Since Meta announced its foray into the Metaverse in October last year, demand for virtual parcel NFTs has surged, driving prices up. The Sandbox has established itself among the leading Metaverse blockchain projects. It consists of 166,464 ERC-721 tokens, and creators can create profitable experiences for players such as games, events or parties.
This article will lead you to analyze the valuation process of The Sandbox land. In this virtual world, what factors determine the final price? Are there parcels that are over or under priced? How does The Sandbox compare to other Metaverse projects in terms of funding, scarcity, and collaboration?
Learn about plots in The Sandbox
When Facebook announced its rebranding as Meta, there was a surge of interest in Metaverse-related projects. Since then, demand for virtual world projects, including The Sandbox, has skyrocketed. The lowest price of The Sandbox has risen from less than 1 ETH in Q3 2021 to an all-time high of 5 ETH in January, and has reached an average of 3 ETH as of this article. The current floor price puts The Sandbox at a minimum market capitalization of $1.27 billion.
What exactly are plots in The Sandbox?
Plots are actually NFTs that act as a kind of digital real estate on which creators can create experiences. Each plot has a predefined topography that is 96 meters wide, 96 meters long and 128 meters high. Its owner can build and modify it, or rent it out to other players to make money with the experience. Beyond the monetization experience, The Sandbox has other use cases, including passive income generation through staking and governance voting rights.
In terms of token distribution, 10% of the total parcel supply (16,704 parcels) will be held by The Sandbox to host special events and feature exclusive games. Another 16% will be used as a reserve, distributed as rewards to partners, creators and players. The remaining 74% ($123,000) are up for sale, of which 81% ($100,054) are sold at the time of writing.
Now that we’ve covered parcels in The Sandbox, let’s take a look at the factors that affect land prices when evaluating parcels in the Metaverse.
How to Appraise The Sandbox Site
Plot valuations in The Sandbox follow the same principles as real estate in the real world. The price is determined by two main variables: location and size. Other factors such as structural design or plot function are the primary factors that attract users to plots, but the location and size of plots determine their price. The Sandbox Metaverse is still in its early stages, and experiences are just beginning to be created.
We analysed the sales of more than 25,000 The Sandbox plots between August 2021 and March 16, 2022. The analysis only considered 1×1 plots, as larger plots were mostly sold by auction, And due to high price restrictions, the secondary market is not representative.
Adjacent 1×1 parcels can be divided into parcels of different sizes in The Sandbox. The maximum area (XL) of adjacent parcels is 24 x 24 for a total of 576 parcels. There are 35 XL parcels in total, 13 of which belong to The Sandbox. Plots of this size occupy more than 12% of The Sandbox’s territory, and “celebrities” who own plots include game developer Atari, famous NFT collector Pranksy, NFT project Cyber Kongz, Binance, Ubisoft, and fan token companies Well-known companies such as Socios, Gemini, Coinmarketcap, Meta Key, Republic Realm, Warner Music Group and South China Morning Post.
The 12×12 size contains 144 adjacent plots and is owned by well-known brands such as Adidas, Snoop Dogg, CryptoKitties, Ultra, Smurfs, Care Bears and GuildFi. Finally, small and medium plots are the most accessible property opportunities and are open for sale. According to references, in a recent Metavex auction, the winning bid for the Metavex Medium plot was 215,000 SAND, or about $630,000, while the auction price for the Small plot was 45,000 SAND, or about $130,000.
The Sandbox’s geographic model adds to the importance of adjacent parcels. While parcel size is intrinsically linked to price, its location plays a crucial role in the valuation process.
This is illustrated by the highest transaction price for a 1×1 sized plot. Lot #151499 owned by The Yacht’s King Domain, adjacent to a medium sized BAYC lot and a large lot called LooksRare, is selling for 100 ETH. The price of the plot exceeds that of smaller subplots like The Crypto Lifestyle, which sell for 71 ETH.
In The Sandbox Metaverse, Location Is King
Well-known brands and celebrities have made properties in this Metaverse, and the acquisition of these virtual parcels is aimed at creating experiences such as gaming or social hubs to attract crowds. High foot traffic around these key partners increases the likelihood that adjacent parcels will direct visitors into their own experience, potentially increasing their revenue stream.
