Podcast: 2022 Crypto Theses with Ryan Selkis
08 Dec 2021
Remember when we were kids and used to play video games?
These games were always excellent for entertainment irrespective of whether we play them alone or with some friends. Rather than buying a new cycle or a bat, we were ready to sacrifice our pocket money on the new PlayStation model.
But 21st-century virtual world gaming is entirely different from what we used to experience. Today, gaming is a social phenomenon. It is a part of our social life, and to some, it is their alternative reality.
It reminds me of a dialogue from the movie Ready Player One:
“People come to The Oasis for all the things they can do, but they stay because of all the things they can be. It’s the only place that feels like I mean anything.“
The extent of physical isolation that the world has seen since 2020 has given this phenomenon more validation and adoption.
Today, these virtual worlds impact our real-world mindset, relationships, and income from just being a source of entertainment. Further, because people are willing to spend time and money on a specific virtual world, that world in itself becomes valuable real estate.
It is irrelevant that these goods and spaces are digital. Willingness to pay is the ultimate factor in assessing the economic value of these platforms.
Let us take Minecraft as an example which is one of the most played games in the world.
The game is a virtual world where you can create your world and experiences using your creativity and resources available in the game. It is one of the first few games which comes with no objective or rules. Players can build and explore the game at their discretion. This category of games is known as “Sandbox Games”. The nature of these games is precisely like a sandbox that allows children to create anything they want from it.
Minecraft made a $142 million revenue in 2020, with 200 million copies were sold last year. This explains a lot about the untapped potential in the virtual world market.
However, these games have a problem that is hindering the growth of this virtual ecosystem. Let us identify and discuss some prime issues.
The problems with the traditional gaming platforms are as follows:
The gaming company has ultimate ownership right on all the digital assets generated on the platform.
There is no actual ownership of digital items for a creator or the player in a traditional game ecosystem. If you purchase a gun on Call of Duty, you have access to that gun, but you don’t own that asset in an absolute sense.
If the game is shut down or you lose access to your account, those digital assets will be gone forever.
Central control over the trading of digital items restricts creators and players from getting fair value of their virtual goods. Gaming companies take a big chunk out of the sales value for themselves.
Moreover, some items can be restricted for trade by the company.
Existing game marketplaces are based on Fiat Currencies such as USD, Euro, GBP, etc., which do not support microtransactions and can hamper the in-game economies.
The in-game assets are not interoperable within different applications. A sword purchased in Minecraft cannot be used in Worldcraft. So, a player would need to buy separate assets for a particular application.
Today, we have brought a project that aims to solve all these above issues. The name of this project is The Sandbox.
So, let us understand what it is all about.
This report is intended for CoinSutra VIP users. This research report is based on the current market conditions and should not be treated as direct financial advice. Investing in crypto-assets has risk due to high volatility, so invest only that amount which you are ok to lose.
The Sandbox is a virtual world where players can build, own and monetize their gaming experience. The platform is built on the Ethereum Blockchain Network and has an in-house governance and utility token called SAND. We will discuss more on the SAND token later in this report.
With a decentralized, community-based, and blockchain-based platform, The Sandbox aims to benefit its users by providing:
The Sandbox team has a pretty successful past in the gaming industry. The founding team has a previous venture established in 2011 with the name of Pixowl Inc., a mobile gaming company.
In 2012, Pixowl launched its first game, The Sandbox, and a second game, The Sandbox Evolution, was launched a few years later.
There are 40 Million downloads on Pixowl games, and 70 Million virtual worlds have been created in these games. This means that the Sandbox franchise already has a vast community to back up this new blockchain project. Pixowl.Inc was acquired by Animoca Brands in 2018.
The blockchain version of The Sandbox was launched in 2018 and is still in the adoption and development mode. The whole virtual world on The Sandbox is divided into 166,464 LANDS. These LAND are the spaces created in the Metaverse, in which players can create and monetize games. LANDS can be combined to form ESTATES, and ESTATES can be combines to form DISTRICTS.
The founders of The Sandbox are as follows:
Arthur Madrid – Twitter
CEO, Director, and Co-Founder of The Sandbox
Arthur Madrid was the CEO and Co-founder of Pixowl.Inc and is currently a board member of Animoca Brands.
He is a long-time social gaming entrepreneur and advisor to many gaming, social media, and software startups.
Sebastien Borget – Twitter
COO, Director, and Co-Founder of The Sandbox
Sebastian Borget was the COO and Co-founder of Pixowl.Inc.
Sebastien holds a Computer Science Engineer Degree from Telecom SudParis, one of France’s leading graduate engineering schools in Information and Communication Technology.
Currently, he manages operations of a 45 plus members international team devoted to the Sandbox project. Further, in 2020 he was the president of Blockchain Game Alliance.
Now, let us understand the components of The Sandbox ecosystem.
The three main components of The Sandbox are Vox Edit, Marketplace, and the game itself. Now, let us understand the components of The Sandbox.
VoxEdit is a tool for artists where they can create in-game assets for The Sandbox ecosystem. It is a simple 3D voxel modeling package that allows artists to create and animate 3D objects such as people, animals, tools, etc.
