By Larry Wright
Metaverse has never been given a serious thought until now. It was considered something that was only good for the pages of science fiction, and people who yearned for that kind of reality could only propose what kind of elements to be added to this fictional reality. But something interesting has happened in these past few years as decentralization and blockchain technology have helped to bring that element of science fiction from the pages of history into reality. Metaverse is very much real, and soon enough, it will be available to all kinds of people to have a virtual sense of reality before them.
With Facebook strengthening the campaign by announcing its own Metaverse project only last year, it is only about time that a proper virtual reality platform is built from the ground up, and to discuss on that very front, Metaverse Index has a unique solution for the users who want to participate in the Metaverse. But through the Metaverse Index, they would be able to do so by accessing various protocols rather than relying on a single token.
MVI is the name that is given to the Metaverse Index, and according to the founders, the very purpose of this platform is to analyze the trends that are currently active in business, entertainment, and social media towards the virtual economies. This project is to grasp whispers from anything that is even remotely related to decentralization, blockchain technology, and non-fungible tokens.
To be able to understand where the Metaverse Index rests and what are the possibilities that users would be able to get entertained, it is important to give this article a thorough read and analyze the methods that have been discussed here, which would help you to enrich your experience with virtual reality should it become available in the coming years.
Introduction to Metaverse Index (MVI)
Before you begin to gather the proper functioning of the Metaverse Index, it is paramount that you know about its definition. Metaverse Index is basically a contemplation of computerized algorithms that are designed to trace the present trends within a myriad of social elements, including entertainment, business, politics, sports, and even social activities, so that their transitioning into a virtual environment could take place.
It is simply an algorithm put into place to learn about the trends that are popular among people who engage with these categories of social entanglements so that a fitting infrastructure of the same standing could be built on the virtual grounds Metaverse. Metaverse Index was launched by Index Coop, which is a private crypto index solution provider, in 2021 and is a completely decentralized but community-driven organization that finds itself responsible for the development as well as maintenance of various other crypto indexes, including the DeFi Pulse Index and the Bankless BED index.
When it comes to Metaverse, it is going to be a behemoth also and will open a live virtual universe that will offer various interesting elements to the users. You would be able to interact with each other in a completely virtual fashion, much like virtual avatars of your real person entangling with various offerings and benefits of this virtual world. You can share your social presence with others, have a sense of provenance, and could even start a new chapter of virtual reality for yourself if your mind becomes up for the task. It could be like a new beginning or chapter in your virtual life.
Apart from the social entanglements, Metaverse is going to open many doors for the virtual economy to grow and become a sensation of the future. The markets and even the digital ownership of things within Metaverse are going to use the prospects of blockchain technology and decentralization to achieve that result, and everything from buying property in Metaverse to owning a certain element would work on the principles of web 3.0 solutions.
There will also be a Metaverse NFT index incorporated within the vastness of Metaverse, which would help investors to explore the opportunities of investing their money in Metaverse. You would be able to capitalize on the choice of various Metaverse protocols that are made available to you rather than opting for a single platform or token; having a sense of such diversity is only going to help you to diversify your portfolio and help in developing an interest towards virtual investing.
Metaverse Index’s Criteria for Tokens
Most people would only be connecting with Metaverse for the sake of enjoying the opportunities that it represents in the most virtual sense possible. But there would be a few other restless financial fanatics who would be behind every possible opportunity it can throw their way so that they can make a quick buck or enter into a deal of a lifetime through virtual tokenization.
There is an inclusion criterion for the Metaverse Index which means that not every token would be available within the index for you to trade your money in. To make sure that your investment lands on a significant token that has a future with it or is included within the Metaverse Index, you must take a look at the criteria that are proposed for these tokens to become a part of it.
You must know what the token in itself is offering, what the market conditions are, and if it is included within the Metaverse Index or not; following is a brief interaction of the criteria that tethers the token with the Metaverse Index for you to trade in;
Ether Based
The first and foremost criteria for any investor to engage with the Metaverse Index is to have tokens that are based on ether blockchain. Not only this, but the tokens should actually be made available on the Ether blockchain; otherwise, investors won’t be able to target or invest in cryptocurrencies at all. MVI is paramount to revising this protocol at a later date so that could it put tokens from a wide array of blockchain protocols could be made available on the blockchain; this will allow investors to truly explore the technology as well as the present precedent of the token itself and will also help them in diversifying their portfolio.
Market Capitalization
Market capitalization also happens to be an extremely important factor that needs to be taken into account. For any token to be listed on the Metaverse Index offering or for an investor to engage with that particular token, it must have a market capitalization of more than $50 million; otherwise, it won’t be listed on the Metaverse Index, and neither the investor nor the market man would be able to have any kind of exposure to that particular token.
Category of Protocol
Presently the Metaverse Index is fulfilling its purpose of carrying its name through the inclusion of non-fungible tokens. It might not engage with any protocol that is not present on the Ether blockchain, but for non-fungible tokens, the criteria are a bit inclusive. These protocols living on the Metaverse Index must comply with particular categories of the tokens, such as non-fungible tokens, augmented reality, music, entertainment as well as virtual reality.
More categories would be added within the protocol as an extensive outreach program for people to engage with a wide variety of elements that they can explore and interact with in real-time. At present, the protocol is only going further with these mentioned categories, and anything that doesn’t fit this criterion should not be considered for either listing or investment over the Metaverse Index.
