1. Metaverse companies

2. Blockchain metaverses

Let’s deal with stocks first so that we can move on to more degen stuff.

If you invest in stocks no problem, most of the so-called “metaverse companies” do things outside of the metaverse. and of course there will be competition. I do not think there will be a winner takes the all situation but still, you might pick the wrong one or miss the right one. For example, you think Disney metaverse will be huge and you go all in. Then it turns out that Netflix offers a better product before Disney and takes all the market share. As I mentioned in my first investing in metaverse you can alleviate this risk by owning an ETF.

If you decide to invest in blockchain metaverse then you take more risk.

There is a saying in crypto: “You are your own bank.”. Although this works well, I find the digital cash analogy better. If you have a bank account and lost your password, your bank will recover your fund thanks to the KYC requirements. If you lose your cash in a wallet, then it is gone for good. Web3 wallets are like the latter but in digital form, if you lose your seed phrase or get hacked, your tokens are long gone. Holding your tokens in a centralized exchange like Binance or Kraken is more like holding them in a bank. There are ways to minimize self-custody risk but it is out of the scope of this article.

If you are storing your cryptos on an exchange instead of a Web3 wallet, then you do not have the self-custody risk, but the custodian risk. The exchange that hosts your wallet is responsible for your tokens. Exchange hacks and rug pulls are common in crypto.

Adoption is the key to success in metaverse projects. Your favorite metaverse may not gain enough traction or some other project may take users away.

Say, you bought some NFT clothes and land and paid a hefty 10k$. Then, you want to sell because you realized that it made no sense to pay for digital land, or simply you need the money. NFT stands for non-fungible token and this creates a lack of liquidity. Your parcel in the metaverse is one of its kind and you have to find a buyer to be able to sell it. Unlike, say, a Bitcoin or an orange which are more like fungible assets. You give 1 orange, I give 1 orange, we are equal.

Low liquidity is especially true for smaller projects. You may have to wait days before you could sell anything, or you may not be able to find a buyer at the price you want.

Low liquidity risk also holds for fungible assets such as tokens. Let’s say you bought some shitcoin with a very low volume and pool depth. Swapping it back to your harder asset or fiat will incur slippage, and may impact price. So you end up getting less than what you expected. The inner workings of an automated market maker are out of the scope of this video I will leave a link if you are interested.

Around blockchain technologies, defi, gamefi, and metaverse, there is huge regulatory uncertainty in most places in the world right now. Policy makers, regulators, and politicians are usually old, impotent, and afraid of novelty. It is possible for them to come up with some stupid regulations, which in turn will affect your investments.

You might prefer to buy their cryptos on a decentralized exchange such as uniswap, orca, or pancakeswap. This time you take smart contract risk. These platforms are usually audited and have a good track record but you should not take it as risk free either. Something looks safe until it is no more safe. Less-known DEXes and CEXes will have higher risks.

This is more of a subtle one. Metaverse tokens are, as the name implies, tokens. They do not have their own blockchain. They are tokens issued on a blockchain. Let’s take Decentraland’s MANA for example. It is an ERC-20 token on Ethereum network. So you use Ether to send and receive MANA tokens as well as land, which are NFTs on ethereum. Ethereum network has a very good track record and does not seem to go away anytime but you should be aware. Some tokens such as Defi Kingdom’s JEWEL uses Harmony ONE blockchain. Compared to Ethereum, it is a newer project so you might expect higher risk involved when using chains other than Ethereum.

Market risk is a no-brainer. I am sure you are all familiar with this. if stock market dumps, bitcoin dumps, if bitcoin dumps, altcoins also dump, and they dump HARD. If you need to cash out and we are experiencing a market bottom this is not good for your finances… It is worth noting that stocks recently started to make super aggressive moves as well.

So, you learnt about all the risks involved in investing in metaverse stocks and tokens, or did you? Well, there might be some risks I missed to mention or there might be unknown risks. Once again, always do your own research I am not a financial advisor just a random guy internet.

If you enjoyed the article seriously consider following me on Twitter and Medium.

See you in the metaverse!

(^*.*^)

Disclaimer: The author is not affiliated with any of the entities above. The author does not endorse any of the views presented in these articles. This document is not an offer, nor the solicitation of an offer, to buy or sell any of the assets mentioned herein. The views expressed in this post are not, and should not be construed as investment advice or recommendations. This post is intended for informational purposes only.

