Returns as of 03/11/2022
Returns as of 03/11/2022
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The metaverse promises to be the next big technology, an evolution of the internet that blends virtual and augmented reality with work, entertainment, commerce, and social interaction. While we are still years away from a true metaverse, some blockchain video games already look like promising precursors to that technology.
Axie Infinity ( AXS -0.64% ) and Decentraland ( MANA -1.27% ) could one day be incorporated into a larger network of virtual worlds. But in the meantime, the native cryptocurrency from each game — AXS for Axie Infinity and MANA for Decentraland — could be a smart way to cash in on the multitrillion-dollar metaverse.
Here’s what you should know.
Image source: Getty Images.
Axie Infinity is a play-to-earn cryptocurrency game built on the Ethereum blockchain. Players can collect, train, and battle with digital pets known as Axies in the virtual world of Lunacia. Each Axie falls into one of nine classes (e.g., aquatic, reptile), and each has different battle stats and genetic traits that make them more or less valuable.
Similarly, Lunacia is divided into 90,601 plots of digital property across seven different types of land (e.g., arctic, forest). Each Axie and each piece of land is represented by a non-fungible token (NFT) on Ethereum, and those NFTs can be bought and sold on the Axie Infinity Marketplace. In other words, players can turn their in-game assets into real-world money.
By playing the game, users can earn two different tokens: Axie Infinity Shards (AXS) and Smooth Love Potion (SLP). AXS tokens are used in governance and staking and will eventually be used to make marketplace payments. But both tokens are needed to breed Axies, an option that allows players to create new (and potentially more valuable) digital pets.
As of November 2021, Axie Infinity ranked as the most popular Ethereum-based game in terms of daily active users. Over the past year, Axie players have spent a whopping $3.9 billion on the marketplace, and the platform has generated $1.3 billion in revenue — which comprises fees charged for breeding and marketplace transactions. That makes Axie Infinity the leading decentralized application in terms of sales, even outpacing NFT marketplace OpenSea.
Going forward, if Axie Infinity manages to maintain its popularity, demand for the AXS token should continue to rise. That’s true for two reasons: First, investors can stake the token to earn rewards, and the payout currently sits at a jaw-dropping 39% after inflation. Second, players must spend AXS tokens to breed new Axies, which itself is a potential path to creating valuable NFTs. In both cases, rising demand for AXS should push its price higher over time. That’s why this cryptocurrency could help you cash in on the metaverse.
Decentraland is an Ethereum-based virtual world powered by the MANA token. Users can explore, interact, and engage in gameplay with their avatars. They can also buy parcels of digital land then develop and monetize that property with 3D content and applications. Simple scenes can be designed using drag-and-drop tools, while more complicated scenes can be constructed using the software development kit, a suite of powerful programming tools.
Of particular note, JPMorgan is one of many well-known businesses that have recently purchased property within Decentraland. It sees the metaverse as a significant market opportunity. In an effort to position itself as an early mover, JPMorgan built the Onyx lounge inside Decentraland, a place where avatars can watch experts talk about the crypto market.
Within the game, land and wearables are represented as NFTs on the Ethereum blockchain, and they can be bought and sold using MANA tokens in the Decentraland Marketplace. Put another way, as Decentraland becomes more popular, those wearable items and parcels of digital land should become increasingly valuable, creating demand for MANA. In turn, that would drive the token’s price higher. There is good reason to believe the platform will continue to gain traction with users.
Decentraland currently ranks as the third most popular NFT collection on OpenSea, which itself is the world’s most popular NFT marketplace. Additionally, the fact that brands like JPMorgan and Samsung are buying property in Decentraland bodes well for investors. That’s why this metaverse cryptocurrency looks like a smart long-term investment.
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Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 03/11/2022.
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Calculated by Time-Weighted Return since 2002. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns as of January 1, 2021.
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