Operational History
Any protocol that wishes to be listed on the Metaverse Index must have at least three months of history regarding its operations; otherwise, it won’t be given any mind as to launch its operation on the most esteemed Metaverse Index. Other than that, the same protocol or the token of the protocol should have a history for its price momentum as well as liquidity again pertaining to three months or more; this way, the index will know that the token is legit and it should be listed on the platform so that other people can gain exceptional coverage as well as benefit from this particular protocol.
Liquidity Options
For any token to become part of the Metaverse Index, it is essential for the token to have proof of consistent liquidity that is viable and cross-referenced with DEX liquidity on the Ether blockchain. In the beginning, investors might not be looking for liquidity as much as they are looking for an opportunity to invest their money into something valid that is going to provide them with essential returns in the future.
But as a way of future-proofing their investment, it is essential that whatever token or protocol is being listed on the Metaverse Index must have some sort of liquidity so that people can just quit their positions and drop everything right then there if the time to do so arrives.
Security Metrics of the Protocol
The first and foremost element that is going to grant permission to the protocol for it to be listed on the Metaverse Index is its security and maintenance. It is essential for the protocol to pass an independent security audit; this has been decided for the sake of taking the element of surprise or Biasness away from the equation as an independent security audit firm would be given the charge to completely assess the security metrics of the protocol which wishes to be listed on Metaverse Index.
In the next step, a product methodologist would be given the task of revealing the results of the security audit, and he must pass the audit in order for the protocol to be considered legit. Suppose a protocol doesn’t go through with an independent audit; in that particular case, the methodologies can improvise through subjective assessment of the protocol based on the grounds and compliance factors of the Metaverse Index community.
Staking Elements
If you were thinking that all the protocols or tokens that are part of the Metaverse Index will be listed for staking right then and there at the beginning of the index, then you are clearly wrong. No token or protocol would be available for active staking at the very beginning of the index. But if there is ever an increase in the general liquidity for that particular token, then a position could be opened for that particular token to become a source of income for people who are looking to stake them via yield generation on MVI.
Working of Metaverse Index
The first thing that you need to understand when working with a Metaverse Index is the fact that it will rely heavily on the index weight calculation method. Furthermore, you would also have to learn about the index maintenance process because these account for the ultimate methodology of the Metaverse Index. The overall discussion towards which this article is inclined, what is Metaverse Index would remain completely incomplete without first discussing the working of the Metaverse Index after the tokens for inclusion have been selected.
The Calculation of Index Weight
After all the eligible tokens and protocols have been identified for their inclusion in the Metaverse Index, the next step involves the calculation of index weight. For all of these tokens to coexist simultaneously within an index, it is important first to estimate the suitable weightage for each and every token present within the index. This task falls on the shoulders of methodologies as they have to calculate the final weights of the tokens within the Metaverse Index by having to calculate the aggregate value of the DEX liquidity option and the square root of the market capitalization for each and every token.
It needs to be stated here that the square root of market capitalization for each and every token accounts for more than 75% of the final weightage for the whole token, and if you want to calculate the weightage of every token present, then you would have to take into account the square root of the collective market capitalization of all the tokens present within the index.
DEX liquidity, on the other hand, is only accountable for determining about 25% of the final weightage of the token in question. The very purpose of calculating the index weight for these tokens is to make sure that liquidity has been emphasized and the index as a whole does not have or has become overallocated to the assets that further cannot be rebalanced through DEX. The proportionate sum of the liquidity for all the tokens that are associated with the Metaverse Index is essential to make sure that any significant slippage could be avoided, especially during the monthly rebalances.
The Maintenance of the Index
Another important thing that you need to understand when tangling yourself with the Metaverse Index is the understanding of the index maintenance process. The methodologists are once again employed for the task, and they take extreme care of the index maintenance process for the sake of preserving the quality of the index.
Why the investors, venture capitalists, or any other investing body would care to invest their money into a Metaverse index? Because they are getting the best of the best cryptocurrencies, non-fungible tokens, and other investable entities over there and because the quality assurance element of this very index are just over the top. That is why it is important to make sure that the standard of quality for the Metaverse index remains upbeat, and there could not be even a slight deviation from the said parameters which calculate and assure the quality metrics of the Metaverse Index.
There are two elementary stages for the sake of understanding index maintenance, and these involve the determination phase and the rebalancing phase. In the determination phase, each and every token is reevaluated for its market capitalization and the overall performance that it has given in this recent period of time. If the observation of the token is well versed and the token itself has given outstanding performance, only then it is allowed to continue within the index otherwise it would get deleted along with each and every fragment of its being from the database of Metaverse Index.
This phase is repeated around the clock to make sure that all the tokens which exist already on the index and those which are being added afterward stick with the highest possible attribute of quality and are not deviating from that set standard. The revaluation phase deals with the addition or deletion of tokens from the index, and the decision for each and every token is carried out on the basis of data collected within the determination phase.
It is absolutely important for each and every token to do their best in terms of trading volume and grabbing the attention of capitalists, or otherwise, they would get deleted forever from the Metaverse Index. The rebalancing phase, however, involves further modifications that need to be done within the composition of the index to update new rates in the first week of the upcoming quarter.
Both phases coexist at the same time to make sure that only the best and most elementary tokens are available for active trading by the Metaverse Index, or anything less than perfect is not even considered for re-addition into the overall portfolio or composition of the Metaverse Index.