As The Sandbox builds TIME Square, metaverse is tipped to be worth $5trn by 2030
16:31, 8 July 2022
Since the Sandbox announced it was building TIME Square in the metaverse last month, SAND grew a hefty 50%. Bitcoin (BTC) added a measly 7% in the same period.
Meanwhile, the metaverse is tipped to be worth $50trn (£42trn) by 2030 by McKinsey & Company. Is the SAND's rally a sign of revival for metaverse tokens after a slump in 2022's second quarter?
SAND/USD
Metaverse tokens, like Axie Infinity (AXS), the Decentraland (MANA), and the Sandbox (SAND), were undisputed success stories in 2021, blowing up unheard of tens of thousands of per cent in value in a year.
Their sparkling performance continued into the first quarter of 2022. March saw Decentraland attract attention with its hosting of the first-ever FashionWeek. The same month, a native token for the biggest NFT PFP project, Bored Ape Yacht Club's apecoin (APE), was launched and went on several market-defying rallies.
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APE/USD
But the sector was not immune to the wider crypto market crash in Q2 2022.
In May, FUD flooded the wider cryptocurrency market when Terra blockchain, host to two of the 10 biggest cryptocurrencies, UST and LUNA, collapsed. Then in June, pressure was heaped on the sector when crypto lending platform Celsius Network and crypto-oriented hedge fund 3AC ran into problems.
And so did metaverse tokens: “Compared with Bitcoin, metaverse tokens have strongly underperformed,” Clara Medalie, a head of research at Kaiko says.
“In Q2, Axie Infinity's AXS was the worst performer, down 77% since March compared with BTC's -55%,” she says.
Metaverse Token Q2 returns
Metaverse tokens saw a slump the second quarter. – Photo: Kaiko.Road to recovery?
But the metaverse tokens sector seems to be picking up.
“What's interesting to note is their slight recovery in June relative to Bitcoin,” Medalie notes.
“Bitcoin underperformed all tokens in June, although AXS and BTC both ended the month down about 35%. Axie Infinity has struggled to maintain the high growth they saw in late 2021, due in large part to a flawed in-game economy that has put downwards pressure on the game's native token,” she says.
Metaverse tokens performance pick up
Performance of metaverse tokens have picked up in June. – Photo: Kaiko.Profiting of metaverse land scarcity
In June, The Sandbox announced it would partner with Time magazine's NFT community, TIMEPieces, to create a virtual TIME Square. (The name is a play on words on New York's Times Square, using slightly different spelling.)
TIME Square will be built on TIME’s land in the Sandbox and aims to be “a destination for convening, art and commerce, inspired by the visual spirit and energy of the iconic neighborhood in New York City.”
The Sandbox had previously scored by providing land in the metaverse with an anonymous user paying a mindblowing $450,000 for a plot of virtual land in the Sandbox next to Snoopverse, the virtual residence of American rapper Snoop Dog.
As the metaverse itself deals with novel issues such as how to value a particular piece of digital land, McKinsey's report noted that platforms like the Sandbox currently benefit from scarcity of virtual land, but warned that their future success will ultimately depend on which metaverse platforms end up being widely adopted.
“Price increases (of virtual land) are driven by scarcity that is designed into present-day platforms like Decentraland and the Sandbox," says the McKinsey report. "That heightens the investment risk involved, even if organizations making the investments aim to derive utility from their virtual real estate by, for instance, using it as their metaverse base of consumer interactions.”
“Their bet is not only on mass adoption of the metaverse in the coming years, but also on adoption of the specific platform that the virtual land is bought in (given near-zero interoperability between worlds for now).”
“As with cryptocurrency and NFTs, the virtual real-estate asset market will likely remain volatile in the near term,” the report warns.
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