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- The metaverse is a megatrend to stay for decades
- It impacts gaming, business, education, socializing, entertainment
- User will have actual ownership of his/her identity and assets
- To invest in the metaverse can be rewarding, but will take years
Should You Invest In The Metaverse?
I have been a gamer since a young age. My first computer was a Commodore 64 in the early 80s, with cassette tapes to be put in a cassette player. Crazy!
I remember loading Flight Simulator took 2.5 minutes. Since then, I had dozens of high-end gaming PCs as well as various game consoles.
Another big passion of mine is as you know investing and creating passive income.
The metaverse sits right at the intersection of gaming and investing, that’s why you can understand how I’m naturally drawn to this space.
What Is The Metaverse?
Simply put, the metaverse is the virtual world we increasingly will use to do those things we do in the actual world, such as
- working and researching,
- interacting with companies,
- socializing with friends and families,
- being entertained (watching movies, listening to music, playing games, ..)
- getting educated (schooling, virtually visiting places, ..)
The metaverse is often termed web 3.0, whereas web 1.0 (1995-2007) was read-only (message boards on Compuserve, AOL, ..), and web 2.0 (2007-now) was read-write (gigantic corporates own everything, the user is the “product”, social networks, blogging, YouTubing, ..).
In web 3.0, enabled by blockchain, cloud computing, and thousands of innovative software-as-a-service companies (SAAS), we as the users start to actually own our data, our user-generated content, and whatever currency we use to get paid or pay someone else.
Metaverse – Much More Than Gaming!
Many people assume that metaverse is just VR or AR gaming. It’s not. It’s much much bigger than that.
I listed gaming above as the last item on purpose.
The biggest companies in the world have already taken notice and started to invest in the metaverse. JP Morgan, the world’s largest bank, was the first financial service provider to buy land in the metaverse project Decentraland, opening the Onyx Lounge. And HSBC, the largest bank in Asia, bought a piece of land in another metaverse project called The Sandbox.
They invest in the metaverse to build ‘virtual branches’, to interact and engage with existing and potential customers.
Instead of having to visit an actual branch of the bank, you can virtually visit the e.g. JP Morgan’s Onyx Lounge, speak with an actual customer rep via a video call, ask questions, get info material, sign up, etc., all from the comfort of your home.
You do not need any virtual or augmented reality device, just a regular computer, mobile, or tablet. Just give it a try and explore Decentraland right here.
The metaverse for the education sector will be huge. Imagine you can virtually visit the Harvard campus, choose any subject you like, and attend the lecture of some of the world’s best professors, for a low monthly subscription.
Or join a pro-story telling history professor, explaining and showing you in an immersive way what happened at ‘The Battle of Issos’ in Southern Anatolia, on November 5, 333 BC between the Hellenic League led by Alexander the Great and the Achaemenid Empire. What a battle it must have been!
The use cases are really endless.
The Metaverse – We Are Very Early.
As of June 2022, the graphics still look sort of clunky and cartoonish but don’t be misled by this. Rather sooner than later you will see AAA graphics and stunning visuals, offering a beautifully immersive experience.
Take a look at this trailer of Wilder World for example to get a glimpse of what’s to come (disclosure: I own some Wild tokens).
It is just a matter of time with increasing computing power, faster bandwidth, and ever-more-powerful graphic cards, that we will soon be able to experience the same visual quality as the top-quality games today.
How To Invest In The Metaverse?
In general, the way I see it is that you basically have the following options to choose from when you like to invest in the metaverse. I list the option with the lowest risk at the top and the riskiest option at the bottom:
- Metaverse ETFs or mutual funds
- Player guild tokens supporting the world’s best gamers
- Platform tokens of platforms such as Decentraland or Sandbox
- Listed stocks with direct/indirect metaverse exposure
- In-game currencies of each respective metaverse game
- NFTS of actual, in-game assets such as land, weapons, skins, etc.
I know of two pureplay ETFs that invest in the metaverse: The Roundhill Metaverse ($METV) and the HANetf Global Metaverse (ISIN IE000KDY10O3, Ticker M37R). Both ETFs hold and invest in companies from around the world, with business operations in the metaverse ecosystem. Disclaimer: I own $METV, led by a very experienced team.
When taking a look at the top 10 holdings of $METV, you will quickly see the ETF is mainly investing in metaverse infrastructure plays.
The Metaverse will not be owned nor built by one entity. Dozens of companies will build the required foundation, hence I believe it is the wise thing to do to invest in those entities producing the shovels and picks for the gold rush, which are companies engaged in the following:
- Virtual Platforms
- Interchange Standards
- Content, Assets, and Identity Services
Player Guild Tokens
There are now about a dozen play-to-earn player guilds. These are typically DAOs, or decentralized autonomous organizations, that you can invest in via buying their governance token.
