Why Decentralization Cultivates Community

Here's a primer on the Culture & Entertainment Sector in DACS.

AccessTimeIconAug 22, 2022 at 10:47 p.m. UTC
Updated Aug 24, 2022 at 7:36 p.m. UTC
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Max Good, senior index research analyst at CoinDesk Indices, contributed writing for this report.

Introduction

In December 2021, CoinDesk Indices launched its Digital Asset Classification Standard (DACS) to set the standard for defining the industries of digital assets. Every one of the top 500 digital assets by market capitalization is assigned to an industry, defined by DACS, then at least one industry is assigned to an industry group, and finally, at least one industry group is assigned to a sector.

Currently, there are six sectors defined by DACS including Currency, Computing, DeFi (Decentralized Finance), Digitization, Culture & Entertainment, and Smart Contract Platform. The Culture & Entertainment sector is the fourth-largest sector in DACS with 86 assets representing 2.0% of the digital asset market, worth approximately $34 billion in market capitalization as of April 30, 2022.


Exhibit 1: CoinDesk Indices DACS

(CoinDesk Indices, 5/13/2022. Market capitalization data is based on 4/30/2022.)
(CoinDesk Indices, 5/13/2022. Market capitalization data is based on 4/30/2022.)

In this paper, we describe the Culture & Entertainment sector in further detail by discussing its definition, constituents, and significance in the broader digital asset space.

Defining the Culture & Entertainment sector

Culture & Entertainment is a relatively young and growing sector in the digital asset industry, particularly since the beginning of 2021. As it is defined by DACS, this sector represents a wide range of digital assets, spanning seven different industries. As blockchain technology branches beyond payments and decentralized finance, it continues to gain new adoption in the realms of art, media and gaming. At the same time, blockchain technology and digital assets are becoming an integral component of the rapidly expanding metaverse. The latter aims to validate a work of art’s ownership, intellectual property, and authenticity. This ensures one’s ownership over their online possessions and identities.

The DACS Glossary defines the Culture & Entertainment sector as follows:

Culture & Entertainment includes all projects that aim to decentralize social media platforms, create decentralized gaming worlds, and increase direct peer-to-peer interaction between content creators and their audience, while at the same time maintain user privacy, security, and ownership of data and digital assets.

Industry groups inside the Culture & Entertainment sector

The industry assignments of digital assets in the Culture & Entertainment sector can be consolidated into three industry groups: Metaverse, Media and Art.

Metaverse is a rapidly growing industry group that includes gaming realms, GameFi and virtual worlds. Based on blockchain technology, metaverse projects allow users to play games, build social interactions, and tokenize and trade digital assets in the virtual world.

Media is comprised of projects that aim to decentralize social media platforms including broadcast streaming and video sharing. These projects create direct links among content creators, consumers and advertisers, thus removing the need for a centralized intermediary.

Lastly, Art comprises all digital assets directly associated with digital art-focused non-fungible tokens (NFT). This can include platforms for artists to mint NFTs, NFT marketplaces and NFT-related governance tokens.

Within the Culture & Entertainment sector, Metaverse is the largest industry group representing 58.3% of the sector followed by Media and Art, each representing 37.8% and 3.9% of the sector, respectively.

Exhibit 2: Culture & Entertainment Sector Breakdown by Industry Group

(CoinDesk Indices, 5/13/2022. Market capitalization data is based on 4/30/2022.)
(CoinDesk Indices, 5/13/2022. Market capitalization data is based on 4/30/2022.)


Exhibit 3: Industry Groups Under Culture & Entertainment Sector

Industry Group
Market Capitalization ($)
Number of Assets
% of Market Capitalization
Metaverse
20,090,779,731
49
58.3%
Media
13,011,569,992
28
37.8%
Art
1,331,185,697
9
3.9%

(CoinDesk Indices, 5/13/2022. Market capitalization data is based on 4/30/2022.)

Industries inside the Culture & Entertainment sector

Each one of 86 digital assets inside of Culture & Entertainment is assigned to a single industry before the industry is assigned to an industry group in the sector. There are seven industries that feed into three industry groups mentioned prior: Gaming, Virtual World and Metaverse Platform are the three industries assigned to the Metaverse industry group; Broadcast, Social and Media (Other) are the three industries assigned to the Media industry group; and Art is the only industry assigned to the Art industry group.

