Metaverse tokens analytics
There is a lot of buzz surrounding Metaverse at the moment. In a previous article, we covered what constitutes the nature of Metaverse and several ongoing projects whose business models or profitability are tied to such a concept. But once Metaverse meets blockchain, besides virtual real estate in the form of NFT, this symbiosis also involves a complete tokenomics system. In fact, almost all Metaverses [based on blockchain technology] rely on internal tokens that can be bought, sold, exchanged, earned, or even created by the users themselves. In this article, we will discuss the different facets of metaverse tokens.
Table of contents
What is it all about?
What is a Token? What is a metaverse token?
What is the metaverse tokens value?
Some examples of metaverse tokens
Sandbox
Decentranland
How are tokens created?
Closing thoughts
What is it all about?
To understand the mechanics of metaverse tokens, it is essential to understand the meaning of the Metaverse itself. Considering that the basic understanding of the notion is already acquired, we won't go back to the in-depth definition of what a Metaverse is. Just to remind, the Metaverse may be described as a vast expanse of digital space where users can interact with each other in real-time and have similar or even superior experiences to those they have in the real world. This way, the Metaverse is a virtual world. A virtual world powered by a virtual economy.
Users in order to interact with each other have to use any item or verifiable record to make payments and exchange goods or services within the Metaverse. In the real world, we use money. In contrast, Metaverse, relying on a blockchain, leverages DeFi's gamified mechanics to ensure a functional and digital internal economy. This is where metaverse tokens take the stage.
What is a Token? What is a metaverse token?
A Token is defined as “a digital unit designed with utility in mind, providing access and use of a larger crypto-economic system”. Thus, tokens must not be mistaken with cryptocurrencies, as they can have multiple purposes. They could be used as a specific asset or represent a particular use on the blockchain. Also, tokens are parts of the token economies that refer to the economy of goods and services that have been tokenized.
As for the Metaverse built on the blockchain, metaverse tokens provide access to multiple services and applications in the virtual space. Therefore, Metaverse tokens allow users to exchange values and assets via crypto-currencies and Non-Fungible tokens. Some tokens are used as units of virtual currency to complete digital transactions within the Metaverse or to grant special in-game abilities. Other tokens represent unique items, such as clothing for virtual avatars or lands and can be used to authenticate ownership.
What is the metaverse tokens value?
First of all, metaverse tokens have value inside the virtual worlds. Users can use them as native service cryptocurrencies to purchase in-game assets, such as land or other items that can be traded with other users. Thus, they can be spent on in-world products and services. Certain metaverse cryptocurrencies also allow their owners to vote on decisions within a metaverse platform. Or if they’re an NFT, they can be used to authenticate ownership and gather users with in-game attributes. Some games feature the “Play to earn” concept allowing users to obtain more metaverse tokens and NFTs through different means including reward systems.
On the other hand, metaverse tokens have also value outside the virtual worlds. For instance, metaverse tokens in the form of cryptocurrency can be exchanged for fiat currencies, or those in the form of NFTs could be traded on in-game platforms or exchanges such OpenSea or even rented as a source of passive income.
Some examples of metaverse tokens
The most common examples of metaverse tokens include SAND of the immensely popular Sandbox metaverse, a virtual world driven by NFTs. Another common token example is MANA of the Decentraland project. It not only functions as in-game currency but also provides each MANA holder with voting power in the Decentraland DAO. Last but not least, AXS, the native token of Axie Infinity, is a play-to-earn game. In Axie infinity players could breed and raise unique creatures known as Axies, which they can then compete with each other and even sell in the marketplace.
Let's take these examples to give an overview of how metaverse tokens are used in practice.
Sandbox
As mentioned above, the SAND token is the native token of The Sandbox metaverse. It serves as the basis for all in-game transactions and interactions within The Sandbox ecosystem. Therefore, SAND is used to play games, customize users' avatars, buy LAND, or trade ASSETS in the Sandbox market. SAND is also a governance token. As a governance token, SAND is used by its holders to submit and vote on changes to the platform through a decentralized autonomous organization (DAO) structure.
In addition, holders can stake SAND within the game to earn rewards, including a share in the revenue from all transactions in SAND tokens.
Overall, the SAND token has three key use cases:
Medium of exchange: SAND may be traded for LAND and other in-game items
Governance: SAND holders may participate in the platform’s governance decisions
Staking: Users can stake SAND tokens and earn a share of the platform’s advertising and transaction fee revenue
The live The Sandbox price today is $4.48 USD with a 24-hour trading volume of $597,670,046 USD. The SAND token can be earned through playing games and contests in The Sandbox or purchased on cryptocurrency exchanges.
Decentranland
Much like The Sandbox, The Decentranland ecosystem runs on its native utility token MANA. Within the Decentraland, LAND and other in-game assets are purchased by using MANA. LAND is a Non-Fungible token that represents the plots of land owned by players. Landowners also have voting privileges as they get two thousand votes per LAND token.
Similar to SAND, MANA also provides voting power as part of Decentraland’s governance protocol.
The MANA token has two core use cases:
Medium of exchange: Can be used to purchase LAND and other in-game items
Governance: As Decentraland relies on a DAO structure, MANA holders may participate in the platform’s governance decisions
The live Decentraland price today is $2.84 USD with a 24-hour trading volume of $438,400,191 USD. MANA could be bought on several exchanges for either crypto or fiat.
How are tokens created?
With the rise of gamified blockchain-based metaverse platforms, Initial Game Offering (IGO) is becoming increasingly popular. The process is similar to an Initial Coin Offering (ICO), but besides the cryptocurrency tokens, IGO allows participants to pre-purchase a blockchain game’s NFTs or in-game tokens at its early development stage. So, what is the difference between an IGO and an ICO?
IGO is a method for blockchain gaming projects to raise capital. IGO participants can get early access to the in-game assets by supporting the game development in its nascent phase. Most often, participation in the IGO results in assets consisting of "mystery boxes" that contain characters, skins, accessories, weapons, and other in-game items. In most cases, these are NFTs needed to access or play the game.
In order to participate, investors must generally purchase the native token from the launchpad platform. After acquiring the required tokens, participants have to lock them into a pool for a certain period of time. Depending on the allocation algorithm, they will then receive the project's token or NFTs in proportion to the amount of locked-in tokens. Sometimes, participants are required to hold or stake the purchased gaming token or NFTs for a certain period of time before they can freely trade it on the market.
ICO was the first approach to crypto fundraising. It allows blockchain-based project teams to raise funds using crypto-currencies. In an ICO, these teams generate blockchain-based tokens that they sell to their early supporters. This serves as a crowdfunding phase - users receive tokens they can use (immediately or in the future), and the project receives money to fund development. Usually, an ICO is announced ahead of time and specifies rules for how it will be run.
ICO was the first approach to crypto fundraising. It allows blockchain-based project teams to raise funds using crypto-currencies. In an ICO, these teams generate blockchain-based tokens that they offer to their early investors. This acts as a crowdfunding round - users receive tokens that they can or likely will use in the future, and the project receives money to fund its development. Usually, an ICO is announced in advance and specifies the rules of its conduct.
Closing thoughts
With Metaverse attracting a lot of interest, metaverse tokens are also gaining popularity. Moreover, the inherent aspects of blockchain technology are perfectly suited for Metaverse development.
The rise of metaverse tokens is part of the decentralization movement that truly empowers and liberates the virtual economy of Metaverse, offering promising opportunities and potential investments.