When it comes to investing in the metaverse, most people focus on one of a few options.
This could be metaverse related stocks, the native cryptocurrencies of metaverse projects
or even individual virtual real estate properties within a given metaverse.
However, given how early we are in the metaverse narrative, all of these choices lack the diversification
I would want to see in a metaverse investment.
It’s just too early to pick the best long-term metaverse play.
Then I found the cryptocurrency project $MREIT, or the MetaSpace real estate investment trust.
This project is combining the high growth potential of the metaverse with the diversification
and regular income of a traditional real estate investment trust.
This video is not sponsored or paid for in any way, and in fact, I don’t even own any
$MREIT tokens at this time.
However, I think this is one of the most interesting metaverse opportunities out there, so I wanted
to cover it for anyone who may be interested in a metaverse investment and to give some
attention to the project for doing something unique.
In this video, I’ll cover the $MREIT project, starting with how it is bringing the popular
REIT model to the metaverse.
We’ll also take a look at the tokenomics of the project and where to buy it if you’re
interested.
However, $MREIT is still a very new project and has some important risks to be aware of,
so we’ll wrap up with those at the end.
Let’s take a look.
First we have to start with the MREIT strategy, which is best explained through the traditional
REIT structure.
In traditional markets, REITs are real estate investment trusts.
These are investment funds that acquire a portfolio of real estate properties.
As they collect income from renting or selling these properties, they reinvest that income
back into the business and pay most of it back to investors.
REITs are particularly attractive to dividend investors because they’re required to pay
90% of their profits to shareholders in the form of dividends, and therefore generate
pretty high dividend yields.
Of course, the value of shares can also increase with the underlying property values, so you
can enjoy the income and growth that comes with the real estate market.
MREIT is doing the almost the exact same strategy with digital real estate in the metaverse.
The key difference, of course, being that if this metaverse narrative plays out like
some think it might, these digital properties could appreciate much more rapidly than traditional
real estate.
And if you were wondering, the founder and CEO Eric Klein does have actual real estate
experience.
Time will tell if that translates perfectly to metaverse real estate, but it’s cool
to see that it’s not a completely new endeavor for him.
Of course, the first step for the $MREIT project is acquiring metaverse real estate.
And they will do this through the $MREIT token.
This started with venture capital funding through Unicrypt, where they raised $25,000
to fully launch the token.
They further kickstarted the project through KleinCap, a private equity firm also owned
by CEO Eric Klein.
This has given the project some liquidity to work for early acquisitions, while also
releasing a total of 23 million tokens for trading, initially on Pancakeswap.
While this doesn’t give them a ton of cash to work with initially, the path to growth
is pretty clear.
As more investors purchase MREIT tokens, the price will go up given the limited circulating
supply.
This increase will lead to greater liquidity, meaning that the MREIT team can sell tokens
from their treasury or holdings with minimal price impacts.
Then, they can use those funds to purchase more metaverse properties - with eyes currently
on the Sandbox, decentraland, somnium space, cryptovoxels and upland.
The purchase of properties should add value to further stabilize the token price, since
each token gives you partial ownership of the underlying metaverse portfolio.
Eventually, the token should trade pretty close to the price of these underlying properties.
And this is part of the appeal of the REIT structure - now, through $MREIT, investors
can buy into a portfolio of metaverse properties for less than $1, instead of saving up thousands
of dollars to purchase digital property themselves.
But beyond the influence of investors and traders, MREIT will also generate income to
purchase properties through partnerships and other activities.
And for that, we have to understand what MREIT plans to do with its portfolio.
First, is renting its virtual properties.
Using the rentible platform, they can rent out individual properties in the metaverse
for regular income.
Next is advertising.
With the purchase of billboards and other virtual locations, they can sell placements
to brands for recurring revenue.
They also say they’re going to create NFTs and metaverse projects that will give users
access to real-world locations.
Additionally, they plan to create digital workspaces and co-working environments, which
again, can be leased or rented to interested parties.
Finally, if a property has appreciated and they want to reinvest that capital elsewhere,
they can sell properties to adjust their portfolio.
All of these strategies will give MREIT funds to reinvest into the portfolio and acquire
new properties.
And the best part is, this benefits token holders beyond just getting exposure to new
metaverse real estate.
MREIT has outlined a clear formula for how their profits are allocated to the project.
60% of all profits are reinvested into the portfolio of metaverse properties.