A large virtual lot Snoopverse owned by music legend Snoop Dogg, its plot around NFTs is very attractive, as this large plot will be the garden for exclusive experiences including games, concerts, and meeting with neighbor Steve Aoki Working with SupDucks. As part of Snoopverse’s second public auction, the five small lots were auctioned for an average of 78,200 SAND, or about $230,000.
The Sandbox map can help identify popular areas like the Snoopverse. Following the same logic to locate areas with high traffic potential, The Sandbox marks some plots as “premium” owned by major brand partners or Sandbox itself.
The Sandbox premium area represents how the premium land has reached the top of the recognized large land. However, overlaying the price map on The Sandbox premium map reveals the presence of high-value non-premium areas, as well as premium areas with below-average net sales prices.
The value of land parcels varies from region to region. As the platform develops into a more mature money-making Metaverse, increased demand in these areas could push up prices for nearby parcels.
To sum up, while the size of the plot is directly related to the price, at this early stage, the location plays a crucial role. As the game matures, such as the specific use of the plot, the design, or type of experience in it, will undoubtedly become more important. For now, however, location is king at The Sandbox.
Comparison with other Metaverses
While plots have been analyzed for size and location, as a platform, The Sandbox’s price is also influenced by other factors and can be used as a benchmark against other virtual worlds.
- Utility is one of the most important value propositions in The Sandbox. In addition to the entire earn-and-play and social experience throughout the game, The Sandbox also has a full micro-economy by allowing owners to rent out their properties and hold SAND in them, granting access to governance votes. Projects like Decentraland compete with these experiences, but lack financial gain. Other projects like NFT Worlds may have solid passive income mechanisms but lack a great immersive experience.
- Economically, this earn-as-you-play dapp also has a competitive advantage. The historical transaction volume of The Sandbox land is over $530 million, just behind the decentralized area. By 2022, The Sandbox has become the leading virtual world platform with over $98 million in transactions and attracting over 6,800 unique traders.
- Floor prices for plots have stabilized at around 3 ETH, which is lower than smaller virtual worlds such as Decentraland or NFT worlds, but almost double that of peer Metaverse projects such as CryptoVoxels, Webbland or Treeverse. This floor price puts the market value of The Sandbox site at $1.27 billion, which is 36% higher than the central area.
- Supply is limited. The Sandbox lot is scarce. Projects like CryptoVoxels have far less supply, but plots are free to expand their footprint at any time.
- Partners have always been one of The Sandbox’s focuses. The project is fully supported by Animoca Brands, a well-known web3 investment agency. Partnerships with celebrities and big names in numerous traditional industries and web3 projects, plus the latest HSBC, make it the first bank to own a plot in the virtual world.
- With nearly 900,000 followers on Twitter and over 280,000 members on Discord, The Sandbox has one of the largest communities in Web3. Decentraland has 560,000 Twitter followers and 160,000 Discord members. Prospects are promising for both projects, but The Sandbox’s community size is a very positive indicator.
As Metaverse narratives gain interest and momentum from traditional and web3 institutions, people investing in this space are starting to recognize parcel value. Not only will digital real estate be a place for virtual characters to socialize and enjoy community-built experiences, but these virtual parcels also carry a passive income feature. Additionally, the mechanics and governance of the parcel owners make The Sandbox parcel the most popular virtual parcel. While size itself affects lot prices, location plays a more important role in value. A well-located 1×1 plot can command a higher sales price than some 3×3 plots.
Geospatial models increase the importance of adjacent parcels. Celebrity neighbors like Snoop Dogg or The Sandbox are able to create economic impact in terms of traffic, gameplay and exposure of the game on these plots and become a “premium” asset.
The increase in experience in virtual reality will eventually fluctuate the value of these parcels, as the experience will be more appealing than a neighbor’s parcel valuation. You can use this report as a guide to identify potential opportunities in The Sandbox’s virtual world.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/how-to-value-the-sandbox-plot-what-drives-land-prices/
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