AR/VR ICOs

campurro Analysis July 7, 2021

AR/VR ICOs

In many ways, crypto and AR/VR (augmented reality/virtual reality) platforms are a natural fit. Though sometimes used interchangeably, VR refers to complete immersion in a digital world, while AR refers to virtually augmented aspects of a live experience. While the nature of transactions conducted with cryptocurrencies in VR remains similar to those in the physical world, developers can also more easily experiment with the economics of supply and demand for their coins through mechanisms like airdrops and forks. AR/VR give users the ability to enter into a sort of pseudo-social existence — perhaps the most ideal staging area for testing out crypto. 

Second Life, an online VR platform, introduced virtual currencies, known as Linden Dollars, on its platform back in 2003. The experiment was moderately successful — according to the platform’s founder Philip Rosedale, who has since founded another VR company, the gross domestic product (GDP) of the Second Life economy peaked at one billion dollars and is currently between $600 million and $700 million a year.

AR/VR gaming platforms now offer blockchain entrepreneurs a similar opportunity to build a virtual economy.

Vitalik Buterin, Ethereum co-founder, noted that the gaming industry has drawn many early adopters to crypto, because it’s a place where blockchain can be developed more quickly and seamlessly. NEO, a blockchain that is valued at more than $5 billion in crypto markets currently, is optimizing its product to serve the gaming industry. A Japanese car-racing game called CryptoFast has already integrated NEO tokens, which are the cryptocurrencies used on NEO’s blockchain, into its workflow.

In fact, the market for AR/VR ICOs is expected to be worth $150 billion by 2020, by some estimates. That figure encompasses multiple streams of revenue, including hardware and content, and diverse industries, such as healthcare and gaming. Attracted to this opportunity, tech behemoths like Facebook and Google have also launched separate divisions dedicated to the technology. This means that startups attempting to build a platform on the network are up against deep-pockets.

What to consider before investing

While evaluating investment in an AR/VR ICO, it is important to consider the nature of coins being issued. Generally, coins that are used for transactions within a virtual economy are considered utility coins, exempt from strict disclosure and expensive compliance costs. But declaration as a utility coin does not completely eliminate the regulatory risk.  

In 2017, the SEC decided to halt the ICO for Munchee, an online platform for restaurant reviews. As outlined in its white paper, the $MUN token was to be used for transactions and restaurant credits. It was also to be listed on third party cryptocurrency exchanges for trading.

But the SEC halted Munchee’s ICO on the grounds that the founder had promised an appreciation in its price to investors. The coins being promised on AR/VR platforms have similar utility  to other ICO-issued coins because they are used to facilitate transactions and build a virtual economy. In a climate of regulatory uncertainty, however, the risk that the SEC will crack down on a project is a real one.

Below we have outlined examples of upcoming AR/VR coin offerings. Please note that this is not a comprehensive review of the ICOs, nor is ICO Ranker providing any investment advice with regard to these ICOs, as all of our resources are for educational purposes only.

Weave Token

The Weave token is a utility token being issued on Stellar, a blockchain founded by Jed McCaleb, who also had a hand in launching Ripple. According to its white paper, the token does not provide any ownership rights to the holder. The ICO, which is already in progress as of this publishing, will end on 31 July 2019.

WEARVR, the company behind Weave, is an independent app store and VR content company that claims to have deep relationships with all stakeholders in the VR/AR community, including developers, users and manufacturers of hardware within the industry. This web of relationships will help establish a use case for the Weave tokens within its economy.  

The main use case for the Weave token lies on WEARVR’s platform. The company behind the token has said that it will reward and encourage usage on their platform and also within the “thousands” of apps that it distributes. While the company has not provided exact app numbers, a Google Play store listing states that it has over 1,000 VR apps on its platform. The listing also has user reviews that range from five stars to one star.  

In its white paper, WEARVR has outlined other use cases for its token. For example, it plans to stimulate the app economy by creating a decentralized VR app store in which user and app developers are directly connected. Another use case for Weave lies in Digital Rights Management, where the token will be used as a payment mechanism, dependent on the traction of VR usage on the network.

WEARVR plans to issue 4.8 billion tokens (half of the total number of Weave tokens issued) for private placement and public sale. Ninety percent (or 4.3 billion) of the total number of issued tokens will only be available to private investors, who can purchase those tokens at a discount of 40 percent of $0.06. This is standard modus operandi for coin offerings because it allows investors to cash out their investment for profits, when the token is listed on an exchange. The remaining ten percent, which will be available for a standard price of $0.10, are reserved for the general public.   

According to online database Crunchbase, WEARVR has raised $1.5 million from investors, at the time of this writing. The company’s entry also cites a report that estimates $5.1 million revenues for the startup.

GoFindXR

The concept behind GoFindXR is comparable to Second Life: Creating an alternate universe using advanced technology. GoFindXR is like a standard town or city with the usual attractions — shopping, social events and real estate — except virtual.  An extended reality browser will be used to access the XR web and its applications. Future plans include smart glasses that will “look just like normal sunglasses.”

The $XR token is the currency used in the planned economy. Some of the use cases mentioned in the white paper include registration of land and conducting of transactions on the XR web. Revenue sources for the company include advertising fees and transaction fees. A total of 1.3 billion tokens will be issued in total and 35% will be pre-mined and available for token sale. Purchased tokens will also be available for staking — or being kept for long periods of time — to lease specific plots of land on the XR web. Tokens that are not staked will be trade-able on various exchanges.

The white paper states that revenue from GoFindXR will be shared with content creators, app developers and staked tokens on XR web. These may be similar in form and structure to dividends and could open up the XR token to a security classification. There is not much information about XR token’s legal status in its white paper, other than a statement that the project’s team “strives to comply with all international regulations and building for a long term and prosperous future.”

Crunchbase does not have a listing for this project or its founders.

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