Investing in the Metaverse
What is the metaverse and how can we make money investing in the future of it?
Dear Sunday Investors:
Welcome to this week’s edition of the Sunday Investor! To our new members, the format of this weekly newsletter will be a deep-dive into one investment-topic. This week, we will focus on the metaverse. We will go into what the metaverse is, who is apart of building the future of the metaverse, as well as how to invest in the metaverse whether it’s in stocks, ETFs or in cryptocurrencies.
Read, enjoy and share with your network. Let’s all build wealth together.
Weekly Market Recap
Let’s dig into some of the most important events that happened in the markets in the last week:
The Federal Reserve approved plans to scale back its bond-buying program this month as anticipated. Jerome Powell made no mention of increasing interest rates, but mentioned they are “keeping an eye on inflation”.
Coinbase (COIN) announced that they are now allowing customers to borrow as much as 40% of their bitcoin value up to $1 million.
Facebook, Nike, Microsoft, Unity & EA lead headlines on creating the future of the metaverse.
What is the Metaverse?
According to Forbes, the metaverse is a boundless, 3D digital world accessed as easily as the internet, where we do things like hang out in a park, play a game, see a concert or suffer through a work conference.
The metaverse is a digital reality that combines aspects of social media, online gaming, augmented reality (AR), virtual reality (VR), and cryptocurrencies to allow users to interact virtually. Augmented reality overlays visual elements, sound, and other sensory input onto real-world settings to enhance the user experience.
Watch the movie trailer here for “Ready Player One” which is based on the metaverse in 2045
As the metaverse grows, it will create online spaces where user interactions are more multidimensional than our current technology supports. Instead of just viewing digital content on a screen, users in the metaverse will be able to fully immerse themselves in a space where the digital and physical worlds converge.
Epic Games’ Fortnite, which launched in 2017 has been a game similar to the metaverse that we have experienced. With Fortnite, gamers saw the game as a place to socialize through audio and video chatting features built into desktop computers and gaming consoles. Virtual concerts from star artists such as Marshmello, Travis Scott and Arianna Grande have further widened the idea of how far this concept can go without us even realizing it.
What is different about Facebook which will now be known as Meta after their announcement for a company-wide shift to the metaverse this week, is how they are envisioning the future of the metaverse as being experienced through a VR headset such as the Oculus.
Facebook has invested over $3B in the last 10 years on VR headset technology and has no plans on slowing down. If you have had an Oculus headset on before, you know how completely immersed into the game you can become. The technology is still evolving, but the graphics and movements are only going to get more realistic in the future which has caused an uproar of excitement for the industry as a whole.
Who is Building the Metaverse?
The metaverse, which many experts expect could still be more than a decade away from being fully realized, will take cooperation among the largest tech giants.
Highlighted below are a few of companies playing a pivotal role according to this Reuters article:
Facebook, which will start trading as Meta Platforms on Dec 1, has said it now wants to be seen as a metaverse company rather than a social media company.
The tech giant, which has about 3 billion users, has been investing heavily in augmented and VR and has the most widely used VR headset in Oculus.
Roblox is an already existing platform which has aimed to give users and developers ways to create digital worlds. Popular in the younger generation, they are looking to expand this to the broader population.
Its CEO has also talked about future shopping and conducting business on the platform, which has its own virtual economy powered by its Robux currency.
Microsoft’s CEO Satya Nadella in an earnings call this year said the company was working to build an "enterprise metaverse" as the digital and physical worlds converge in its offerings.
Imagine working on Powerpoint and Excel in the metaverse with your work colleagues; Yes/No?
Microsoft, which owns Xbox and the world-building game Minecraft, is also a key player in the gaming world. Xbox boss Phil Spencer has talked about planning for "a metaverse or mixed-reality construct."
The apparel giant has taken its first steps into the metaverse. The Oregon-based company has filed several new trademarks this week that indicate its intent to make and sell virtual Nike-branded sneakers and apparel.
Imagine wearing your digital NFT Jordan’s into your metaverse house with a CryptoPunk art piece on the wall.
Computer chip maker Nvidia Corp (NVDA.O) built its Omniverse platform for connecting 3D worlds into a shared virtual universe.
The Omniverse can be used for creating simulations of real-world buildings and worlds, could be the "plumbing" on which metaverses could be built on.
Matterport Operating, Inc. provides a 3D camera and interactive viewing platform. This allows their users to capture, upload, and create digital scans of real-world environments and share them online.
Matterport just signed a partnership with Facebook AKA Meta for what some are envisioning bringing real-life spaces into the metaverse.
Almost 60% of all AR/VR games are already created on the Unity platform. As the leading platform where virtual reality games are, this number is only expected to grow as developers flood into this space.
Unity makes revenue as its customers grow and when games on its platform increase engagement with users, being a recurring revenue stream over the long term. A company like Unity with top-tier graphics capabilities and a business model that would thrive with the metaverse is a great bet to appreciate in the following years of metaverse development.
