Metaverse Land: What Makes Digital Real Estate Valuable

by Scott Duke Kominers

Originally Published at: 16Z Crypto

People have been hanging out in digital spaces since the chat rooms and gaming MUDs (“multi-user dungeons”) of the early Internet. But these days, the digital world is taking on a growing share of our activities and time – and it’s becoming more physical than ever before.

A powerful recent example is the Zoom background, which made it possible to separate speakers in a video call from the physical rooms surrounding them. That effectively gave us the power to create private digital spaces. People quickly started making these spaces their own – personalizing them with a variety backgrounds of everything from Serengeti vistas to Studio Ghibli films.

And now metaverse platforms can give our digital spaces a sense of physical structure and geography, creating new ways to explore and interact within them. (I’ve attended several conferences hosted on the platform, for example, in which the Zoom rooms used for presentation sessions are connected by an eight-bit digital landscape, where participants can quite literally run into each other.)

How should we think about what to build for the metaverse? The framework is so simple as to be almost tautological: People use digital spaces when they create opportunities not available in the “outside option” of the physical world. This means that the value of those spaces is determined by the activities people want to engage in there, and how the affordances of digital space support those activities.

Read7 Essential Ingredients of a MetaverseOpens in a new tab.

Again, in the case of Zoom: you’re much more likely to organize a group video call for far-flung friends and relatives than for a chat with a neighbor (at least in non-pandemic times). Likewise, one is more likely to go to a metaverse concertOpens in a new tab. with friends when either the friends or the musical artists (or both) are difficult to see in-person. And while many people will soon be having meetings in virtual conference room spaces, nobody is going to want to take long, boring “commutes” in the metaverse when they could just “teleport,” moving between digital locations instantly. Meanwhile, the metaverse will always be the go-to when it affords experiences that are not available in the physical world – like swashbuckling or exploring distant galaxies.

All of this is still in its early stages, making it difficult to predict precisely what will create the greatest and most lasting value. Nevertheless, it’s still possible to reason about what might drive value for users in our ever-expanding digital space.

Metaverse land and real estate

People have talked about the concept of “digital real estate” for decades. Historically, the phrase has referred to scarce space – often dedicated to advertising – on a given publisher’s website, like the New York Times homepage. Today, people have grown accustomed to centralized entities and attention aggregators – the likes of Facebook and Google – owning many of these spaces, which they rent out.

Digital real estate has always had value. What’s differentOpens in a new tab. about web3Opens in a new tab. is that digital asset paradigms like non-fungible tokens (NFTsOpens in a new tab.) make it possible for individuals to uniquely own – not just rent – specific pieces of digital real estate and metaverse land and locations for private or shared use. Blockchains, a core web3 technology, enable this by offering decentralized, tamper-resistant, and publicly accessible records of who owns which digital assets.

Given that digital space is, in theory, infinitely expansible, skeptics might still question whether the concept of “owning” digital land or buildings even makes sense.

But metaverse platforms have their own forms of scarcity: There’s only so much space on the wall of a digital building, for example; and thanks to geography, there are only so many buildings close to an amenity like a virtual concert hall or a resource deposit like a Vespene geyserOpens in a new tab..

But at the same time, distance can be less of a factor thanks to the possibility of fast travel or teleportation. Thus, what matters for thinking about the value of a given piece of metaverse land and real estate is how people’s activities inform its use.

People (or rather, their avatars) might walk out of a virtual concert together and then meander down an adjacent virtual shopping strip. Just like in the physical world, then, the shops closest to the virtual conference hall will get the most “foot traffic.”

The Metajuku shopping district in Decentraland

This means local proximity can still matter even in virtual space. 

Indeed, there’s a sense in which proximity to metaverse events and amenities might sometimes be more valuable than in the physical world: the audience for a virtual concert, for example, is globalOpens in a new tab., which can in principle bring a lot of attention to whatever’s in the digital-building next door.

Yet virtual proximity matters far less at middle-to-long distances. In the physical world, there’s significant value to having a house in the suburbs because it affords more space while still making it possible to work in the city nearby. But when it’s possible to commute by teleporting, it doesn’t matter whether your virtual “home” is anywhere near your “work” in the underlying metaverse geography.