These in-game assets can then either be used by the artists in the game or placed in the market for sale.
Artists may explore and download Vox Edit here.
The next important component of The Sandbox project is the Marketplace.
The marketplace allows users to sell their creations made in the VoxEdit in the form of Non-Fungible Tokens (available in ERC-721 and ERC-1155 standards). Thus, the marketplace gives a ready open market to the creators to monetize their creations.
There are many renowned collections on this marketplace, such as collections from Atari, Smurfs, Binance, FTX, Gemini, Coinmarketcap, etc.
You can explore The Sandbox Marketplace here.
The most important component is the product that The Sandbox platform offers and, i.e., games.
As discussed above, The Sandbox virtual world is divided into several pieces of LANDS. After purchasing a LAND, a user can create a game on the land and place their in-game assets, which can either be created on VoxEdit or purchased from the marketplace.
Through Game Maker, users can decorate their LAND with assets and incorporate gameplay features by assigning predefined behaviors to the assets. This can turn up a barren LAND into a full-fledged game.
Currently, there are no games to experience on the platform. However, the Alpha version of the gaming interface is expected to launch in late September or early October 2021. You can also experience the interface from the videos in the gallery.
The platform is currently available in the web version and is expected to expand to iOS and Android devices later this year. Eventually, gaming consoles will also be integrated with the platform. Basis the roadmap of the project by 2023, more than 5,000 games are expected to be up and running on the platform.
You may explore and download the Game Maker here.
Avatar is another component of the ecosystem which is an in-game voxel representation of a player. An owner can modify his Avatar piece by piece (such as helmet, arms, torso, legs etc.).
An Avatar user can:
For more information on The Sandbox Avatar, click here.
SAND is the in-house utility and governance token of the Sandbox ecosystem. It is an ERC-20 token built on the Ethereum Blockchain Network.
The primary use cases of the SAND token are as follows:
a. Use on The Sandbox Platforms
Based on The Sandbox Roadmap, by 2023, the platform’s ecosystem will be converted into a full-fledged DAO (Decentralized Autonomous Organization). This means that SAND token holders would govern and would vote on the key proposals of the platform.
SAND tokens can be staked on a particular piece of LAND, allowing a token holder to generate passive income on their SAND tokens. As a staking reward, you would receive additional SAND tokens. As an additional reward, a staker would also receive a few gems and catalysts, which can be used on the platform or sold on the marketplace.
5% of total SAND transactions would be allocated towards reward distribution. Out of this 5%, 50% would be given to the staked SAND tokens. As the staking rewards are linked with the revenue generated by the platform, we will understand the revenue model of The Sandbox platform later in this post.
d. Liquidity Mining
SAND tokens can be deposited on Uniswap for liquidity mining.
For more information on the Liquidity Mining of SAND tokens, click here.
|Maximum Supply (Source)||3,000,000,000|
(30% of Total Supply)
|Token Value (in USD)||0.8296|
|Market Cap (in USD)||$ 734 Million|
|Fully Diluted Value (in USD)||$ 2.5 Billion|
|24 Hours Volume (in USD)||$ 512 Million|
|Particulars||Token Allocation in No.||Token Allocation in %age|
|Founders & Team||570,000,000||19%|
|Total SAND Supply||3,000,000,000||100%|
The token economy and allocation look decently fair. 30% of the tokens are already in the market circulation, possibly lowering the risk of substantial volume transactions by the crypto whales. As the platform gets better adopted within the next 24 months, this should increase the circulating supply and the number of token holders.
You can buy the SAND token on the following Centralized and Decentralized Exchanges:
|Centralized Exchanges (CEXs)||Decentralized Exchanges (DEXs)|
|Huobi Global||1Inch Exchange|
You can find more information on the SAND token here.
As we have already discussed, the whole The Sandbox Metaverse is divided into pieces of land. Anyone who would purchase a piece of land would be granted LANDS token, which is an ERC 721 (Non-Fungible Token standard) token. There are a total of 166,464 LANDS that can be purchased.
LANDS are physical spaces in the Metaverse owned by players to create and monetize Games. LANDS are used to publish your game and can be rented to game creators. Based on The Sandbox team, 58% of the land has already been sold on the platform.
For more information on The Sandbox Land, click here.
Currently, The Sandbox team has identified the following five revenue streams that would help in managing and growing the platform:
The Sandbox has several renowned partners such as:
The competitors of The Sandbox are as follows:
|Traditional Gaming Platforms||Blockchain-Based|
The pros of The Sandbox project are as follows:
However, the Cons of The Sandbox project are as follows:
Fundamentally, The Sandbox is an excellent project.
However, currently, most of the development of the platform is just a theory. The critical factor in deciding the platform’s fate would be the adoption of games being developed on the platform. Until we have proof of adoption, it would be not easy to give a clear answer to this.
Therefore, we suggest holding a small portion of your portfolio in this token based on the solid foundation, partnerships, and token economy. Once the gaming interface starts coming up within the next 6-8 months, then based on the adoption, we can decide whether to double or close our position in the SAND token.
Bullish – We are currently bullish on Sandbox and we believe that it is in an uptrend.