5 Top Metaverse Tokens to Watch

Group of young adults playing computer games together.

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Many things have gone meta recently, and I'm not just referring to Facebook. It seems like everybody's talking about the metaverse. And investors are piling into metaverse crypto tokens.

Metaverses are virtual worlds where you can socialize, shop, work, visit art galleries, and attend concerts -- many of the things you can do in the real world. There are many ideas about how the metaverse will evolve, but some form of cryptocurrency will likely be the payment of choice. We're already seeing people using crypto to buy land and goods in various virtual universes.

So, which metaverse tokens should be on your watchlist? Here are the top five by market cap, according to CoinGecko.

1. Axie Infinity (AXS)

Axie Infinity is one of the top-performing cryptocurrencies of 2021. It's already seen eye-watering gains of over 24,000% so far this year and inspired a slew of similar games. Players breed, raise, and compete with cute (and unique) Axies, which they can also sell in the marketplace.

Axie is a play-to-earn game, which means that players earn crypto rewards that have value outside the game. This idea is one aspect of the metaverse that has caught people's attention, especially during the pandemic. In some countries, people found these in-game rewards helped them cover their COVID-related economic losses.

2. Decentraland (MANA)

Decentraland is a 3D virtual reality platform that you can visit today. You don't need a headset to explore, just an internet browser. You don't even need to own any cryptocurrency -- you can enter as a guest and visit this virtual world.

Players can own and develop parcels of land, which can be paid for using MANA tokens. There are tools inside the game that people can use to create spaces and artwork. They've built everything from medieval dungeon mazes to casinos and bars. There are also regular events, from parties to poker games and exhibitions. Last month, Decentraland hosted its first ever multi-day music festival, with acts like Deadmau5 and Paris Hilton headlining.

3. Sandbox (SAND)

Sandbox is very similar to Decentraland in that players can buy land on which they create and share games and experiences. The biggest difference is that it has not yet fully launched its virtual world to the general public.

However, there's more customization in Sandbox, and a bigger focus on NFT creation. Users can build their own games and NFTs, which can then be played or traded. Sandbox has announced a slew of partnerships in recent months, including deals with OpenSea, Snoop Dogg, and The Walking Dead. It also recently closed a $93 million fundraising round

4. Enjin Coin (ENJ)

We touched on NFTs (non-fungible tokens) above. These unique digital assets live on the blockchain and are a large part of the reason for the explosion in popularity of games like Axie and virtual worlds like Decentraland and Sandbox. NFTs mean you own the items you buy or win in a game -- and you can sell them or trade them in real life.

Enjin is a platform that lets people create and manage their NFTs. It integrates with several gaming platforms and allows players to use an item across multiple games, or sell it on the marketplace. Before NFTs, if you bought a sword to use in one specific game and that game folded or you stopped playing, the item was lost. Now, you own the item no matter what happens in the game. And Enjin makes that process possible.

5. Render Token (RNDR)

Another aspect of the metaverse are the companies that enable the creation of those 3D and augmented reality visuals. Here's where Render comes in. Its decentralized infrastructure utilizes otherwise unused computer processing power to render digital content.

It means digital creators don't need to spend as much money on expensive computing equipment, and the network participants can earn rewards. It's scalable, environmentally friendly, and enables people to create cost-effective 3D content.

Tread carefully as you enter the metaverse

Remember Second Life? The online virtual world that became popular in 2003? I don't. It still exists, even if it hasn't grabbed public attention recently. Similarly, before Facebook, there were several incarnations of social media platforms that did not become multi-billion-dollar companies. Which is to say that the latest waves of virtual worlds and world-building applications may not be the ones that survive long term.

It's easy to get caught up in the hype and buy metaverse tokens because their prices have risen in recent weeks and you think the idea of the metaverse has legs. But cryptocurrencies are still high-risk investments and it's not a good idea to invest more than you can afford to lose. Even more so when it comes to trending coins as the price may have been pushed up by speculators.

Personally, I'm a big fan of these tokens and have had them on my radar for some time. But don't take my word for it -- do your own research and take time to understand these virtual worlds. Make sure you understand the possible risks, how the technology is evolving, and how the crypto metaverses fit into projects being developed by companies like Meta.

Most of the tokens listed above are available from at least one top U.S. cryptocurrency exchange. However many smaller metaverse tokens are not, which is another reason for caution. Buying from a reputable exchange gives you additional peace of mind.

One final thought, several of these tokens are built on ecosystems like Ethereum (ETH) and Solana (SOL). As the metaverses grow, so will the ecosystems behind them. A safer route might be to instead own these bigger (and lower risk) tokens. But it all depends on your tolerance for risk and personal investment strategy.

Buy and sell cryptocurrencies on an expert-picked exchange

There are hundreds of platforms around the world that are waiting to give you access to thousands of cryptocurrencies. And to find the one that's right for you, you'll need to decide what features matter most to you.

To help you get started, our independent experts have sifted through the options to bring you some of our best cryptocurrency exchanges for 2021. Check out the list here and get started on your crypto journey, today.

Read our free review

Emma Newbery owns Axie Infinity, Decentraland, Sandbox, Enjin, Render, Ethereum, and Solana.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. The Motley Fool owns shares of and recommends Ethereum and Meta Platforms, Inc. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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