Jun 7, 2022 - Economy & Business

Investing in the metaverse: Ball, Bitwise and Multicoin team up for index launch

Illustration of a person walking along a gridded hallway towards a bright light

Illustration: Sarah Grillo/Axios

Crowds in London waved at a hologram of Queen Elizabeth II in a golden carriage Sunday — not to Britain's actual queen. To Matthew Ball, leading expert of that theoretical parallel Internet world (or worlds), the gesture appeared to affirm the potential of what is not real.

Driving the news: "The Monarchy is in the Metaverse? Monarchyverse," Ball quipped via tweet. And the latest way to invest in its development comes from a partnership between Ball, investment firm Multicoin Capital and crypto index specialist Bitwise Asset Management.

  • They launched an index Tuesday designed to hold a diverse set of tokens representing projects that could ultimately power the metaverse, which is also available as an investment strategy at Bitwise.
  • It's only open to "qualified purchasers" or those with at least $5 million in investable assets. Also, it's just for those who want a private placement subscription, meaning a $100,000 minimum.

What they're saying: The index offers a diverse set of crypto assets, the makeup of which will be responsive to the quickly-growing market it represents, Ball tells Axios. Only it's very possible that the metaverse winners of tomorrow don't exist today.

  • "I'm optimistic that most of the winners of the future 10- and 20-years from now have not been created yet," he said. "You have to actually be pessimistic, and arguably cynical, to believe that most already exist because that would presuppose disruption is unlikely."
  • "At the same time many of those companies exist. Some of them are known, others have limited recognition and some are known only to the triple-F category — friends, families and fools."

Details: Ethereum, Chainlink and Solana tokens are in the index, alongside many others, each project's coin representing a metaverse investment.

Between the lines: Render, for example, stands to be important because computing power is scarce — and creating the metaverse will require a lot of it.

  • The project is attempting to use a blockchain-chased programmatic system to tap into unused units.
  • "The metaverse has unprecedented, almost incalculable demands for compute," Ball said. "What Render does is produce a blockchain based system that allows one to tap into individual and privately owned computing devices to basically sell computing cycles like we would a solar panel."

Yes, but: While the potential of the metaverse is real, so is heightened regulatory scrutiny. For example, regulators are looking into whether Binance's BNB token was a security when it was sold in 2017, according to Bloomberg. That token is also in the index.

How it works: Ball, Multicoin and Bitwise together determine which digital assets are central to the metaverse, and will actively express their views of growth potential over time via the weight each token holds in the index.

  • The index will hold at maximum 40 tokens.
  • Liquidity, regulation and "asset integrity screens" are also used, according to the trio. The latter refers to screening for projects a la Luna/Terra.

Flashback: Ball also launched the Metaverse ETF with Roundhill Investments in 2021.

  • The ETF, which goes by ticker "METV" has roughly $540 million in assets under management. Top holdings include Meta Platforms, Roblox, Nvidia, Microsoft and Snap.

State of play: "My expectation would be that 5 years from now the index does look quite different, but it will be a gradual shift as different projects come to the forefront as the best solution replaces what was the best solution," Ball said.

The bottom line: Some see a multi trillion dollar development unfolding for the metaverse over the next decade or two, and the ways to invest in that vision of the future — outside of buying a parcel of digital land — are proliferating.

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