(Updated 19. September 2022)
Decentraland was my first encounter with “the metaverse”, but Sandbox has hijacked much of my excitement about this crazy sector of the crypto market. In this article, I’m looking into the possibility of The Sandbox (SAND) reaching $1,000.
Here's my conclusion:
My conclusion was that The Sandbox could reach $1,000 if it captured a meaningful share of value created in the metaverse. At that price, its market capitalization would be $1.5 trillion.
The main obstacle and reason why The Sandbox might struggle to reach 1,000 dollars is that it has a huge supply:
Currently, there are 1.5 billion tokens in circulation, which logically makes the price low. The max supply is 3 billion coins, which means that only half of the existing coins are in circulation at the moment. (source)
Remember: Price = Market Cap / Circulating Supply.
If the circulating supply is high, the price must be low. With a large enough market cap, The Sandbox could still reach $1,000.
We can calculate the required market cap by manipulating the equation above like this:
Price * Circulating Supply = Market Cap
$1,000 * 1,500,000,000 = $1,500,000,000,000 = 1.5 Trillion USD
In other words:
For The Sandbox to reach $1,000, the market cap has to reach $1,500,000,000,000 = 1.5 Trillion USD.
To give some perspective, the image below shows the market cap of a hypothetical Sandbox at $1,000 side by side with the expected peak Bitcoin and Ethereum prices for this crypto cycle: (historical $100K Bitcoin scenario and historical $8K Ethereum scenario)
Comparison of market caps
Since a $1,000 SAND would have a larger market cap than Ethereum at $10K, I did not see it happening soon. A later cycle left more room for the scenario.
My estimate at the time was no sooner than the latter half of that decade, and no later than the following decade.
That estimate used my historical million-dollar Bitcoin scenario, which gave The Sandbox more room to reach $1,000.
The Adoption of The Sandbox Might Take it to $1,000:
Adoption is what drives the value of the SAND token. More adoption makes the coin go up in price, basically.
At the time, adoption of The Sandbox was increasing.
The Sandbox lagged behind the leading decentralized metaverse "Decentraland" on users, but was growing quickly. It had a total of 500,000 users as of Q4 2021, while the number for Decentraland was estimated to be in the millions.
As of March 2022, The Sandbox had 300,000 monthly active users, comparable to Decentraland at the time. (source)
Another interesting thing to compare is the volume of trading on Opensea (the leading NFT marketplace):
The Sandbox has a lifetime volume of 159,900 ETH.
Decentraland has a lifetime volume of 221,700ETH
In other words, Decentraland NFTs have been traded roughly 40% more than The Sandbox NFTs. However, we need to keep in mind that Decentraland has been up and running much longer than The Sandbox.
Also, the gap between them was MUCH bigger 12 months ago. The Sandbox might be smaller than Decentraland, but in terms of growth, I think it's doing better.
Below you'll find some of the partnerships The Sandbox has landed:
source: The Sandbox website
In addition, they have hosted some pretty cool events, like a concert with Deadmau5 and Snoop Dogg. (source)
In the future, we will need to see continued growth in monthly active users and partnerships with big and small artists, businesses, and other organizations. Only with huge growth in these areas can The Sandbox ever reach $1,000.
How Can The Sandbox Reach $1,000?
If The Sandbox manages to capture all its potential, the price would probably be in the multiple thousands of dollars range.
Think about it:
The Sandbox is recreating the world in a digital format. It creates value from real estate, art, music, games, gambling, collectibles, parties/festivals, in-game businesses, marketplaces, and the list goes on…
We’ve got respected macro experts like Raoul Pal saying that “the metaverse”, which The Sandbox is making, might double the global GDP.
His reasoning goes (basically) like this:
If we copy the world into a digital format, we could potentially create the same amount of value in the metaverse as in the “real” world, and as a consequence, double the global GDP
The current global GDP is estimated to be roughly 85 Trillion USD. To simplify this a lot, we can think of the global GDP as the world’s market cap.
If The Sandbox gets a 100% market share, which it won’t, and its market cap reaches $85 Trillion, the price could in theory reach: $85 Trillion / 3,000,000,000 SAND (max supply) = $28,333 per SAND
If The Sandbox gets a 20% market share of the metaverse and reaches a market cap of 0.2 * $85 Trillion = $17 Trillion the price would be:
$17 Trillion / 3,000,000,000 = $5,666
Even if it only captures 1% of it, the price would be:
$0.85 Trillion / 3,000,000,000 = $283
All those calculations were with the max supply. If we use the current circulating supply we can multiply the prices by 2x...
This gives us a SAND price of $566 with a 1% market share. Therefore, to reach $1,000 it just needs to double the market share to 2%.
In other words:
For The Sandbox to reach $1,000, it would need a market cap equivalent to almost 2% of global GDP. Under the metaverse-growth scenario used here, I regarded that as possible.
Nevertheless, we see the beginnings of this value explosion already. There have been huge concerts, parties, art gallery openings, other social events, and much more. The virtual real estate part, institutional adoption, and other metaverse projects like Decentraland are also taking off as I write this.
Conclusion: Yes, The Sandbox Can Reach $1000
My conclusion was that The Sandbox could reach $1,000 if it captured a meaningful share of value created in the metaverse.
Under Raoul Pal's metaverse scenario, The Sandbox could move beyond $1,000 by capturing roughly 2% of that value at the then-current circulating supply, or about 4% at the maximum supply.
Oh, and please remember:
This article is NOT a price prediction type of article. All of this is purely hypothetical and should be considered a thought experiment. I hope you found it interesting and illuminating.