If you would like to view the real-time dashboard that was used in the making of this article, check out our The Sandbox Macro Financial Statements dashboard on Dune Analytics.
Key Takeaways
While primary sales volume remained flat, secondary sales volume grew 1,685% compared to the prior quarter. Notes this report only includes Sandbox Sales from OpenSea.
The number of active buyers rose ~37% compared to the last quarter and grew each quarter of 2021.
The Sandbox launched its limited Alpha version of its gameplay in November 2021 which drew thousands of players.
The most traded LANDs of The Sandbox virtual worlds are within the bottom left quadrant
Introduction to The Sandbox
The Sandbox is a gaming metaverse – virtual world – where players and creators can make 3D assets and experiences (e.g. games) that can be monetized via NFTs.
The Sandbox ecosystem leverages a variety of tokenized gaming features including:
SAND – a digital in-game currency used for purchases, monetization, and asset creation
LAND – digital ownable land within the Sandbox virtual world
ESTATE – a combination of LANDs to create a larger plot
GAMES – a bundle of assets and scripting logic to create interactive experiences
ASSETS – 3D virtual images created by players
GEMS – tokens burnt to give attributes to assets
CATALYSTS – tokens burnt to create ASSETS
The Sandbox provides Mindcraft-esque gameplay with digital ownership and more robust in-game economics due to the tradeable nature of $SAND and the other assets within the Sandbox virtual world.
Sandbox offers a variety of in-game NFTs as well as user-generated NFTs. The VoxEdit NFT builder is used for creating 3D objects (ASSETS) such as avatars, creatures, buildings, and other tools.
Macro Overview
LANDS are blockchain-backed tokens (using the ERC-721 standard for non-fungible tokens, aka NFTs) representing physical parcels of The Sandbox Metaverse. There is a finite amount of Sandbox LAND – 166,464 parcels of which 62% have already been distributed.
New parcels are released for sale through auctions or at specific price points. In 2021, The Sandbox recorded over $350 million in LAND sales volume.
Notably, 80% of The Sandbox’s total LAND volume occurred in the final quarter with secondary sales making up for nearly all of fourth-quarter volume. While primary sales volume remained flat, secondary sales volume grew 1,685% compared to the prior quarter.
Since The Sandbox had a player-capped Alpha release, tracking its active daily or monthly users isn’t useful at this point. However, the number of active buyers rose ~37% compared to the last quarter and grew each quarter of 2021.
More interestingly, the increase in secondary sales volume and growth in buyers resulted in a 25% turnover in the total LAND assets.
With 26,000 secondary LAND sales and around 15,000 unique buyers, it’s likely that large owners are selling some of their LAND supply and that a subset of buyers are actively trading digital LAND.
Sandbox Micro Overview – Land Analysis
The median price of Sandbox LAND has appreciated from $1,308 at the end of Q3 to a median price of $11,364 by the end of Q4. This nearly 10x increase of the median price is due in part to the growing trend of the metaverse and Sandbox’s continued expansion. Upon announcement of its Series B, Sandbox LAND appreciated significantly peaking in December.
The Sandbox LAND Map
By analyzing The Sandbox virtual world by total LAND volume per parcel, we’re able to determine which LANDs have been traded the most. Parcels in The Sandbox are separated into 1×1, 3×3, 6×6, 12×12, and 24×24 parcel plots. The heatmap shows the plots that have witnessed the highest aggregate trade volume on the secondary markets. This effectively helps determine which plots of LAND are most desirable (that have been available for sale).
The redder plots – indicating more trade volume – are predominantly clustered within the lower left quadrant of The Sandbox. One potential explanation is that as The Sandbox has expanded, traders have been drawn towards expanding regions of the map.
Diving deeper, the reddest 12×12 plot is located (outlined in red) adjacent of the Yield Guild Games ESTATE and possesses multiple LANDS for sale on OpenSea (indicated by white boxes). It’s possible being close to YGG or Stakefish (the Doge dog ESTATE) makes the next-door land more valuable.
The second most speculated on plot (outlined in red) is near the first most traded 12×12 plot and shares a border with Atari, Ludena Protocol, and is close to two Sandbox-owned ESTATES. However, unlike the previous plot, this one has fewer OpenSea listings currently available.
