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Five years ago, tech angel investor Chris Adamo and a few friends jumped on a burgeoning trend in the digital asset world: they used a virtual real estate broker to buy 23 parcels of property in a metaverse called The Sandbox. He doesn\u2019t remember exactly how much he spent, but it was around $200,000 for the whole group. The real estate, to be clear, consisted of pixelated parcels in \u201chip,\u201d \u201ctrendy\u201d virtual \u201cneighborhoods,\u201d an asset that crypto bros and Web3 enthusiasts like Adamo saw as the future of tech and digital investment. At one point, it ballooned tenfold in value. Adamo was far from alone. Across the four major metaverse platforms, property sales topped $500 million<\/a> in 2021.<\/p>\n It wasn\u2019t just niche investors making that call. Perhaps most famously, Mark Zuckerberg bet big on the metaverse. He called it<\/a> \u201cthe successor to the mobile internet.\u201d Convinced that one billion people<\/a> would eventually use it, he poured $80 billion<\/a> into the effort and, in one of the most visible signals of that bet, renamed Facebook as Meta.<\/p>\n Adamo and his cohort bought into that vision. “When metaverse worlds and NFTs started, our friend group wanted to begin learning and playing in the proverbial sandbox,” Adamo says. \u201cSince we all had already owned so many NFTs, as an experience to learn that realm, land ownership seemed like the next logical trial by fire.”<\/p>\n But big promises to investors gave way to weak financial performance and low user counts, and many metaverse companies have struggled in recent years. The Verge<\/em> reported in 2023<\/a> that Decentraland\u2019s billion-dollar metaverse had as few as 38 active users on a given day. Animoca Brands, which owns The Sandbox, cut 50% of its staff and closed all offices<\/a> worldwide last year. Perhaps most damningly, Mark Zuckerberg announced last month that Meta would effectively shut down Horizon Worlds in June. All of its employees were laid off and the metaverse budget cut by 30% as the company pivoted toward wearables like its viral AI and AR glasses<\/a>.<\/p>\n As for Adamo, he tells Fast Company<\/em> that the money his group put into Sandbox real estate has effectively been written off as a sunk cost, one he has accepted won\u2019t yield returns anytime soon. They tried to sell and take the loss, but there was \u201cno one to buy them,\u201d he says. For now, they\u2019re holding on, partly in the hope that the assets might rebound, partly, as Adamo jokes, as a kind of historical artifact.<\/p>\n “Going into it, we knew that it was going to either be a complete wash (too early) or a big outcome if it took off,” he says via Instagram direct message. “Sadly, the tech and adoption was just too slow and lost steam as COVID ended and people got back to real-world activities.”<\/p>\n The metaverse house-hunting process largely mirrors the real-world one. Land can be bought at auction or at a fixed price. Once a buyer secures a parcel, they pay in crypto and receive the keys as a non-fungible token (NFT). Owners can then build whatever they want, a mansion, a bungalow, even a to-scale replica of Epcot Center. They can settle into their pixelated Experimental Prototype Community of Tomorrow, or, more realistically, try to flip it to the next buyer. Entire firms sprang up to support this ecosystem, including brokerages like Metaverse Property and designers who offered to digitally stage virtual homes.<\/p>\n The parcels Adamo purchased were in a coveted area of The Sandbox, near the buzzy NFT Bored Ape Yacht Club compound and a plot owned by Adidas. He declined to share exactly how much his group, which called itself the MetaCollective DAO, ultimately lost, but prices offer a sense of the stakes. At the time, Sandbox properties started at around 1 ETH, roughly $3,000. One parcel near Adamo\u2019s sold for about 42 ETH, or nearly $130,000, in 2022.<\/p>\n This wasn\u2019t just a passive investment; Adamo and his group had ambitions for the land. \u201cWe tried to create a virtual college, the first metaversity, but sadly it never quite had time to take off,\u201d Adamo says. He envisioned a full syllabus, with courses on cryptocurrency, chain building, partnerships, fundraising, communications, and more.<\/p>\n They weren\u2019t the only ones spending big in the virtual world. Snoop Dogg famously sold a parcel<\/a> in The Sandbox for $450,000. At the start of 2022, MetaMetric Solutions reported that metaverse real estate sales topped $85 million<\/a> in January alone. Matt Upham, a TikTok creator who makes content about AI, tech, and coding, also bought land for $15,000 in 2021 and later lost money on the investment. Five years on, he told followers he regretted it.<\/p>\n \u201cI was, like, 25, and that was the dumbest financial decision of my life,\u201d he said in a video<\/a> posted in March after the shutdown announcement. \u201cMetaverse as a concept is completely done. Meta is shutting down Horizon Worlds\u2014their Metaverse\u2014and I bet the rest are going to follow.\u201d<\/p>\nHow the metaverse real estate economy works<\/h2>\n