More broadly, in the metaverse, people are unlikely to engage in time-consuming long-distance travel when there’s the option of teleporting. The one exception is when long-distance travel is itself a valuable or entertaining activity – such as taking a virtual ferryOpens in a new tab. where one can explore and play games while in transit.

All of this means that the value of metaverse land and real estate to users will likely depend on what’s locally proximate, rather than on the full geography of that metaverse. We can expect to see thriving shopping malls, micro-cities, or even entire virtual worlds that are kind of like islands in digital space – packed with activity that leads people to travel locally within them – yet separated by “distances” large enough that people will just teleport across them.

It doesn’t even matter whether these different activities are on the same platform. Just like we might use Zoom for meetings at work and Messenger or Snapchat to socialize, someone might work in Meta’s Horizon WorkroomsOpens in a new tab.; then hang out with friends in The Sandbox; and curate their own private art gallery in VoxelsOpens in a new tab..

The metaverse platform market is unlikely to be winner-take-all. Moreover, even within a given platform, there are likely to be many successful activity clusters – and entrepreneurs can try to launch their own by developing novel amenities or resources that serve as hubs for others to build aroundOpens in a new tab.. That’s the beauty of composabilityOpens in a new tab., a core feature of web3 that lets people build on and adapt existing frameworks to create new experiences. 

Metaverse land zoning and planning

Building potential is limitless in the digital world, which means we might hope to do away with the frustration of zoning policies and other forms of structured geographic planning. But as with local proximity, planning can almost paradoxically matter more at times in the virtual world.

People might not want to set up shop next to something distracting – and the power of digital construction makes it possible to create spectacularly ugly eyesoresOpens in a new tab.. If a virtual space becomes unappealing, then users can move elsewhere instantaneously; this puts a particularly high burden on metaverse platform architects and builders to curate their spaces according to users’ preferences and their intended use cases. 

For the same reason, high-level rules are often needed in order to prevent obscenity, harassment, and other usages that devalue the digital experience for participants. Given the importance of local proximity discussed above, guidelines that group complementary types of activities near each other – such as various forms of commercial activity – may also help maximize the user experience.

At the same time, the ability to create beyond the boundaries of classical designs (or even physics) is one of the biggest benefits of digital space. Some metaverse worlds’ principal benefit will be in the freedom they give users to build whatever they want.

One natural middle-ground is to focus just on guiding a space’s high-level layout and visual plan. That’s what the White Sands metaverse projectOpens in a new tab. has done with their recent collection of luxury villasOpens in a new tab.: restricting people from altering their villas’ exteriors, while empowering creators to redesign the interiors. This mirrors regulations in many places in the physical world that try to maintain the external visual character of blocks and neighborhoods, while still allowing the spaces inside of buildings to be reconstructed and reorganized.

Metaverse land: White Sands luxury villa

A White Sands luxury villa

The importance of micro-level planning, especially, varies by context. Meticulous zoning may be essential in creating an upscale digital streetscape, but could be far less relevant in a game world where people battle orcs or play as goblinsOpens in a new tab.. And likewise some types of development restrictions we see in the physical world – such as height restrictions on roller coasters – may be completely unnecessaryOpens in a new tab. on metaverse land because digital space is not beholdenOpens in a new tab. to the conventional rules of earthbound physics.

But overall, there will be significant value in creating digital spaces that feel intuitive and consistent to users – which means some degree of planning will often be vital.

Digital assets and platform choice

In addition to the question of where digital and metaverse land is most valuable geographically, there’s also the question of which platforms are most valuable to build in. Here, classic chicken-and-egg dynamicsOpens in a new tab. of bootstrapping and building marketplaces come into play: It’s best to build for platforms with established user bases; yet at the same time, users are most likely to join a platform that already has a vibrant ecosystem.

This means digital land can be especially valuable to users when it sits atop a platform architecture that’s already popular – as with NFT WorldsOpens in a new tab., which runs on the Minecraft engineOpens in a new tab.. Similarly, land in a metaverse that integrates many existing digital communities, as The Sandbox does, and as OthersideOpens in a new tab. has suggestedOpens in a new tab. it may do, could also hold significant appeal for users and builders.

These sources of value depend, once again, on the intended user activities: Some metaverse platforms will be built to support digital versions of day-to-day tasks; others will be fantastical game worlds; and still others will simply invite us to explore and interact in an infinite expanseOpens in a new tab..