1. Metaverse companies

2. Blockchain metaverses

Let’s deal with stocks first so that we can move on to more degen stuff.

If you invest in stocks no problem, most of the so-called “metaverse companies” do things outside of the metaverse. and of course there will be competition. I do not think there will be a winner takes the all situation but still, you might pick the wrong one or miss the right one. For example, you think Disney metaverse will be huge and you go all in. Then it turns out that Netflix offers a better product before Disney and takes all the market share. As I mentioned in my first investing in metaverse you can alleviate this risk by owning an ETF.

If you decide to invest in blockchain metaverse then you take more risk.

There is a saying in crypto: “You are your own bank.”. Although this works well, I find the digital cash analogy better. If you have a bank account and lost your password, your bank will recover your fund thanks to the KYC requirements. If you lose your cash in a wallet, then it is gone for good. Web3 wallets are like the latter but in digital form, if you lose your seed phrase or get hacked, your tokens are long gone. Holding your tokens in a centralized exchange like Binance or Kraken is more like holding them in a bank. There are ways to minimize self-custody risk but it is out of the scope of this article.

If you are storing your cryptos on an exchange instead of a Web3 wallet, then you do not have the self-custody risk, but the custodian risk. The exchange that hosts your wallet is responsible for your tokens. Exchange hacks and rug pulls are common in crypto.

Adoption is the key to success in metaverse projects. Your favorite metaverse may not gain enough traction or some other project may take users away.

Say, you bought some NFT clothes and land and paid a hefty 10k$. Then, you want to sell because you realized that it made no sense to pay for digital land, or simply you need the money. NFT stands for non-fungible token and this creates a lack of liquidity. Your parcel in the metaverse is one of its kind and you have to find a buyer to be able to sell it. Unlike, say, a Bitcoin or an orange which are more like fungible assets. You give 1 orange, I give 1 orange, we are equal.

Low liquidity is especially true for smaller projects. You may have to wait days before you could sell anything, or you may not be able to find a buyer at the price you want.

Low liquidity risk also holds for fungible assets such as tokens. Let’s say you bought some shitcoin with a very low volume and pool depth. Swapping it back to your harder asset or fiat will incur slippage, and may impact price. So you end up getting less than what you expected. The inner workings of an automated market maker are out of the scope of this video I will leave a link if you are interested.

Around blockchain technologies, defi, gamefi, and metaverse, there is huge regulatory uncertainty in most places in the world right now. Policy makers, regulators, and politicians are usually old, impotent, and afraid of novelty. It is possible for them to come up with some stupid regulations, which in turn will affect your investments.

You might prefer to buy their cryptos on a decentralized exchange such as uniswap, orca, or pancakeswap. This time you take smart contract risk. These platforms are usually audited and have a good track record but you should not take it as risk free either. Something looks safe until it is no more safe. Less-known DEXes and CEXes will have higher risks.

This is more of a subtle one. Metaverse tokens are, as the name implies, tokens. They do not have their own blockchain. They are tokens issued on a blockchain. Let’s take Decentraland’s MANA for example. It is an ERC-20 token on Ethereum network. So you use Ether to send and receive MANA tokens as well as land, which are NFTs on ethereum. Ethereum network has a very good track record and does not seem to go away anytime but you should be aware. Some tokens such as Defi Kingdom’s JEWEL uses Harmony ONE blockchain. Compared to Ethereum, it is a newer project so you might expect higher risk involved when using chains other than Ethereum.

Market risk is a no-brainer. I am sure you are all familiar with this. if stock market dumps, bitcoin dumps, if bitcoin dumps, altcoins also dump, and they dump HARD. If you need to cash out and we are experiencing a market bottom this is not good for your finances… It is worth noting that stocks recently started to make super aggressive moves as well.

So, you learnt about all the risks involved in investing in metaverse stocks and tokens, or did you? Well, there might be some risks I missed to mention or there might be unknown risks. Once again, always do your own research I am not a financial advisor just a random guy internet.

If you enjoyed the article seriously consider following me on Twitter and Medium.

See you in the metaverse!

(^*.*^)

Disclaimer: The author is not affiliated with any of the entities above. The author does not endorse any of the views presented in these articles. This document is not an offer, nor the solicitation of an offer, to buy or sell any of the assets mentioned herein. The views expressed in this post are not, and should not be construed as investment advice or recommendations. This post is intended for informational purposes only.