Ball Metaverse Research Partners was established in 2020 to produce an Index that would provide investors with diversified exposure to what Matthew Ball, as well as executive-entrepreneurs such as Tim Sweeney, Jensen Huang, and Mark Zuckerberg, believe is a multi-trillion-dollar transformation that will unfold over the coming decades: THE METAVERSE.  

Ball believed that an Index was the best way to gain exposure to this theme because he believes the benefits of this transformation will be wide ranging and enormous, but often unpredictable. Certain industries, value pools, companies, technologies, and products will be disrupted or elevated, destroyed and created. For this reason, it’s likely that some single investments will produce returns greater than the Index overall, just as companies such as Apple, Google, Facebook, and Microsoft have long led their peers in “internet services,” or “social networking,” or “mobile computing.” And yet not all investors picked, say, Apple. Some bet instead on early and wayward leaders such as BlackBerry or Nokia, or Microsoft under Ballmer rather than after Ballmer and under Satya. A well-constructed Index that contained each of these names, as well as some of the other beneficiaries of these trends, such as Netflix or Match Group, Salesforce and Nvidia, might have fallen short of the best single bets, but the collective would have soared above most other benchmarks over time. The same, Ball believes, will be true of an effective Metaverse Index.

To establish this Index, it was necessary to first establish an Expert Council with the requisite expertise and diversity of perspective of the burgeoning Metaverse. Ball Metaverse Research Partners’ seven-member Expert Council was ultimately constituted with former executives from Nvidia, Amazon's AWS and Prime Video, Match Group, Valve, Oculus, Facebook, Square Enix, The New York Times, GLG, Spotify, and Andreessen Horowitz, and more, as well as the former Lead Game Designer and Co-Executive Producer of games such as Grand Theft Auto: V & Grand Theft Auto V: Online and Red Dead Redemption 2 & Red Dead Redemption 2: Online. The proprietary and passive BALLMETA Index developed by the Expert Council tracks the development of the Metaverse against a universe of thousands of publicly-listed entities, each of which is assigned one of four weightings across seven different categories, each with their own weighting. 

In early 2021, Roundhill Investments licensed the BALLMETA Index to produce the Roundhill Ball Metaverse ETF, which launched on the New York Stock Exchange in June of that year and was the single largest U.S.-listed sector ETF launch of 2021 and one of the largest ETF launches worldwide of any sort. In November 2021, Ball Metaverse Research Partners and Roundhill were invited to ring the closing bell at the NYSE. Three years later, the Roundhill Ball Metaverse ETF maintains a 90%+ share of U.S. Metaverse ETFs, even though the Financial Times called the Metaverse “the hottest concept ever in the history of exchange traded funds” (this was “despite steady media coverage suggesting there has been little interest in the “sub-theme”).

Since inception, many of the companies included in the BALLMETA Index were developing, if not prioritizing, or even focused on blockchain technologies (Coinbase is one such example). Pioneers in the Metaverse and crypto have long associated these two platforms/technologies with one another. This includes Coinbase founder Brian Armstrong (who said in an official company memo that Matthew Ball was a particular influence on his perspective), Binance Academy, Yuga Labs, and even Neal Stephenson, who coined the term Metaverse in 1992, and in 2022, co-founded Lamina1, a Layer 1 blockchain “optimized for the open Metaverse,” with Peter Vessenes, who co-founded the Bitcoin Foundation in 2012. This linkage typically has a few drivers. First, each trend reflects and reinforces the significance and rise of digital-first, and often, “digital-only” activities, goods, experience, collectives, etc. Second, blockchains provide users with verifiable and secure ownership of digital assets (encompassing financial instruments, identity data, goods, payments, and so on). Third, blockchains provide various mechanisms through which data can be composably interoperated across independent and autonomous systems. Fourth, the pre-eminent blockchains are permissionless, trustless, and transparent, which advocates believe is essential to producing a widely prosperous Metaverse and not one controlled by only a single company, or even corporate oligarchy.

During the three years (which covered twelve, regularly scheduled rebalances) since BALLMETA’s launch, blockchain technology has steadily elevated in our methodology. In particular, this aligns with the insight of Jesse Walden, a member of our Metaverse Expert Council. Walden has emphasized that "growing adoption and support for crypto will further accelerate the emergence of the Metaverse." His reasoning centers on the transformative potential of blockchains to establish a robust digital property rights system for the internet, a critical prerequisite for a prosperous Metaverse economy. Walden is the co-founder and a General Partner of Variant Fund, a blockchain-focused VC, which has raised over $560MM over Funds II and III. Walden was previously co-founder of one of the earliest high profile blockchain start-ups, Mediachain Labs, which built the Mediachain protocol for tracking ownership of digital media assets on public blockchains. Mediachain Labs was acquired by Spotify in 2017, where Walden led blockchain R&D as a product lead. In 2018, he became an investment partner at a16z’s first crypto fund, later co-leading its crypto start-up school, before leaving to start Variant.

In recent years, cryptocurrencies have been resilient in the face of market fluctuations, rising interest rates, heightened regulatory scrutiny, and scores of anti-blockchain policies across the major mobile and console gaming platforms. The field has also made considerable progress. Regulatory approvals continue to grow, as does institutional adoption, and overall legal clarity. NFTs, for example, have established key legal clarities around their classification as collectibles. Newer blockchains like Solana and more recently Bitcoin have now also fostered energetic NFT communities, with Bitcoin's Ordinals project enabling the creation and trading of NFTs directly on the Bitcoin blockchain. The introduction of the European Union's Digital Markets Act and Digital Services Act, as well as similar legislation in other markets globally, also enables blockchain developers to, for the first time, fully deploy cryptocurrencies, NFTs, and other token-based economics systems into their games, social networks, and apps without worrying about Apple or Google's restrictive policies, business models, or whims.

As a result of various developments in the blockchain field, the methodology produced by the Ball Metaverse Expert Council now produces a sizable allocation to bitcoin and Ether. The methodology is particularly appreciative of Ethereum’s potential role in the formation of the Metaverse. This will result in the largest allocation ever made to Ether in any active Index. Roundhill Investments also reports [URL] that the Roundhill Ball Metaverse ETF will now hold the largest recorded investment in Ether for a U.S. listed ETF.

As a collective, the Expert Council is excited about the transformative potential of blockchain technology, and how it can not just accelerate the development of the Metaverse, but also provide a secure, transparent, and user-centric foundation to an open and equitable Metaverse economy.

The Ball Metaverse Research Partners’ Expert Council, 24 June 2024.