Future of the metaverse categorized into different sub-industries
Investing in the Metaverse
So how do we invest in the metaverse? For this, there are a few different options in both stocks, ETFs, and cryptocurrencies that are contributing to the future of the metaverse. This next section will be outlining these three sections and the leaders in the space for each of these.
Facebook (FB), Microsoft (MSFT), NVIDIA (NVDA), Roblox (RBLX), Nike (NKE), Snapchat (SNAP), Unity Software (U), Taiwan Semiconductor (TSM), Autodesk (ADSK), Amazon (AMZN), Immersion Corp (IMMR), Apple (APPL), Fastly(FSLY), Intel (INTL), Qualcomm (QCOM), Coinbase (COIN), Matterport (MTTR)
META: Roundhill Investments META ETF which holds the top 41 companies they believe will have the biggest contributions to the future of the metaverse
Click here for more on the investment strategy and holding details
Now that we have gone through different companies who are apart of creating the metaverse, we will now look into different cryptocurrencies that will power this play-to-earn shift of the gaming industry.
What are play-to-earn games? The play-to-earn gaming model embraces the idea of an open economy and financially rewards every user who adds value by playing and spending time in the gaming ecosystem with real money.
With the cryptocurrency market, it is important to note that these assets are more volatile then their stock market counterparts mentioned before. After the Facebook announcement on the shift to Meta, the majority of these tokens below saw 100%+ gains in the following 7 days.
AXS - Axie Infinity #23
Axie Infinity was created in 2018 and has become the most popular play-to-earn game in the cryptocurrency space. The game contains monster-like creatures called "Axies" that players can collect, breed, sell, and duel with other players on their application. Each Axie is a nonfungible token, or NFT, minted on the Ethereum blockchain.
Looking at current marketplace data, it shows that over 2 million Axies were bought and sold in the past few months which amounts to 140,956.7 ETH ($639.5 million). AXS, Axie Infinity’s native token is currently priced at $158.88 and is ranked #23 on the top 100 crypto charts by market capitalization.
The record for the most expensive Axie ever sold was achieved the year prior for 300 ETH, which amounts to $1.375 million now.
MANA - Decentraland #54
Decentraland is a decentralized 3D virtual reality platform that consists of 90,601 parcels land. Virtual estate in decentraland are NFTs which can be bought by the cryptocurrency MANA, which is based on the Ethereum blockchain.
Unlike a regular game on Xbox or PC, players have direct control over the rules of the online world. Non-fungible tokens or NFTS (think last weeks newsletter) represent in-game collectibles, including clothes, items, and the game’s virtual real estate, LAND. Users store these tokens in their crypto wallets and sell them to other users on the Decentraland Marketplace.
Decentraland is one of the leading metaverse tokens with a thriving community since its creation back in 2017. After Facebook’s move to Meta, the MANA token surged 300% in the following 7 days and has consolidated around $3.00 per MANA token currently.
ENJ - Enjin Coin #62
Enjin is a software that gives developers the ability to create and manage virtual goods on the Ethereum blockchain.
The idea is that by using blockchain technology to manage in-game items across many different properties, Enjin can help reduce the high fees (on Ethereum) and fraud that have plagued the transfer of virtual in-game goods and collectables.
Toward that goal, Enjin has released software development kits (SDKs) allowing users to both create digital assets on Ethereum and integrate them into games and apps.
ENJ has also just recently announced a $100M Efinity Metaverse Fund to formalize support for our ecosystem partners, and help make the decentralized Metaverse a reality.
SAND - The Sandbox #77
The Sandbox is a another metaverse-based crypto with a world featuring over 200+ physics elements presented in 2D pixel blocks that can interact with each others. In the Sandbox, players can play, build, own, and monetize their virtual experiences similar to Decentraland’s MANA shown above.
The Sandbox has just raised more than $90 million in a funding round led by SoftBank Group in the last week which has caused the SAND token to soar over 300% in the last month. As shown in the picture above, companies like Atari, Metamask, and Rollercoaster Tycoon have bought spaces in The Sandbox metaverse with more to come.
Where to Buy Metaverse Cryptos?
So now we know all about the top metaverse cryptos; now where do we buy them and play the games? The top 3 exchanges you should look for these cryptos on are Coinbase, Voyager, and Crypto.com. For more information on where to find each of these cryptos, you can go into the CoinGecko link below and click “markets” to see which exchanges have which tokens.
Click here to see all of the metaverse cryptocurrencies ranked by market cap
The metaverse has the potential to be a disruptive technology that will change the way we connect with one another; this will create opportunities for numerous companies and cryptocurrencies that are at the forefront of this space.
The metaverse will benefit from the collaboration of numerous companies resources and technology and it will be exciting to see what will be done in the next 5-10 years to make the metaverse a reality.
Next week, we will continue our learning journey into a different investment topic! What do want to see? Comment below!
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Not financial or tax advice. The content in this newsletter is for informational purposes only. Every investment and trading move involves risk. Do your own research when making a decision.