The Wall Street bank has opened a lounge in blockchain-based Decentraland.
JPMorgan, the largest bank in the U.S., said it has become the first lender to arrive in the metaverse, having opened a lounge in Decentraland, a virtual world based on blockchain technology.
As well as the unveiling of the Onyx lounge (the name refers to the bank’s suite of permissioned Ethereum-based services), JPMorgan also released a paper exploring how businesses can find opportunities in the metaverse.
“There is a lot of client interest to learn more about the metaverse,” Christine Moy, JPMorgan’s head of crypto and the metaverse, said in an email. “We put together our white paper to help clients cut through the noise and highlight what the current reality is, and what needs to be built next in technology, commercial infrastructure, privacy/identity and workforce, in order to maximize the full potential of our lives in the metaverse.”
With the mainstream acceptance of things like non-fungible tokens (NFT), the past year has seen a breathless advance into the metaverse, a catch-all for immersive gaming, world-building and entertainment, fueled by integrated commerce applications. In January, electronics giant Samsung opened a version of its New York store in Decentraland, and in November Barbados established a metaverse embassy, also in Decentraland.
JPMorgan begins its assessment of “metanomics” by pointing out that the average price of a parcel of virtual land doubled in the latter half of 2021, jumping from $6,000 in June to $12,000 by December across the four main Web 3 metaverse sites: Decentraland, The Sandbox, Somnium Space and Cryptovoxels.
“In time, the virtual real estate market could start seeing services much like in the physical world, including credit, mortgages and rental agreements,” said the JPMorgan report. It added that decentralized finance (DeFi) collateral management could well come into play, and that rather than traditional finance companies this could be done by decentralized autonomous organizations (DAO).
Work in the metaverse will also be gainful, said the report, pointing to a range of entertainment providers, as well as apps like RTFKT, a virtual shoe designer recently acquired by Nike. Another big spend will likely be on advertising, the bank said, citing a prediction that in-game ad spending is set to reach $18.41 billion by 2027.
The JPMorgan paper attempted to illustrate the metaverse hype versus the reality, stating that many areas need to improve. These include the overall user experience and performance of avatars, as well as commercial infrastructure.
“We believe the existing virtual gaming landscape (each virtual world with its own population, GDP, in-game currency and digital assets) has elements that parallel the existing global economy,” according to the bank report. “This is where our long-standing core competencies in cross-border payments, foreign exchange, financial assets creation, trading and safekeeping, in addition to our at-scale consumer foothold, can play a major role in the metaverse.”