Monthly Portfolio Update (MVI and GAME) - March 2022
MetaPortal Gaming Index, $GAME, is designed to provide exposure to the emergent crypto gaming space. Investing across games, virtual worlds and gaming platforms. The index is a simple and effective way to express the view that crypto games will capture a greater share of the burgeoning gaming market.
Starting this month, we are replacing the dedicated Metaverse Index (MVI) monthly update with one that will cover both of our products, MVI and the MetaPortal Gaming Index (GAME).
Without further ado, let’s see what happened in March. After several months of pain, we saw some green shoots outside the majors. Nearly all thematic indices were up only, with MVI and GAME gaining 9.2% and 27.8%, respectively. BTC and ETH, meanwhile, recorded their 2nd straight month of gains, up 5.3% and 12.5%, respectively. Please note that GAME performance is for a partial month, as it launched on March 2nd and was seeded before that.
The macro narrative is somewhat clouded. There are apparent risk-off factors like inflation, rate hikes, an inverted yield curve in the US, war in Ukraine, increase in commodity prices, etc. However, the market seemed to have priced in some of the worst outcomes and was able to rally on “better than expected but still bad” news. General sentiment on the economic front is that we are headed for a recession, with hopes of a soft landing engineered by the Fed. While risk-on assets have rallied over the second half of March, many believe that Fed’s success in fighting inflation somewhat depends on asset prices and the wealth effect. Meaning risk assets must go down. Otherwise, the Fed will continue to tighten the monetary policy.
Overall, while we continue to believe in the future of what we are building in the crypto space, the short to medium-term downtrend seems likely.
Stats and sats
As GAME has less than a month of track record, most of its risk data is statistically useless. We will revisit numbers like correlation, beta, etc., for GAME in a few months.
For MVI, risk metrics have been relatively stable over the last several months. MVI’s correlation to ETH and BTC is at 0.73 and 0.65, respectively, since inception. The MVI’s beta is currently at 1.09 for ETH and 1.27 for BTC. Net capture ratios remain positive, although they have been trending down over the last couple of months. For BTC, the net capture ratio is currently 27.8%, while for ETH, it’s sitting at 7.3%.
The number of unique addresses holding MVI on Ethereum increased by 1% in March, while addresses on Polygon grew by another 8%. The Polygon bridge continued to lock up MVI, with its share of circulating supply increasing from 5.5% to 5.9% in March. Circulating units decreased by 2.5%, with 185,536 units circulating at the end of the month.
Trading volume fell, with $5.8m traded in March, a 52% mom decline. Since hitting $75m in monthly volume in November, MVI trading volume has gone down each month. In fact, it’s down 92% since ATH, well ahead of the 62% price drop.
Briefly turning our attention to GAME, there are currently 18,227 units outstanding with a small average daily trading volume of about $10k. So far, we haven’t actively tried to promote and market the product. The market environment is rather challenging, and some valuations in the space remain frothy.
Portfolio performance
Most tokens in the MVI were up in March, with NFTX, AUDIO and RARI being the biggest winners. ENJ, AXS, TVK and WAXE also contributed to performance, outpacing ETH during March. On the opposite side, YGG, RLY, DG and MANA underperformed.
NFTX was up 41.5% in March. There was not much to the move; other than that the protocol is seeing pretty strong organic growth. Monthly volume hit its highest level since perhaps July-August of 2021, and TVL has recently reached $60m.
Of course, some of the TVL growth is an outcome of price appreciation. But NFTX has also seen a continued increase in the number of vaults on the platform, up 24% in March and about 40% growth in the number of active users. Both of those metrics are sitting at ATHs.
We spoke about composability benefits with NFTX and protocols like Gem and FloorDAO building on top of them. Here’s another thread and a reminder of why this is important.
While we can’t find any news on why AUDIO spiked around 50% on March 19th, there was plenty of newsflow from Rarible to justify its 30% rally during the month. The Rarible Protocol added support for Polygon and is working on Solana integration. We also saw some partnership announcements, with several communities opting for building a custom marketplace on top of the Rarible Protocol. MetaAngels is one example of that, while Wanderers and CryptoPunks V1 are some of the others.
There was also an update on the structure of the Rarible Protocol as they try to navigate the relationship between the founders at Rarible.com and the DAO. Basically, the DAO seems to have split into two entities, Rarible DAO and Rarible Protocol, with dedicated teams. Rarible Protocol will be working with Rarible.com while the DAO “will continue to incubate projects and will still be governed by $RARI holders.”
IMX was a clear outperformer when it came to tokens in the GAME index, with MC and PDT also showing solid returns.
IMX was up 50% in March, on the back of its Series C capital raise and a continued wave of partnerships and integrations. The team raised $200m at a $2.5bn valuation, bringing in large traditional investors like Temasek and Tencent. There was also an announcement that Warner Bros. will create DC Comics trading cards as NFTs and mint them on Immutable X.
For those interested in some fundamentals, it appears that IMX is seeing meaningful volume, with the most NFT trades relative to other L1 or L2 chains.
And on tokenomics, the team put together an all-in-one IMX Tokenomics Portal, which some might find handy.
Rebalancing and Closing Thoughts
Last but not least, there are no inclusions or removals for this month’s MVI rebalance. There might be something happening on this front next month, though.
For GAME, the product is designed to rebalance on an ad-hoc basis, but at least quarterly, at the discretion of the methodologist. Meaning we will likely not rebalance until May. We hear that some exciting features are coming to Set Protocol that would improve the rebalancing process for GAME.
Our short-term outlook is more cautious than optimistic, with most valuations stretched rather thin. On the other hand, we are seeing some opportunities with specific live projects being mispriced relative to the rest of the space. However, fundamentals might not be deemed important enough to support prices given the current macro conditions.