The Metaverse industry group is comprised of three industries: Metaverse Platform, Virtual World and Gaming. As it implies, Gaming consists of games that either have a narrative, or a strong focus on gameplay. The assets in the Gaming industry may be used as part of in-game reward systems, or for purchasing in-game assets. Virtual World refers to open-sourced virtual worlds that allow creators and builders to design their own experiences and games. Virtual World features marketplaces for decentralized trading of scarce land and other digital assets such as clothing and accessories. Metaverse Platforms are online stores or developer products that host a range of games or marketplaces that allow for trading of virtual assets, such as NFTs, in-game items and land.

As of April 30, 2022, Metaverse Platform is the largest industry by market capitalization under Metaverse industry group with 14 assets totaling $9.8 billion in market capitalization.

Exhibit 4: Industries Under Metaverse Industry Group

Industry
Market Capitalization ($)
Number of Assets
% of Market Capitalization
Metaverse Platform
9,842,065,467
14
49%
Virtual World
5,641,725,138
11
28.1%
Gaming
4,606,989,126
24
22.9%

(CoinDesk Indices, 5/13/2022. Market capitalization data is based on 4/30/2022.)

Within Media industry group, Social encompasses platforms that share the characteristics of traditional social media applications, but with an emphasis on Web3 qualities: decentralization, censorship resistance and validation of an individual’s ownership over his/her avatars, data and information. Social also includes fan tokens that enable more direct interaction between supporters and the entities they support, such as sports teams. Broadcast consists of decentralized platforms whose primary function is to facilitate audio and/or video content creation, while typically incentivizing frictionless exchange between creators, advertisers, and consumers. Media (Other) is made up of all digital assets that fall into the Media industry group but could not be further classified.

As of April 30, 2022, Social is the largest industry by market capitalization under Media industry group with 17 assets totaling $9.1 billion in market capitalization, followed by Broadcast and Media (Other).

Exhibit 5: Industries Under Media Industry Group

Industry
Market Capitalization ($)
Number of Assets
% of Market Capitalization
Social
9,136,500,874
17
70.2%
Broadcast
3,766,796,210
10
28.9%
Media (Other)
108,272,908
1
0.8%

(CoinDesk Indices, 5/13/2022. Market capitalization data is based on 4/30/2022)

Again, Art encapsulates all digital assets directly associated with digital art-focused NFTs. This can include platforms for artists to mint NFTs, NFT marketplaces and NFT-related governance tokens.

Major assets inside the Culture & Entertainment sector

There are 86 digital assets inside the Culture & Entertainment Sector with the top assets, APE1, representing 16.5% of the sector, and the top ten assets representing 65.6% of the sector. There are 49 assets in the Metaverse industry group, totaling around $20 billion in market cap, with ApeCoin (APE)1 being the largest. In the Media industry group, there are 28 tokens totaling around $13 billion in market cap, with Theta Network (THETA)2 being the largest. There are currently nine assets in the Art industry group, totaling $1.3 billion in market cap, with APENFT (NFT) being the largest.


Exhibit 6: Top 10 Assets Inside the DACS Culture & Entertainment Sector

(CoinDesk Indices, 5/13/2022. Market capitalization data is based on 4/30/2022.)
(CoinDesk Indices, 5/13/2022. Market capitalization data is based on 4/30/2022.)


Conclusion

The Culture & Entertainment Sector is relatively small but contains many tokens representing a variety of use cases. The assets within this sector are wide ranging in functions and users, but together they embody the creativity of Web3. Within this sector, artists have the luxury of monetizing their work directly from consumers and gamers can possibly earn and spend money for their activities and virtual real estate can be purchased and sold.

As Culture & Entertainment continues to grow, collaborations and interoperability between different ecosystems will likely evolve into a greater web of interconnected virtual worlds with an interdependence of ownership among diverse consumers and users.

References

1. ApeCoin (APE) is the governance and utility token for APECoin DAO, a decentralized community of Web3 builders. Token holders can participate in governance activities, purchase products, access exclusive games, merch, events and services. ApeCoin also serves as a tool to incentivize third-party developers to participate in the ecosystem by incorporating APE into services, games and other projects.

2. Theta Network (THETA) is an open-source protocol that provides dapp infrastructure with a focus on broadcasting, eSports, virtual reality, music, peer-to-peer streaming, distance learning and e-conferencing. Theta’s vision is to empower creators and users to build and consume content by leveraging their decentralized structure, thus eliminating the value extracting traditional corporate model.

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CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Jodie Gunzberg

Jodie Gunzberg, CFA, is the Managing Director of CoinDesk Indices.


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