This is directly going to drive the value of the MREIT token higher as more properties
are added, so it’s great to see such an aggressive number going back towards the project
itself.
25% of the profits are given back to token holders as quarterly rewards.
According to the white paper, this reward amount is calculated based on a holders’
percentage of the circulating supply.
Profits are converted into MREIT token, which will create quarterly buying pressure, before
being distributed to its holders.
It’s also interesting to note that you must hold MREIT tokens for at least 1 full quarter
before becoming eligible for this reward, which encourages long-term holders and prevents
anyone from gaming the system to get free rewards.
This is much like the structure of a traditional REIT, and again, it’s quite an aggressive
structure to reward token holders, which could be very appealing if the project is able to
generate substantial profits.
With the remaining 15% of profits, 3% goes to the team, 2% to legal and the remaining
10% goes to marketing and development efforts.
They also have staking on the roadmap, but with no other mention of it on the white paper,
it’s tough to say how this will play into the potential returns or the greater tokenomics.
So with that, let’s take a closer look at the tokenomics.
Out of a supply of 500M tokens, 378M have been locked in the project’s treasury until
January 2023.
Unfortunately, we don’t have any further information on whether all these tokens will
become instantly unlocked in 2023 or if they will unlock in phases.
Nor do we know what function these treasury funds will actually serve.
8M tokens have been burned, and 80M have been allocated to the team and their partners.
Interestingly, some of these unlock throughout 2022, at the rate of 3M tokens each quarter,
but again, we don’t know what they will do with these tokens as they become unlocked.
There are currently 23 million tokens in circulation, and with a current price at the time of writing
around 25 to 30¢, this gives us a circulating market cap of roughly $6 Million.
That is an incredibly small market cap, meaning the MREIT token will be highly volatile, which
has its pros and cons.
So now is a good time to discuss the risks of the MREIT project.
As we said, with the current tokenomics and price, this project is going to be very volatile.
The low market cap and low number of coins in circulation means that large buy and sell
orders are going to cause massive price swings.
This could be good if money flows into the project, but could be equally disastrous if
money flows out of it.
Similarly, the low number of tokens in circulation leaves a lot of room for token price dilution
as new tokens get unlocked and released.
Unless there is increased demand for the token as new tokens begin circulating, the price
of MREIT will drop in proportion to the new circulating tokens.
12M tokens are being released in 2022, so the circulating supply is already going to
increase by 50% this year.
Then over 370M tokens get unlocked in 2023, with no clear guidance on how any of these
tokens will be used.
I would personally like to see a lot more detail regarding their plan with these tokens
once they get released, because if there’s no buying demand, it could tank the token
price pretty quickly.
Finally, it’s pretty clear that the MREIT project is still incredibly early in its mission,
and keep in mind they just launched in December 2021.
But as of the end of March, they only have one metaverse property acquired - this is
a MetaSpace HQ in decentraland, which occupies 3 plots of land.
So if you want that diversified exposure to metaspace real estate, you aren’t getting
that just yet.
And unfortunately, they’ve been super vague about upcoming acquisitions.
There are a lot of teasers about upcoming PR, acquisitions, partnerships and more in
the discord, but nothing concrete to go off of yet.
Overall, the aspirations for this project are super impressive if MREIT can accomplish
them, and if the metaverse is going to be as valuable as they say, this could be a great
opportunity for both growth and income.
But for me, the risks are too great until we get more clarity from the team regarding
tokenomics, or at the very least, see more official land acquisitions and partnerships.
If you’re interested in buying some MREIT tokens for yourself, it is currently listed
on Uniswap v3.
To purchase it you will first need to copy the token address listed on their website
and whitepaper.
After launching the Uniswap App, you’ll click select a token, then manage token lists
and then click the tokens tab on the top.
Here, you’ll paste the MREIT token address and add it as a custom token.
At this point, you can choose it as a token to swap into and then trade into it from ethereum.
Of course you will also need to have MetaMask or another supported wallet to execute the
trade.
But that’s everything there is to know about MREIT at this time, if you have any other
information or thoughts on this project I’d love to hear from you in the comments below.
As always be sure to click the link in the description to get $50 of Bitcoin for free
at Celsius Network,
And - check out my previous video to see why I put $1,000 into the JUNO token, perhaps
one of the best opportunities in crypto right now.
I’ll see you next time.