If a metaverse platform hopes to encourage users to customize their own spaces and potentially launch commercial ventures, then it needs to provide the tools to enable that. By contrast, if a digital space is just intended for use in business meetings or medical consultations, it might be more important to focus more on platform stability, security, and privacy.

Meanwhile, for the creators of digital assets – such as artists, game studios, and NFT communities – it can be especially valuable to build in ways that areOpens in a new tab. interoperable and portable across platforms. One of the greatest benefits of web3 is the chance for users to bring the digital assets they own with them wherever they may goOpens in a new tab., accruing personal identity, and status, and other attributes. As this model becomes familiar to users, they are likely to demand it more and more.

Portable, decentralized identity applies to everything: Someone might want to take a weapon or talisman they use in a videogame world, for example, and feature it as a decoration in their virtual office. (This writer, for one, has adorned his real-world office with physical representations of his favorite virtual artifacts, such as a map of HyruleOpens in a new tab. and a MystOpens in a new tab. “linking bookOpens in a new tab.” – why should his digital office be any different?)

But in the metaverse, even buildings can potentially be carried from place to place. An individual who owns a digital building can create a space that’s truly “theirs” by filling it with their favorite art, furniture, or ephemera – and then take it with them as they travel across platforms. This is the thesis behind FarOpens in a new tab.’s SOLIDSOpens in a new tab., for example: a framework for generative architecture that can be used flexibly across different metaverse environments. As a result, digital land in a particular metaverse may ultimately be able to capture value created in dozens of other metaverses.

solids nft by far

An NFT that is part of the SOLIDS project by the artist Far, owned by the author.

The frameworks described here suggest that thinking about what drives the value of digital land for users is not as difficult as it might seem at first. What matters is how people will use the metaverse’s various spaces; how well-suited a digital space is to those activities; and how overall valuable those activities are to users.

The discussion here has focused on use cases that are intuitive to contemplate, and already available on various metaverse platforms. Yet many of the greatest opportunities will be those that we haven’t even envisioned yet, as digital spaces increasingly enable experiences that have no analog in the physical world. As the metaverse expands beyond the scope of what we can easily imagine, it’s important to remember that the sources of value for completely novel applications may be harder to recognize and interpret at firstOpens in a new tab. – even when the same underlying principles apply.

But there’s clearly more to the concept of digital and metaverse land than there was previously, as we co-create ever more innovative digital spaces around and for ourselves.


Acknowledgments: My thinking here reflects conversations with a number of metaverse builders and consumers, especially Blockchain BrownOpens in a new tab., Luke CrawfordOpens in a new tab., Eoghan CrowleyOpens in a new tab., Jad EsberOpens in a new tab., FarOpens in a new tab., FlashrektOpens in a new tab., Adam HollanderOpens in a new tab., Bobby HundredsOpens in a new tab., Steve KaczynskiOpens in a new tab., Valet JonesOpens in a new tab.LimpOpens in a new tab.NiftyPinsOpens in a new tab.SAFAOpens in a new tab., and the Chain Runners ArchitectsOpens in a new tab.. Special thanks also to my editors Robert Hackett and Sonal Chokshi!

Disclosures: The author holds a White SandsOpens in a new tab. “Parcel Pass” and advises a different Adam Hollander company (Hungry WolvesOpens in a new tab.); he is also an advisor to Far’s company FINE DigitalOpens in a new tab. and holds several SOLIDSOpens in a new tab., including the one pictured above. He also holds a Modern BillboardOpens in a new tab. lot and an OthersideOpens in a new tab. “Otherdeed.” More broadly, the author is engaged in advising a variety of marketplace businesses and crypto projects, including around metaverse strategy.


The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. In addition, this content may include third-party advertisements; a16z has not reviewed such advertisements and does not endorse any advertising content contained therein.

This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments for which the issuer has not provided permission for a16z to disclose publicly as well as unannounced investments in publicly traded digital assets) is available at

Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see for additional important information.

Don't want to miss a post? Fill out the form below to be notified every time an article goes live:

Dale Calvert

Dale Calvert is a serial entreprenuer. He started his first business at age 14, a direct mail business out of his parents home. Dale has always believed that wealth is created in front of a trend. This business philosophy lead him into the cryptocurrency space in 2017, He made the decision in 2022, that the cryptocurrency space is where he will be spending the majority of his time.

Recent Posts