real benefits to people, whom she calls “core users of the metaverse.”

The Decentraland executive does not see the rise of generative AI as “competition” but rather as “opportunity,” stating:

“AI tools can accelerate the construction of virtual worlds, help people track what’s happening in virtual spaces in real time, and make the experience of the metaverse more dynamic and personalized. It’s fair to say that AI will help virtual worlds evolve in ways that we’ve only just begun to explore.”

Industry reshuffle

Currier, marketing director of the Decentraland Foundation, attributed the reasons for the decline of the metaverse to: "market bubbles caused by overdrawn expectations; technical bottlenecks that are difficult to break through; and structural changes in the technology industry."

Currier told Cryptonews that the current phase of the Metaverse’s cold reception is actually a reconstruction of the industry’s value , and this reshuffle is screening out loyal builders:

"Like all bear market cycles, this is a major industry reshuffle - clearing the market to make room for loyal builders who will understand the boundaries of the metaverse and focus on products that users really need."

Karagyaur, CEO of BQ9 Ecosystem, emphasized that the metaverse is not dying out, but is undergoing a technological paradigm shift - the field is "evolving into an AI-enabled vertical application cluster based on public demand."

“While the initial hype may have faded, what remains is something far more profound: a shift from corporate-controlled virtual worlds to human-centered, community-driven ecosystems,” she elaborated, adding:

“While industrial applications continue to grow, such as Siemens’ collaboration with Nvidia on digital twins, the real energy has shifted to platforms like Roblox, Fortnite, and Everworld, where communities of users, not companies, shape the experience. These platforms don’t sell escapist solutions; they empower people to create, connect, and collaborate.”

Sethi, a representative of the Polkadot blockchain project, cited industry data and pointed out that the daily active users of the gaming platform Roblox exceeded 80 million in 2024, and this year it reached a peak of 4 million concurrent online users , continuing to lead the Metaverse user stickiness index.

Epic Games' phenomenal game "Fortnite" maintains a strong growth momentum - according to the latest operating data, the number of users reached in a single event has steadily exceeded 10 million , continuing to consolidate its position as a leading platform for metaverse social entertainment.

Polkadot blockchain analyst Sethi deeply deconstructs the "Fortnite" ecological empowerment model - through the brand strategy of virtual-real linkage with luxury brand Balenciaga, phenomenal film and television IP "Star Wars", etc., the platform has successfully built a business closed loop with an average daily user retention of millions , confirming the continuous value creation of Metaverse IP operations.

Hope in the Dark

Experts say Zuckerberg's big bet on the Metaverse has turned into a complete disaster. In 2024, Reality Labs, Meta's division responsible for developing Metaverse products, reported a record operating loss of $17.7 billion.

According to Meta's official financial report, Reality Labs has accumulated losses of nearly $70 billion over the past six years. Although Zuckerberg's Metaverse blueprint has come to nothing, there are still several projects in the ecosystem that are growing against the trend.

Blockchain data analysis agency DappRadar released the "2024 Game Industry Report", focusing on promoting the two most influential metaverse projects in the industry this year: digital identity protocol Mocaverse and blockchain gaming platform Pixels. Both achieved dual breakthroughs in user scale and commercial value through differentiated ecosystem construction strategies.

Zuckerberg's $46 billion went down the drain? What happened to the Metaverse track?

 Source: DappRadar

The Mocaverse project created by Animoca Brands launched the MOCA token and an on-chain decentralized identity called Moca ID, which attracted 1.79 million user registrations in a short period of time and successfully integrated with 160 Web3 applications.

The report notes that the project has received $20 million in funding to expand its ecosystem and launched the Realm Network, which aims to "facilitate interoperability in gaming, music, and education."

Pixels was first launched in 2022. Last year, the browser-based farming-themed multiplayer online game "gained huge traction" and its number of daily active users exceeded the one million mark.

The Pixels project has migrated from Polygon to Ronin Network and integrated its assets called "FarmLand NFTs" into the Mavis Marketplace.

DappRadar also mentioned some important developments in Yuga Labs' Otherside metaverse, The Sandbox, and Decentraland. Among them, Decentraland launched a new version of its desktop client, which is said to "improve operating performance and optimize visual effects."

The report points out that Decentraland’s creator-centric economic system is its “distinctive feature”, with creators not only able to retain 97.5% of their sales, but also receiving a 2.5% royalty share when digital assets are traded a second time – a revenue distribution ratio that sets a record high in the industry.

Despite this, some aspects are still seriously lacking. According to DappRadar:

"Without a 'killer app' to drive mass adoption, media attention has waned and companies that had previously invested heavily in virtual worlds have shifted their focus."

Is the Metaverse in decline?

Karagyaur, the ITU expert, told Cryptonews that the success of the metaverse will “depend on integration, not isolation.” She explained:

"It will only continue to grow where it complements existing industries, not where it seeks to replace them. The next phase of digital technology will no longer be about escaping reality, but about improving reality itself."

Narula, founder and CEO of Improbable, which built Yuga Labs’ metaverse platform The Otherside, pointed out that value-driven innovation will save the metaverse. Beyond dazzling visuals, users must have practical value.

"The metaverse has always been a concept of something deeper and more grounded in reality, rooted in people's basic need for self-actualization," he said.

“While the ‘flashy’ Meta investor conference-style metaverse has faded, the technical, pragmatic version we’re working on is still going strong,” he said.

Narula also mentioned that teenagers and minors "spend a lot of time on gaming platforms like Minecraft, Roblox, and Fortnite, participating in increasingly complex virtual experiences, economies, and even doing virtual jobs."

DappRadar：三季度虚拟世界交易量暴跌91.61%至9000万美元

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