[Spotlight] The Metaverse land ETF
Until recently, the word ‘metaverse’ was quite an uncommon word in the technological ecosystem. However, it has quickly become the destination of all progressive ideas in recent times.
Any player in the technology space not already in the Metaverse is undoubtedly headed there. These actions are driven by the popular and proven notion that everything becomes better in the Metaverse.
That said, the concepts that make up the Metaverse are not novel; instead, the idea represents any experience or space where you would like to be physical – online.
Metaverse Land: Territory Redefined
Essentially, the Metaverse is a virtual manifestation of physical reality, and it becomes imperative for humans to extend a sense of possession and territory into it. As the Metaverse becomes built out, many people join the online communities, and as such, they develop a desire to express and own spaces, items, and other things in these virtual worlds, including lands.
Notably, these land acquisitions are the first step to owning a digital home that doubles as a territory and storage for the virtual stuff owned by an individual or group.
From the mid-scale and business perspective, several companies are debuting into the Metaverse by proactively acquiring large expanses of digital lands. The companies are strategically positioning for retail as the community grows.
For example, they expend their technological resources to build warehouses and complexes that become useful for rental to individuals who want to store virtual items and cryptocurrency exchanges requiring a Meta representation.
Introducing ETFs into the Metaverse
As reported by CNBC, the real estate sales in the Metaverse topped $500million last year and could double this year, according to investors and analytic firms. With the buzz gained after Facebook was named Meta, the Metaverse will welcome a geometric increase in traction.
Notably, with greater asset ownership in the virtual space comes increased participation from the economic perspective. Big game players are creating an atmosphere for brokering in the virtual space through the development of Metaverse Exchange trust funds(ETF).
Metaverse ETF provides investors with an actively managed diversified portfolio of companies developing the Metaverse, giving investors room for shared funding.
Demystifying Metaverse Land ETF
Spotlighting the operations of ETFs in the Metaverse gives a bigger picture of the financial implications of the metaverse development.
Through Exchange Trust Funds, investors can track the value of their digital spaces, the related investment strategies of complementary digital investment, and transfer their ownerships without hassles.
Several investment firms are spinning millions to acquire large tracts of spaces in the virtual world, and this move is not an end in itself. The virtual land expanse is simulated such that investors acquire lands and spaces on open digital exchanges.
On top of the already outlandish idea of being a virtual landlord, creating more incredible wealth and value is the sole driver of the early investment in the Metaverse land Exchange Trust Fund.
Traditional ETF Vs Metaverse ETF
Traditional ETF and Metaverse ETFs are very similar in their overall operation- the fund provider owns the underlying asset, designs a fund to track the asset performance, then put up shares in the fund for sale.
Traditional ETFs are created by considering the totality of assets, including stocks, bonds, and currencies, marking each unit with a unique ticker.
Metaverse ETFs track the performance index of virtual assets and use the information to list them as shares for investors. Unlike traditional ETFs, Metaverse ETFs focus on the investment inclinations of companies actively involved in the Metaverse. Categories and indexes measure their inclination level.
1. Roundhill Metaverse
Roundhill Metaverse launched in June 2021. The ETF platform operates by tracking an index that envelopes companies’ investment activities in the Metaverse. This method is highly efficient as it analyzes the tractions of the companies and sums it up using a pre-defined indexing system. The Roundhill Metaverse ETF ETF captures the Metaverse in a single portfolio.
Roundhill metaverse ETF indexes companies based on three categories. The categories will give investors the required information and idea about the metaverse asset shared funds. Roundhill Metaverse ETF will index the holdings of these companies uniquely to attract investors- indexing a greater weight to core companies.
2. Fount Metaverse ETF
Fount Metaverse ETF focuses on companies that develop, manufacture and distribute products that are vital to metaverse technology. The ETF is home to big names such as Alphabet, Apple, and Meta.
Fount Metaverse ETF will index the assets of these companies and their participation in Metaverse to design the public share. The ETF currently trades on the New York stock exchange and charges an annual fee of 0.7%.
Index for ETFs: Into the details of the categories
Pure Play Companies: This term describes the companies with business models and capital development closely linked to the Metaverse. In simple terms, growth in the metaverse industry triggers a concurrent increase in the business’s economies.
Core Companies: These companies have fewer operations linked to the Metaverse than pure-play companies. They are less affected by the growth or degeneration of the Metaverse industry.
Non-core Companies: Non-core Companies derive the more significant chunk of their revenue outside the metaverse business ecosystem.
Today, several platforms actively sell real estate in the Metaverse, with the ecosystem welcoming more players every week. Without Exchange Trust Funds (ETF), Metaverse landowners are faced with the challenge of assigning value and risk to assets with artificial scarcity and an indefinite future.
Investors could get drowned in the competition and operational dynamism of these platforms. Hence, there is a need for an organized body of experts capable of revolutionizing shares-ownership and opening the market for more significant activities.
Since the technology debut, real estate sales have focused on the ‘Big Four’- Sandbox, Decentraland, Cryptovoxels, and Somnium, with over 200,000 land parcels shared between them. The activities of the big four have called for more participation from ETF platforms.
Platforms such as Fount ETF and Evolve Metaverse ETF create an ecosystem of value for investors to make better choices in the Metaverse real estate industry.
Benefiting the Metaverse community
ETFs operate with an index designed to measure the viability and performances of companies that invest and develop Metaverse related technologies. The index helps recommend investing across a diverse range of Metaverse land assets, thereby avoiding concentration risk.
In recent times, location has played a crucial role in the prices of lands and assets in the Metaverse. As reported by CNBC, someone recently paid $450,000 to be Snoop Dogg’s neighbour in Sandbox.
Although the investment is bogus, buyers can recoup their money through ETFs while maintaining their ownership of the Metaverse assets.
Buying an ETF
As the Metaverse continues to grow, a surge is expected in the activities of involved platforms. As with the physical world, the economic side of the Metaverse is crucial to its overall operations.
Investing without a plan is riskier than not joining the metaverse train; hence, selecting the right ETF is an important economic decision for investors.
Notably, while ETFs are designed to stalk the worth of an underlying asset in the Metaverse, they are generally sold at market-determined prices, different from the asset’s value. In the Metaverse, more ETFs are being set up daily; therefore, it can be tough narrowing it down.
Investors are expected to highlight their plans for buying spaces in the Metaverse. After noting their investment goals, selecting an ETF possessing a social and environmental focus that aligns with theirs is crucial.
The now and Future of ETFs
Although Metaverse land ETFs are in the early stages, the revolutionary cause of these platforms is evident. ETFs will open up the Metaverse land and asset market to more individuals and groups.
Due to the finite nature of lands in the Metaverse, every virtual reality fanatic cannot own a parcel of land. More people gain a sense of inclusion in the Metaverse with Exchange Trust Funds.
The early impact of ETFs for Metaverse asset owners will help create more participation and drive a greater understanding of the technology and its economic perspective.
We can argue that ETFs are the core revolutionary force that will increase the acceptance of the Metaverse within the online community.