What is the Metaverse Index ?

The Metaverse Index (MVI) is designed to capture the trend of social activity, entertainment powered by NFTs and blockchain technology. It uses a combination of the square root of market cap and DEX liquidity to arrive at the final index weights. The article focuses on discussing Metaverse Index in detail.

What is the Metaverse Index?

The “Metaverse Index” (MVI) is an index of the most popular decentralized applications (DApps), digital assets, and services in the metaverse. It is a popular investment among investors who are interested in the metaverse. It provides a way to gain exposure to a variety of metaverse-related tokens without having to research and select individual tokens.

Think of it as a stock market index for the metaverse. The main aim of the Metaverse Index (MVI) s to provide a comprehensive overview of the metaverse and its development.

• MVI uses a combination of the square root of the market cap and DEX liquidity to arrive at the final index weights.
• MVI helps to track the movement of NFT.
• MVI is also a liquid investment, which means that it can be easily bought and sold.

History of Metaverse Index (MVI)

The Metaverse Index (MVI) is a liquidity-adjusted, root capitalization-weighted index that was launched in November 2020 by the crypto asset management firm called Index Coop. Index Coop firm has launched this index to capture the trend of entertainment, social activity, and business moving to take place in virtual economies, powered by NFTs and blockchain technology.

• The MVI index fund was created to provide investors with exposure to the growing metaverse industry, which is a virtual world built on blockchain technology.
• The MVI index fund is designed to track the performance of a basket of different tokens related to the metaverse, including cryptocurrencies that are used to facilitate transactions within virtual worlds, governance tokens that are used to manage decentralized autonomous organizations (DAOs) that control virtual assets, and other tokens that are used to provide users with access to different aspects of the metaverse.

Events of the Metaverse Index MVI

• 2020: The MVI is launched by Index Coop.
• 2021: The MVI’s market capitalization grows from $1 million to over $100 million.
• 2022: The MVI is listed on major exchanges, such as Binance and Coinbase.
• 2022: The MVI is used by major investment firms, such as Grayscale and Fidelity.

What does the Metaverse Index (MVI) Track?

The MVI index tracks the performance of the most popular and influential projects in the metaverse and is meant to provide an objective measure of how the metaverse is growing.

• MVI is a group of tokens designed to capture the trend of entertainment, sports, and business shifting to a virtual environment. The index is represented by an ERC20 token.
• The MVI uses a combination of the square root of market cap and DEX liquidity to arrive at the final index weights. The token must be available on the Ethereum blockchain.

MVI tracks the performance and market growth of the following:

• Entertainment.
• Arts.
• Sports.
• Businesses in the Virtual World such as Virtual Reality (VR), Augmented Reality (AR), and Non-Fungible Tokens (NFTs).

How Does Metaverse Index (MVI) Work?

MVI provides investors with exposure to a diversified portfolio of metaverse-related tokens. By holding MVI, investors can gain exposure to various projects and companies that are driving the development of the metaverse. This allows individuals to participate in the growth potential of the metaverse industry without the need to individually research and invest in multiple tokens.

The index is maintained by a team of analysts and developers. They are responsible for collecting data, analyzing trends, and making decisions about which projects should be included in this MVI index.

Here are some of the factors that Index Coop considers when rebalancing the MVI:

1. Market capitalization: The market capitalization of a token is the total value of all the tokens that have been issued. Index Coop wants to make sure that the MVI is diversified, so it looks for tokens with a variety of market capitalizations.
2. Liquidity: Liquidity is the ease with which a token can be bought and sold. Index Coop wants to make sure that the MVI is liquid, so it looks for tokens that are traded on a variety of exchanges.
3. Growth potential: Index Coop wants to make sure that the MVI includes tokens that have the potential to grow in the future. It looks for tokens that are backed by strong teams and have a clear roadmap for growth.

Metaverse Index (MVI) Calculation

The index weight is calculated using a combination of square root market cap and liquidity weight to arrive at the final index weights.

TW = 75% * RMCW + 25% * LW

Here,

TW: token weight in the $MVI;

RMCW: square root of market cap weighted allocation;

LW: liquidity weighted allocation.

