Study reveals how avatars shape digital identity in the metaverse

A major new study from Blockchain Research Lab , shows the growing impact of avatars in the metaverse, where digital identity is an essential component of the experience. We encourage you to read the full report here. Below is a summary of key findings that are of interest to our community.

Here’s an overview of the study and its goals:

This report explores the central role avatars play in digital identity, providing users with infinite possibilities for expression, communication, and representation. It explores how users can create and control their digital identities through avatars, enabling them to use the metaverse across different platforms and applications. The report also examines avatar markets and their size, including the use of 3D avatars in virtual worlds and the emergence of digital asset emotes as new forms of expression. Finally, it considers the important role that avatars and digital identities will play in the development of an open, inclusive, and interoperable metaverse of the future.

That sounds like a lot of relevant information for those of us who use and love avatars, doesn’t it? Let’s read on to get to the heart of ten of the most important findings!

1. Avatars are a major pillar of the metaverse

OK, this one comes as no surprise to anyone who’s played in The Sandbox. As one of the six main metaverse pillars, avatars represent the user, allowing them to choose their desired identity.

While the open metaverse is constantly changing, avatars will always play a central role. They are the gateway to the metaverse, with users typically first choosing or creating an avatar that represents them in the virtual world when they activate an account. Avatars can be customized to reflect the user’s style, interests, and personality, so they communicate information about the user to other dwellers in the virtual world. And, since avatars can be easily swapped out, this digital identity can be adjusted frequently depending on mood, game or even to access different utilities unlocked by different avatars.

2. Avatars are already a billion-dollar market

The market size for avatars is already massive. And the avatars ecosystem is only growing bigger across platforms. In fact, more than 2.7 million creators earned $538M in 2021 alone. And, players often change their avatars to reflect their current moods: 20% of Roblox users update their avatar on a daily basis. This shows the demand and potential for avatar markets in Web3, which incentivize and reward creators in a way that allows them to keep more of their earnings than on centralized platforms. In The Sandbox, for instance, creators keep 95% of their revenue. Cha-ching! This is great for creators — and for players, who ensure that their favorite creators make a fair wage for their work.

3. Psychology influences avatar selection

Three main psychological factors influence the choice of avatars in virtual environments:

1. Self-expression and identity — who you are in the metaverse
2. Social comparison and group dynamics — how you compare yourself to others
3. Self-esteem and self-regulation — how people use avatars to protect and boost their self-esteem

These theories suggest that people choose avatars that reflect their own identities, values, and social status, as well as those that help them navigate and fit in with the social dynamics of virtual environments.

Different users will prioritize different motivations for their avatars. These include expressing a desired image or identity through an avatar or choosing an avatar that can facilitate socialization and relationship-building — such as connecting with other Snoop Dogg fans through a Snoop-themed avatar. Two other powerful drivers are role-playing different identities in a safe and controlled environment or using an avatar to explore and understand their own identity. These motivations show the complex process users may go through to select their perfect avatar in The Sandbox and other platforms.

4. Horizontal integration fosters metaverse growth

Horizontally integrating the skills, value, or users of projects working towards similar goals can support the vision of an open and inclusive metaverse.

Collaboration can be mutually beneficial, as demonstrated by the integration of 3D avatars from collections of non-fungible tokens (NFTs) into The Sandbox. In short, working together is good for everyone and will help the avatar market grow.

5. Digital self-expression is rapidly evolving

The current state of digital art to some extent allows users to transfer their emotions, behavior and interaction to their digital avatars. Technological advances have in particular been achieved in letting avatars in virtual worlds display emotions. And avatars are only getting better and more expressive! We’re at the very beginning of a new era of self-expression, where emotes, digital fashion and even adornments like virtual make-up allow us all to creatively express ourselves online — and create fresh new looks whenever we want.

6. Web3 avatars show great growth potential

Web3 avatar markets are just beginning to emerge, with many avatars already existing as NFTs owned by users and paying royalties to creators, such as in The Sandbox.

This demand for avatars in virtual worlds is strong and growing — and we’re only getting started. As such, current virtual worlds have room for improvement in terms of developer and creator incentives, in-app currencies, user empowerment, and developing collectible digital items.

Web3 will accelerate these transformations, creating a decentralized and community-owned open metaverse that introduces all kinds of new ways to engage with each other and express ourselves.

7. Users have multiple digital identities

The ability to use, own, and customize multiple avatars allows users to be who they like, when they like. They can simultaneously reflect any aspect of their (digital) personality with different avatars. They can be a “real looking” person or a mythical being. Avatars empower people to look and behave in ways they can’t do in the real world — and this is fun!

These multiple digital identities mean that users will also have options when it comes to how they present themselves to different communities. With affinity for a variety of passions, hobbies, and pastimes, players can adjust their online identities to better align with their objectives and desires with each community.

8. There’s more to avatars than meets the eye

Factors such as expression, emotions, behavior, history, and social networks contribute to avatars alongside their physical appearance. Avatars can also provide their users with various other utilities, including social, educational, psychological, commercial, and entertainment aspects.

Avatars can provide additional utility through NFT gating. This is when NFTs, including avatars, unlock unique experiences, early access or other benefits. For instance owners of the Snoopverse Early Access Pass NFT had advance access to The Doggies, the Snoop-themed avatar collection. This NFT also provided early access to the Snoopverse in The Sandbox, so players with those avatars could explore the experience before anyone else. Woof!

9. Avatar users have distinct profiles

The study identified multiple user groups in virtual worlds in terms of emote usage. One group actively uses emotes and perceives their positive impact on gameplay; another one considers emotes a part of their social identity; and a third one altogether rejects the idea of paying for emotes, as it seems inauthentic. Each user group requires dedicated avenues of self-expression, and have unique expectations for how they want to integrate avatars and emotes into their gameplay.

10. Digital fashion has huge market potential

The growing role of avatars has a direct impact on digital fashion — because players may prefer to simply change outfits on their avatars rather than switch avatars completely. As such, the digital fashion market is expected to grow rapidly in the coming years, as more people use digital platforms for entertainment and commerce.

Digital fashion and assets can shape your digital identity, and many people purchase digital goods for this reason. This is especially exciting, as more fashion brands enter the metaverse and offer a broad array of really creative looks to customize your avatar. Get ready to look stylish in the metaverse!

While avatars are already a major part of digital expression, their role looks poised to grow even stronger. What do you think will come next? As a member of The Sandbox community, your choices are sure to impact the future of avatars. Your opinion matters!