Animoca Brands expands Web3 capabilities in Saudi Arabia

Animoca Brands secures $50 million from the NEOM Investment Fund to grow Web3 capabilities in Saudi Arabia. This deal includes $25 million via convertible notes with an A$4.50 conversion cap and $25 million through secondary market share purchases. Animoca Brands is focusing expansion efforts on crypto-friendly jurisdictions like Hong Kong and Japan because the U.S. SEC has identified the SAND token as an unregistered security in its legal actions against exchanges. The company also signed a memorandum of understanding with King Abdulaziz City for Science and Technology during the Leap conference in Riyadh. This expansion follows the SEC’s claim that The Sandbox secured $3 million through private sales on Binance. I find the current shift toward the Middle East makes sense as Yat Siu seeks to diversify away from U.S. regulatory pressure. The Sandbox itself faces low engagement, as its few hundred daily active users consist mostly of bots. The company will cut more than 50% of its 250 employees and close offices in Argentina, Uruguay, South Korea, Thailand, Turkey, and Lyon. Robbie Young now leads the platform since co-founders Sebastian Borges and Arthur Madrid left their management roles. This overhaul happens despite the $300 million Animoca invested into the project over eight years. The project seeks to build a hyperconnected, cognitive city in northwest Saudi Arabia on the Red Sea. Animoca also works with stc play to distribute games across the MENA region.

Regional Web3 expansion

The SAND token trades near $0.28 after a 97% drop from its all-time high. I observe heavy short bias in the funding rates, which hit -0.1414% per 8h recently. These crowded short positions increase the risk of liquidations for long holders. You should keep these extreme funding rates, which also hit -0.1088% per 8h, in mind when assessing the volatility of the SAND token.

The Sandbox is a user-generated content ecosystem containing 268,000 land parcels and a community of 65,000 landowners. Users use VoxEdit to create assets and the Game Maker to build experiences with 3D pixels called voxels. The company also plans to launch a new platform for memecoins on the Base blockchain. In contrast, Decentraland launched in 2017 through a $26 million initial coin offering that raised 86,206 ETH. Decentraland users spend MANA to buy its 90,601 plots of land and upgrade avatars. While Decentraland owners enjoy no taxes and can even buy mortgages, the platform relies on a finite supply of land to drive value. I notice the SAND price is significantly lower than its peak, sitting at 0.060137 per coin in some exchange listings.

Metaverse land and governance

Decentraland land sales focus on visibility, but the platform faces governance struggles. Voter participation in many DAOs drops to 20%, which allows whales to dominate decisions. This imbalance occurs because tokenized voting systems often lead to a Gini coefficient tending to 1. The Sandbox holds 268,000 land parcels where users stake SAND to find GEMs and CATALYSTs. The company also plans to launch a new platform for memecoins on the Base blockchain. Will this memecoin pivot successfully increase the engagement of the user base? The $2 billion spent on virtual land in 2022 shows the scale of this market, with one major sale in Decentraland exceeding $2.4 million because the buyers sought visibility and branding. The market saw a massive peak in November 2021 when land sales hit $85 million in a single month. Land prices in Sandbox rose by over 500% in 2021. I see the market shifting as users look for new ways to monetize digital space through advertising or virtual retail.