Metaverse Index (MVI) Maintenance

The team also works to ensure that the index is up-to-date and relevant. The MVI index fund is updated periodically to ensure that it includes the most relevant tokens related to the metaverse.

As the metaverse industry continues to evolve and grow, the MVI index fund is expected to adapt and change to reflect these developments, and the MVI is rebalanced and maintained quarterly in two phases to ensure that it remains representative of the metaverse industry:

1. Determination Phase: The determination phase is the phase when the changes needed for the next reconstitution are determined.
2. Reconstitution Phase: In this phase, the index components are adjusted, added, and deleted as per the instructions published after the end of the determination phase.

How are new Metaverse Index (MVI) Tokens Created?

New MVI tokens are created through a process called minting.

• The Metaverse Index Cooperative periodically rebalances the index composition to include new metaverse-related tokens.
• When a reconstitution occurs, new MVI tokens are minted and allocated to the participants in the ecosystem.
• This ensures that the index remains up-to-date and accurately represents the metaverse industry.

The MVI Methodology

The MVI methodology ensures that the index composition accurately reflects the metaverse market. It considers factors such as market capitalization, trading volume, and project quality to select tokens that have a significant presence and potential impact in the metaverse industry. This methodology provides a robust framework for tracking the performance of the metaverse market.

Here are the steps involved in the MVI methodology:

1. Gather a list of tokens that meet the MVI criteria.
2. Calculate the square root of market capitalization for each token.
3. Calculate the DEX liquidity for each token.
4. Weight the tokens in the index according to their square root of market capitalization and DEX liquidity.
5. Rebalance the index quarterly.

The MVI methodology is a transparent and objective way to track the performance of the metaverse industry. It is a good way to gain exposure to the metaverse industry without having to pick individual tokens or projects.

Benefits of Metaverse Index (MVI)

The Metaverse Index is an important tool for investors and analysts who want to gain a better understanding of the state of the metaverse. 

• Performance: Metaverse Index (MVI) provides an objective measure of the growth of the metaverse and the performance of the different components that make up the metaverse. It also provides insight into what projects and services are gaining traction and which ones are falling behind.
• Diversification: MVI offers investors exposure to a broad range of metaverse-related tokens, reducing the risk associated with investing in a single project. This diversification provides a more balanced portfolio and pothe ential for long-term growth.
• Accessibility: By holding MVI tokens, investors can easily gain exposure to the metaverse market without the need for complex procedures or technical expertise. The token can be easily traded on various decentralized exchanges, making it accessible to a wide range of investors.
• Future Growth Potential: The metaverse industry is experiencing rapid growth and is expected to revolutionize various sectors, including gaming, virtual reality, and social interactions. By investing in MVI, individuals can position themselves to benefit from the continued expansion of the metaverse.

By tracking the performance of the most popular projects and services in the metaverse, investors can gain an edge in making informed decisions about which metaverse projects to invest in.

Limitations of Metaverse Index (MVI)

Here are some of the limitations of the MVI methodology:

• The MVI methodology is not perfect. It is possible that the index could be overweighted in certain tokens or projects.
• The MVI methodology is based on historical data. It is possible that the index could underperform in the future.

Which Tokens are available on Metaverse Index right now?

As of now, there are 13 tokens available on Metaverse Index. The tokens currently included in the MVI are a curated selection of prominent projects within the metaverse industry. These tokens represent various sectors such as virtual reality platforms, decentralized finance (DeFi) in the metaverse, and blockchain gaming. Check out the tokens list below.

Here is the list of available tokens.

1. ApeCoin (APE)
2. The Sandbox (SAND)
3. Decentraland (MANA)
4. Axie Infinity (AXS)
5. Immutable X (IMX)
6. Gala (GALA)
7. Looks Rare (LOOKS)
8. Ethereum Name Service (ENS)
9. Enjin (ENJ)
10. Audius (AUDIO)
11. Illuvium (ILV)
12. Merit Circle (MC)
13. Wrapped Ether (WETHW)

The Metaverse Index is rebalanced quarterly, so the tokens that are available on the index may change over time.