The Metaverse Index (MVI) is one of the many products of Index Coop, a decentralized autonomous organization (DAO) specializing in creating cryptocurrency index tokens. A crypto index token allows traders to acquire wide exposure to the crypto market or a specialized industry segment, making it easier for amateurs to engage in trading. Index Coop offers several fund tokens, each concentrating on a particular business, such as DeFi or the metaverse, where users leverage their investments. The Metaverse Index is a collection of tokens created to capitalize on the trend of entertainment, sports, and business moving to a virtual world through an ERC-20 token, MVI, to represent the index. In simple terms. Metaverse Index aims to be a single investable token for underlying assets. As of today, the Metaverse Index has sixteen assets and aims to keep on increasing.
By definition, the metaverse can be understood as a massively scalable, open, engaging, and real-time platform made up of interconnected virtual worlds where anyone may socialize, work, transact, play, and innovate. Simply, the metaverse is a shared digital space or the future of the internet. Accordingly, the Metaverse Index aims to tokenize this concept with a single token, MVI.
The Metaverse Index fund aims to provide a simple approach to capture a wide market trend based on the metaverse concept without having to research and update a portfolio continually. Thereby, the sixteen tokens that the Metaverse Index captures, including Illuvium, Enjin, Waxe, etc., offset the volatility of the individual tokens that the underlying assets carry. These underlying assets follow a set of rules to determine inclusion and exclusion from the index. As a result, this index fund aims to benefit users from a reduced gas fee compared to trading sixteen tokens individually.
According to the Index Coop platform, the selection of tokens for each index follows specific criteria. The Metaverse Index ropes in tokens that are non-fungible (NFTs), based on the entertainment or music industry or belonging to virtual reality/augmented reality (VR or AR) protocol. Other criteria such as market cap, history and consistency of liquidity position, and security features are also considered, among others. Further, in order to derive the final weights of the tokens for MVI, the index uses a mathematical formula. Typically, a combination of the square root of market cap and liquidity weights is used to determine the final index weight of MVI. Later, as a part of index price maintenance, a rebalancing phase occurs to change the index composition.