What is Metaverse Index (MVI)?

• Blockchain Council
• September 12, 2022

Thinking about the super success of Non-Fungible Tokens makes us realize how well we have acknowledged the concept of virtual money. In a decade, what started as a single-end concept has transformed into a full-fletched industry with billions of dollars under its wings. Cryptocurrencies paved the way for a new-age economic system that speaks of security, ownership, and independence. Non-Fungible Tokens give investors everything they expect from an investment tool. Thriving as digital collectables, NFTs open doors to a system that allows token holders to enjoy the freedom to trade and own things in a more liberal way. The use of blockchain technology makes NFTs a perfect choice for those who are looking for a safe and profitable earning resource.

The craze for NFTs encouraged tech enthusiasts to explore the depths of blockchain technology and virtual assets. This eventually brought the idea of Metaverse Technology into the limelight, making it emerge as one of the hottest trends in 2021. When Mark Zuckerberg’s Facebook rebranded itself into Meta Platforms, the term Metaverse got its first global publicity. Seeing the shift of interest of Facebook from social media to Metaverse, many other firms decided to play their bets on the technology. This gave Metaverse technology the much-needed push to mark a presence in the market space.

Metaverse and NFTs work as supporting agents for each other. They complete each other by providing the necessary friction for growth. NFTs form an inevitable part of a Metaverse economic circle. They fuel the economy within a virtual space ecosystem. Presently, the market is overflowing with potential Metaverse projects, each striving to outshine the others. Well, though having a choice is always a good resort, sometimes it can create confusion. Choosing the right kind of project for oneself can be a tiring task. However, with guidance, this issue can be resolved easily. This is why Index Coop., a popular DAO, created the Metaverse Index (MVI).

What is Metaverse Index (MVI)?

Launched by Index Coop, Metaverse Index serves as a pool of fifteen decentralized tokens created to capitalize on the growing craze for Metaverse technology. The index thrives to allow investors to capture the potential of the market trend that involves shifting to a virtual ecosystem. The transformation is widely seen across domains such as entertainment, finance, e-gaming, business, sports, travel, etc. An ERC20 token, under the ticker symbol of MVI, represents the index. It was launched on APril 7, 2021. MVI shines as the first NFT-focused index.

The launch of the Metaverse Index unlocks new investment opportunities in the fast-pacing Metaverse industry. It gives users seamless access to a diverse range of resources rather than relying on a single asset. The index helps track the movement of Non-Fungible Tokens that form the essence of the Metaverse economy. Investors can use metaverse wallet solutions to ensure safety of their funds during trades.

Earlier, the market had several cryptocurrency indexes, such as C20, that allowed investors to gain exposure to top-rated assets in the sector. DeFi indexes, on the other hand, facilitated exposure to DeFi projects. Now, with Metaverse Index, a renowned DAO platform specializing in designing crypto index tokens, Index Coop. aims to provide exposure to the top-performing NFTs and metaverse projects.

How Does MVI Work?

The MVI relies on calculative mechanisms to fulfil its aims and objectives. It derives the final index weights through a combination of the square root of market capitalization and liquidity weighting. The team considers liquidity a vital aspect of the NFT market. As NFTs and Metaverse are still in their nascent development stage, low liquidity can affect on-chain rebalancing and the allocation of portfolios.

We know that Metaverse is a collection of virtual spaces that uses modern technology to blur the gap between the real and digital worlds. It talks about ownership, transparency, and economic worth. Metaverse is an umbrella term that includes next-gen concepts like Virtual Reality, Augmented Reality, blockchain technology, and Artificial Intelligence. The technology allows users to enjoy 3D visualization of real-world things in a more interactive environment. The use of VR and AR facilitates the involvement of eye-catching elements to enhance the impact of simple real-world items.

On the other hand, NFTs are digital collectables that use blockchain technology and represent real items like art, merch, etc. They give holders ownership rights on their purchased NFT collection. NFTs can represent anything, ranging from a daily use object to a priceless art piece.

The shared digital ecosystem formed by Metaverse blockchain and NFTs is subject to changes in blockchain and other related technologies. Both the concepts are linked together to create an inclusive, user-friendly, and independent economic front for users to gain profits. Metaverse allows anyone to own a piece of its environment through NFTs.

Perks of Using the MVI Token

In the long run, the Metaverse Index and its native currency, MVI, are expected to pump up the craze for the digitalized economy. It aspires to infuse Metaverse into core industrial domains like entertainment, business, and sports. The team is working to achieve its set targets via the MVI token as the portal comes packed with four exclusive benefits:

• Simple Infrastructure

The platform offers a reliable infrastructure for exploring the market trends keeping the investors hooked to the metaverse industry. Users need not have to perform research constantly. The need to rebalance the asset portfolio is also not required when using MVI.

• Economical

Cost reduction is one of the most important characteristics of the Metaverse Index. The gas fee paid here is less than the amount paid for trading tokens individually. Saving is a vital factor for crypto investors, especially with the dynamics of the sector.

• Safety from risks

Virtual assets do not have a central authority to serve as backend support for them. Risks are generally high as token prices fluctuate quite vigorously. However, using an index like the Metaverse Index helps offset individual tokens’ volatility significantly.

•  Transparency

MVI follows a robust mechanism for assessing and selecting the tokens for inclusion and debarring. Transparent rules ensure reliable working conditions within the system. The users get to enjoy best-in-class services.

The MVI Methodology

Index Coop follows the below-mentioned processes to manage its ecosystem:

• Initial Screening 

For portfolio construction, MVI analyzes the five categories on Coingecko namely, NFTs, Entertainment, VR, music, and AR. The project that passes the screening is then tested for other parameters. The tokens need to be an ERC20 asset, have a circulating market cap of $30M or plus, and have high liquidity on DEXs.

• Review of Tokens

The tokens that qualify the screening are then reviewed by MVI. Here, they consider if the token has been correctly classified and aptly fits into the metaverse definition. Other parameters considered for the benefit of passive holders include the future plans of the qualified project to shift to Layer 2 and the impact on this on their liquidity.

• Construction of Portfolio

The index uses the square root of market cap and liquidity weighting combo to derive the final index weights. The formula used for calculating final index weights are:

TW= 75%*RMCW + 25%*LW

TW- Token weight in the $MVI
RMCW- Square root of market cap weighted allocation
LW- Liquidity weighted allocation

Conclusion

When making your crypto investments it is always a boon to have a support system that can guide you and help you minimize the risk factors. The Metaverse Index by Index Coop was created to provide this aid to Metaverse enthusiasts. The industry is growing and so there is very less exposure of the field amongst investors. The index reliably captures the trend of shifting of industries from traditional setups to Metaverse’s virtual ecosystems.

If you are willing to learn more about Metaverse concepts, then you can move to Blockchain Council’s official platform. Learn metaverse terminologies from the wide range of courses offered by the portal. The learners get a fair chance to sharpen their subjective and practical skills from Metaverse Certification list on the platform.