Lending of digital goods opens up Web3 for mass adoption
NFT rental: Digital good rental is the next development on Web3, says Jake StottCEO of Hype.
Earlier this week, streaming giant Netflix entered the metaverse with its latest movie release The gray manstarring Ryan Gosling and Chris Evans.
To promote the new title, the streamer worked with Decentraland to recreate a scene from the film in its metaverse – an engaging experience the company calls a “metaverse mission”. In the experience, users can virtually act out a scene from The gray man and receive rewards like free wearables for their avatars for completing it.
More interestingly, however, Netflix tapped into an emerging Web3 trend that could disrupt the digital goods economy: virtual rentals.
A potentially game-changing technology
Typically, brands will need to own virtual land to stage experiences in blockchain-based metaverses such as Decentraland and The Sandbox. Gucci and Adidas, for example, took land in The Sandbox metaverse earlier this year to roll out virtual experiences for their NFT campaigns.
Unlike the two fashion giants, Netflix decided to build The gray man experience on land temporarily rented from Decentraland. The move makes it easy for the brand to experiment with a new trend without the added cost of buying virtual land parcels.
While Web3 is about ownership, renting can have huge implications for how brands and users experience and interact with the metaverse – especially if the trend takes off.
Currently, it is impossible to rent Ethereum-based assets without putting all your trust in third parties. But thanks to an upcoming Ethereum Token Standard – ERC-4907 – all that could soon change.
If approved, the new standard will make it possible to build smart contracts that enable the temporary lending of blockchain-based assets such as NFTs, without giving up ownership of those assets.
This means that anyone can soon lend and rent NFTs such as land, wearables and PFPs without fear of losing them.
This development has the potential to drastically change today’s metaverse and Web3 landscape. The fact that giants like Netflix have already proven willing to experiment with virtual rentals for launch activations and promotions is a testament to the technology’s promise.
NFT Rentals: Why Brands Need to Get in on the Trend
A recent VICE survey found that 57% of Gen Z felt it was easier to express themselves in the metaverse. A large part of that self-expression was through indulging in real brands virtually. Additionally, respondents indicated that 15% of their fun budget was allocated to digital goods and the metaverse.
This insight points to a huge opportunity for brands to increase brand recognition and engagement with digital goods. Virtual rental can play a central role in their strategies.
Data shows that over $37 billion had been spent on NFTs between January and May 2022. However, despite the huge volume, a number of netizens have yet to acquire their first NFTs. Renting can be an easy introduction to the wonders of NFTs and their various tools, including PFPs, wearables and tickets.
Instead of directly selling digital goods and NFTs (the prices of which can often be quite high, especially for beginners), brands will be able to offer the experience of owning such assets through rentals. Like return policies, this will give consumers the comfort of trying out such digital goods before committing to their purchase.
The key to making Web3 and the metaverse mainstream-friendly is to lower the barrier to entry for both brands and consumers. Virtual rental has the potential to do just that.
Think about it. We’re already used to renting and borrowing clothes and accessories IRL, and we’ll likely do the same when we start spending more time in the metaverse. Before you know it, you’ll be attending virtual weddings in a virtually rented tuxedo and a virtually rented car.
About the author
Jake Stott is the co-founder and CEO of Web3 Super Agency Hype. When he’s not helping leading blockchain companies and iconic brands increase their growth, he enjoys pondering the future of Web3 and the metaverse.
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