- Yield Guild Games
- Good Games Guild
- Real Deal Guild
- Merit Circle
- UNIX gaming
- Astra Gaming Ventures
The player guilds buy, lease, and manage metaverse NFT assets for use in play-to-earn economies. They establish themselves as a leading blockchain gaming community, connecting, sponsoring, and training the best gamers in the world. Whenever these gamers earn money, e.g. tournament prize money, leveling up, and then selling in-game assets, a portion of the revenue then goes to the guild.
One chart Yield Guild Games published explains it quite well:
Source: Yield Guild Games
Simply put, the main DAO creates Sub Daos for each game, managed by a community lead and separate wallets. By this, it’s easy to manage and scale.
Another way to invest in the metaverse is by buying the tokens of the largest metaverse platforms. There are more and more of, but the biggest ones you should be aware of are the following:
- Axie Infinity ($AXS)
- The Sandbox ($SAND)
- Decentraland ($MANA)
- Wilder World ($WILD)
- Illuvium ($ILV)
- Sweatcoin (not launched yet)
The tokens of these metaverse platforms don’t give you ownership in them, but as the monthly active users and transactions grow, so does the demand for the platform token grow, and with more demand, the price typically grows. This is a highly volatile asset class, and I’d advise to only invest very small amounts (max 0,25% of your liquid net worth).
There is no pure-play metaverse stock available (yet), just many companies with various levels of metaverse exposure. Most of the stocks like Meta (Facebook), Nvidia, Autodesk, or Unity are infrastructure plays (see above).
One sector I am looking at closely is the gaming studios such as Take2, Electronic Arts, Ubisoft and Activision Blizzard (now part of Microsoft).
I believe Take-Two (TTWO) for example has an awesome opportunity to create a Ready Player One-like immersive multiverse experience with their Grand Theft Auto franchise. By the way, Ready Player One is a must-read book if you are interested in the metaverse. The movie is good as well.
It will be interesting to see if these companies embrace a multi-metaverse world, or if they try to only allow their IPs to live on their own servers and virtual realms.
Or Sweatcoin, a move-to-earn game I currently play, allowing you to already start earning their upcoming in-game currency token before their official launch. I already earned 500+ tokens, see how many steps I did last week.
To buy in-game currency tokens is extremely, ultra, super, and totally risky. You’re making a bet on one specific game that is competing in a red pond with thousands of sharks. Buying in-game tokens is not an investment. It’s pure gambling. Do this only if you actually like and enjoy playing the game, and don’t assume the value of the token will increase in value.
The last and most risky of all the above-mentioned metaverse asset classes to invest in are NFTs or single games. You can invest in the metaverse by buying land, magical items, weapons, armor, potions, skins, or avatars.
Same as with in-game currencies, this does not represent an investment, just a gamble that the price “might” go up. I would only buy NFTs that you like to own no matter what the price is.
My Metaverse Top Picks
3 Ways I Invest In The Metaverse 🏆
The way I chose to invest in the metaverse is by investing in a combination of the above-mentioned methods:
I – The Roundhill Metaverse ETF 🏅
First, I am currently building a long-term position on the metaverse ETF from Roundhill, with the ticker symbol $METV. By this, I already have good exposure to the companies that will help build the various metaverses. No matter which metaverse projects will become the dominant players, by owning Nvidia (graphic cards), Unity (software), or Qualcomm (chips), I know I don’t have to pick the winning metaverse project.
II – The Player Guild Perion 🥈
It is taking an analytical approach to lending, and conducting deep data analysis into how best to allocate their NFT gaming resources to the top-performing gamers.
Perion has a unique advantage resulting from one of the founders, Amos Whitewolf, previously being the number 1 ranked Axie Infinity player in the world.
Through Amos’ skillset, coupled with proprietary performance tracking software, the Perion team has been training some of the top-ranked gamers in the world to maximize returns from Perion’s assets.
Is Perion’s $PERC Token Undervalued?
As of June 2, 2022, the market cap of Perion is about 1,04 Mio USD in total (Source). If you’d liquidate all of Perion’s assets (see the latest treasury report here), you’d roughly get 12,4 Mio USD. In other words, Perion is trading at a 12x ‘discount to cash’. So every one USD of PERC held is backed by close to $12 of value. You can draw your own conclusion, but I am a buyer here.
III – Wilder World – My Moonshot Idea 🥉
Thirdly, I love what the team over at Wilder World is doing. I bought some first $WILD tokens, and stake them here. This is a very small position in my Digital Asset Portfolio, and I plan to keep this for the years to come. This is a real moonshot idea, either it will go big or die.
Besides these three ways, I will also try and accumulate as many Sweatcoins as possible, because I go for long walks anyways, and I feel great earning something extra when I do something that I enjoy anyway.