Notably, many of the largest ESTATES (24×24), especially within the center, have low aggregate trading volume. There are a few potential explanations for this effect. First, some potentially coveted parcels don’t trade often and many large ESTATES are owned by The Sandbox or their IP partners which are focused on building within the virtual world. Second, even the highest individual parcels have only sold for $100k-$245k which is below the heat maps second tier. Lastly, it’s possible that large owners don’t really care about making small profits on LAND and are looking to hold onto the LAND for a longer time period.
Interestingly, the top 400 parcels by aggregate volume account for 32.5% of the total volume of the over 16,000 lands that have been traded at least once.
There is a clear concentration in the top 100 LANDs which account for nearly 17% of the total aggregate volume, showing that the top land within the Sandbox metaverse experiences significant volume.
One potential reason for this relatively high concentration of volume is that many LANDs haven’t entered the secondary market with the original owner hanging onto their parcels or ESTATES.
The Top LAND Owners
The top LAND owners are predominantly investors in The Sandbox (i.e. Binance, Galaxy Interactive, NFT communities (i.e. Whale, MetaKovan, Kongz), or large crypto-focused companies that have committed to building within The Sandbox Metaverse.
The top 5 LAND owners – one of which is The Sandbox – own 11% of the total LAND supply. Evaluating the percentage of ownership in a digital world is novel to ensure that 1) the amount owned by any one entity decreases over time, thereby facilitating greater in-world entrepreneurship and 2) monitoring that the LAND owners are actively building on their parcels as opposed to holding for speculative purposes.
High Priced (Virtual) Real Estate
It’s worth noting that the Sandbox Heatmap above groups 12×12 parcels to see the total LAND volume and so the most speculated individual parcels of land (most aggregate volume) aren’t necessarily within the highest volume 12×12 grouping. The top five largest purchases – highest price paid for a single parcel of LAND – all exceed $100,000.
Cayson.eth, paid $245,000 for a single parcel of land. The buyer – who also owns BAYC 8435 – purchased the 35 surrounding plots for a total $547,119 ($15,632 per unit) and required the final parcel to create a 6×6 (36 plot) ESTATE.
Olikars.eth holds the second, tenth, and fourteenth largest LAND purchases, spending a combined 80 ETH ($343,000) to acquire all three parcels. The account immediately transferred the assets to 0x2793999444f916254ea15b41403c111e9b610465 and then later to 0x64596df940be25aa5186b095c326dcca4660562d. One of the top purchased plots is adjacent to the future Walking Dead game. The other two plots are adjacent to the Atari RollerCoasterTycoon World and the Atari XL ESTATES.
Sandbox user Ksaffy – and BAYC #2765 owner – holds the title for the third largest plot transaction, purchasing a parcel near The Sandbox Central Hub where all players spawn into the game.
The fourth-largest transaction – $101,883 – was by Sandbox user CryptoSue for a single plot located adjacent to the Snoop Dog ESTATE and Weedbits plot. Finally, Club9.eth ranks fifth for the largest transaction purchasing plot 55816 for 24 ETH ($101,760) in November 2021 and later sold the same plot in January 2021 for 3.5 ETH for a significant loss. This same plot was sold again several days later for $4.67 ETH to an unknown wallet.
Anecdotally, the top purchases are typically LAND owners trying to acquire specific plots of land whether that be next to ESTATES, user experiences (i.e. games, concerts), or important locations (e.g. near the spawn point) that the buyer likely believes will help drive traffic to their parcel.
Sandbox Ecosystem: Governance & Notable Events
Fundraising & Capital Expenditure
The Sandbox completed its $93 million Series B fundraising round in November led by Softbank. Sandbox has taken a distinct approach towards in-game content partnering with various brands and licensing intellectual property for dozens of companies. In a press release, The Sandbox state that the new capital will also be used to expand its IP licensing efforts and grow its virtual world.
