What is The Sandbox?
The vision of the team behind The Sandbox is “to offer a deeply immersive metaverse in which players will create virtual worlds and games collaboratively and without central authority.” A virtual gaming world built on top of Ethereum in which users can build, own, and monetize their activities. Users create assets in the form of NFTs, or non-fungible tokens, which conveys ownership of those assets to the user instead of the game owners. Users can also earn rewards based on participation in The Sandbox, distributed as SAND, The Sandbox’s utility token.
Created by Arthur Madrid and Sebastien Borget, the co-founders of video game company Pixowl, the original Sandbox game launched in 2012. At that time it was not built on Ethereum or leveraging blockchain technology, that shift came in 2019. The team has since raised traditional venture funding over the last couple of years to help fund the development of the now decentralized, blockchain-powered, metaverse world.
What is SAND?
As mentioned above, The Sandbox economy is powered by its utility token, SAND. SAND is an ERC-20 token which means that it is compatible with and secured by the Ethereum network. SAND was launched in 2020 and has a max supply of 3 billion tokens. The value of SAND is closely tied to the popularity of The Sandbox game but SAND can also be traded on public exchanges independent of the game.
SAND has multiple uses in The Sandbox ecosystem: it allows users to purchase LAND and ASSETS, both NFTs that hold value in The Sandbox world; SAND holders can stake their assets to earn rewards; players can spend SAND in The Sandbox marketplace; all SAND transactions charge a small fee that is then re-distributed to the Sandbox Foundation and staking pool contributors; and soon, SAND holders will be able to participate in the upcoming Sandbox DAO (Decentralized Autonomous Organization.) The Sandbox Foundation supports the development of the ecosystem and funds grants for creators of ASSETS.
How does SAND compare to Bitcoin?
First, Bitcoin is a “coin” and SAND is a “token.” Bitcoin powers the Bitcoin blockchain and it is mined by a decentralized network of computers that solve complicated puzzles to verify transactions. By contrast, SAND is a token that runs on the Ethereum blockchain. On Ethereum, ETH is the only coin that can be mined. And miners mine ETH to process SAND transactions. It is what is known as an ERC-20 token, the name applied to the generic token standard for the Ethereum blockchain.
Second, Bitcoin is far larger than The Sandbox, and older, too. While Bitcoin, the largest cryptocurrency by market capitalization, has a market cap of roughly $880 billion, SAND has a market cap of around $3.75 billion (as of January 2022.) And while SAND was created in 2020, and its development is still in progress, Bitcoin has been around for over a decade.
However, it should be noted that although SAND is different from Bitcoin, it is far from independent from it. Bitcoin, the coin with a larger market (by a long shot), can influence the price of all other cryptocurrencies. If Bitcoin crashes, there’s a good chance that SAND will feel the burn too (not directly as they operate entirely distinctly, but through overall market sentiment.) It is not clear, but unlikely, that a significant drop in SAND’s value would have a material impact on Bitcoin.
Before trading any crypto assets it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset. First and foremost:
No Canadian securities regulatory authority has expressed an opinion about The Sandbox, including an opinion that SAND is not itself a security and/or derivative.
Wealthsimple has performed a legal assessment of SAND prior to making it available on Wealthsimple Crypto and has concluded that SAND is not and is unlikely to be deemed a security or derivative. However, there is a risk that this conclusion could change in the future and the impact of this on an asset’s value is outlined in our Product Disclosure.
We evaluated SAND based on publicly available information, including (but not limited to):
- The creation, governance, usage and design of SAND, including the source code, security and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that first created The Sandbox;
- The supply, demand, maturity, utility and liquidity of SAND;
- Material technical risks associated with SAND, including any code defects, security breaches and other threats concerning SAND and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them; and
- Legal and regulatory risks associated with SAND, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of SAND.
Like all other crypto assets, there are some general risks to investing in SAND. These include short history risk, volatility risk, liquidity risk, demand risk, forking risk, cryptography risk, regulatory risk, concentration risk, electronic trading risk and cyber security risk. Each of these risks are described in more detail in our in-app Product Disclosure. As the founding team continues to play an important role in ongoing development of The Sandbox, fixes to any issues or bugs with the game’s operations may be dependent on the core team. SAND also presents higher short history risk and its value is tied to the popularity of The Sandbox which could unexpectedly see a drop in active players.
The Sandbox team and community are not under any legal or regulatory obligation to disclose material information to the public regarding their activities. Holders of SAND have no recourse to The Sandbox team or Wealthsimple if SAND declines in value for any reason.
We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading SAND. Investors should perform their own assessment to determine the appropriate level of risk for their personal circumstances.
WDA is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Wealthsimple Digital Assets Inc. dated June 18, 2021. Please be aware that the statutory rights of action for damages and the right of rescission in the securities legislation of each province and territory of Canada would not apply to a misrepresentation in this Statement.