Catching up with the Sandbox

Token Takeaway: SAND;

We’ve never upgraded a score on Token Takeaway before, but it seems only right to do so with The Sandbox. The Sandbox is a unique type of Metaverse game that is currently inhabited by the likes of Dr Seuss, Ubisoft, The Walking Dead, Snoop Dogg and Atari. This week, we are looking at what has happened since we first covered SAND and why we are upgrading it to a 4.

Since the rebrand of Facebook to Meta, metaverse-based games have been performing well relative to the market, as expected. A Metaverse is a computer-generated virtual world that offers its users a world where they can build, own and monetize their gaming experiences. Non-fungible tokens enable the ownership of assets within the metaverse, and hence in The Sandbox.

Investors should be looking at this ‘sector’ of the digital asset ecosystem as one with massive growth potential. We highlighted this point in our previous Token Takeaway on The Sandbox, and the potential hasn’t changed.

Since We Wrote About SAND

We specifically mentioned a large amount of air beneath SAND at the beginning of November, and this was the deciding factor in scoring The Sandbox a 3.5 and not a 4. Token Takeaway was urging investors to err on the side of caution, unless SAND consolidated after its nearly 400% rise. Now, SAND has consolidated and has since made consistent all-time highs.

Now, let’s evaluate the upcoming events and whether they carry enough weight to keep SAND’s run going.

Upcoming Catalysts for The Sandbox

Catalysts are events that affect the price action of an asset. Typically, a good earnings report or a new drug for a pharma company could be a slingshot for the assets market value in traditional markets. In crypto, these catalysts tend to hold more weight, mostly due to the speculative nature of digital asset investing.

Three main catalysts could help SAND to continue its upwards trend:

• Polygon
• Funding
• Sandbox Alpha

Scalability Is Coming

One thing that staggers me is how The Sandbox can continue to grow at a staggering rate while being on Layer-1 Ethereum. Plans were announced to integrate Polygon in June 2021, so an optimistic investor might expect this launch in Q1 2022. The timing of this event could be positioned perfectly to coincide with SAND’s uptrend, should this need be priced into the market value currently.

Integration with Polygon would make Sandbox unstoppable. This layer-2 scalability solution helps applications increase their development and accessibility while still enabling direct access to the largest money market and secure settlement on Ethereum. Polygon is undoubtedly the best route for further applications wishing to go to the next level. In The Sandbox’s case, Polygon is necessary to fulfil their ambitious plans.

A Well-Funded Sector

In October, the NFT and Metaverse space has been the most well-funded sector, with around $3.5bn raised through VC funds for protocols and companies associated with these virtual worlds. Over the entire Q3 2021, just $1.8bn was raised in the NFT/Metaverse world. The Sandbox was responsible for over $100m of funding, including the resounding $93m raise from Softbank’s Vision Two Fund.

Funding will continue to feed into the metaverse; there is no doubt about that. The top protocols like Decentraland, Axie Infinity, and The Sandbox are likely to benefit the most from future VC rounds. That said, investors need to beware of copy-cats. In DeFi summer, we saw the amoral value extraction from degenerate protocols, which mostly all failed - similar to ICOs in 2017.

The Alpha Event Could Change The Game

Lastly, The Sandbox Alpha release on the 29^th of November is bound to have positive effects on SAND’s market price. This is a given. The more important question is ‘will this event push SAND to flip Decentraland?’. Let’s see how disruptive Alpha might be.

The Sandbox Alpha is an open multi-week play-to-earn event starting in under two weeks. The event will mark the first time players have had a chance to roam the Sandbox metaverse. Eighteen different gaming experiences will be available to play for a select few who win the Alpha pass raffle.

Playing the event will generate a yield from users while completing events will award players with SAND tokens. The current prize pool sits at 1,000 SAND per player - total: $20m. Additionally, three NFTs will be available for these lucky Alpha ticket holders. Anyone else slightly reminded of Charlie and The Chocolate Factory?

However, researching this highlighted a possible risk factor for the play-to-earn sector. Investors/players in Japan cannot participate in the Alpha event due to Japanese government regulation. Let’s hope this does not set a precedent elsewhere.

Conclusion

Investors should be asking themselves whether they think The Sandbox has the legs to cause a flippening of Decentraland. If so, then the next contender is Axie Infinity, which has a 2.5x higher market cap, showing great potential. The upcoming events paint a fantastic picture. However, the possible risk factor of Japan’s play-to-earn regulation needs to be on the minds of investors.