Subsequently, in December, The Sandbox completed a round with Hong Kong based entrepreneur Adrian Cheng to purchase an ESTATE of land within The Sandbox. The plot was purchased from The Sandbox’s “Mega City”, a location set to emulate Hong Kong with ownership across a variety of Hong Kong-based companies and prominent individuals.
Sandbox Alpha
In November of 2021, The Sandbox launched the long-awaited Alpha version of its virtual world which enabled users to interact with other players and explore the “Main Hub” of the Sandbox Universe. As part of the Sandbox Alpha, the Sandbox released 4 NFT avatar collections – Agora, Gearbox, Ducks, and Faction. The Sandbox Alpha was limited to 5,000 passes and had thousands of NFTs distributed to game players. As The Sandbox looks towards growing its user base, the next season of its Alpha is scheduled for May 1, 2022.
Polygon Integration
While Sand already maintains a liquidity pool on Uniswap with Ethereum gas fees making gaming on Ethereum’s base layer untenable, The Sandbox announced its intention to integrate with Polygon starting with an mSAND MATIC staking pool on Quickswap. All Sandbox transactions incur a 5% fee, of which 2.5% is allocated to the various staking pools.
Since there are a variety of transactions required interacting with The Sandbox virtual world (marketplaces, NFT creation, etc) Polygon will enable more interactions between tokens. The Sandbox and Polygon teams are currently working on a custom bridge to make all tokens within The Sandbox available on Polygon.
The SAND Foundation
The Sandbox team started the SAND Foundation to support the ecosystem and allocate grants to artists, game developers, and individuals who produce in-game content. Currently, all $SAND transactions incur a 2.5% transaction fee that is allocated to the Foundation Fund.
LAND primary sales – which accrue as revenue to The Sandbox (a subsidiary company of Animoca Brands – generated $12 million in Q4’21. Meanwhile, both The Sandbox company and The Sandbox Foundation take a 2.5% on secondary sales which resulted in $7 million in revenue in Q4 for each organization. Primary sales revenue will eventually end when all LAND is sold, making secondary sales royalty revenue (on LAND and ASSETS) a key revenue source for the SAND Foundation.
Roadmap
Looking ahead towards the first quarter of 2022, The Sandbox has a few notable developments.
The Sandbox DAO
While not yet deployed, The Sandbox DAO will be able to vote on Foundation grants as well as make decisions on certain game parameters. The Sandbox DAO – set to launch in Q1 of 2022 – will be governed by both SAND token holders and asset owners (e.g. LAND).
Continued LAND Distribution
The gradual distribution of LAND will continue through the first quarter of 2022. This will be coupled with more locations in The Sandbox Metaverse opening with various experiences available to players.
Launch of Public In-game Experiences
In-game experiences – activities for players – are core to growing The Sandbox userbase. Throughout the next two quarters, The Sandbox has planned a variety of experiences including virtual concerts – from LAND owners like Snoop Dogg and Deadmau5 – as well as the launch of games based on licensed intellectual property such as The Walking Dead.
Closing Summary
The Sandbox recorded a record quarter in secondary LAND sales and Foundation revenue. Additionally, it expanded its total buyer base and released a substantial number of new LAND parcels for purchase on the open market. The Sandbox still remains fairly concentrated in LAND ownership, but with 38% of the total LAND parcels yet to be distributed The Sandbox will hopefully see expand its LAND ownership population as the company continues to gradually auction LANDs.
Most importantly, The Sandbox launched its Alpha game to several thousand players along with a myriad of new NFTs including its own NFT avatar collection. As The Sandbox endeavors to create a virtual world populated with people and experiences, the team has various Q1 in-world events planned as well as the upcoming launch of The Sandbox DAO.
This report was commissioned by The Sandbox, a member of Messari Hub. All content was produced independently by the author(s) and does not necessarily reflect the opinions of Messari, Inc. or the organization that requested the report. Paid membership in the Hub does not influence editorial decisions or content. Author(s) may hold cryptocurrencies named in this report.
Crypto projects can commission independent research through Messari Hub. For more details or to join the program, contact hub@messari.io. This report is meant for informational purposes only. It is not meant to serve as investment advice. You should conduct your own research, and consult an independent financial, tax, or legal advisor before making any investment decisions._
