Annus Mirabilis for Animoca Brands and the Open Metaverse

Dear shareholders and friends of Animoca Brands,

A little over a year ago we wrote about how the trends of true digital ownership and play-to-earn will change the world , enabling the rise of a new economy. Today we are happy to share with you a few updates on the progress we have made in this exciting space.

Over the last 4-5 years, Animoca Brands has emerged as the most prolific investor in NFT-centric Web 3.0 companies , which are contributing to building the open metaverse. We see NFTs as central to the future digital experience because they have characteristics that will help ensure that the metaverse will be fair and open.

Overview of Animoca Brands’ investments in NFT-related companies and projects (website )

Animoca Brands and its group companies have enjoyed considerable success in the past year.?

Our best-known metaverse platform is The Sandbox , now available to players in alpha version. The Sandbox has continued its record sales , capturing the zeitgeist of what an open decentralized metaverse should be.?

In October, our casual subsidiary GAMEE launched Arc8 , the new play-to-earn mobile gaming platform that quickly became the most popular app on the Polygon network, driving over a million users to blockchain gaming.?

In fact, all of our group companies and projects have enjoyed notable progress; this includes REVV Racing , Crazy Defense Heroes (Tower) , Lympo , nWay , and Quidd , as well as recent additions such as Prosper and Blowfish Studios (who is hard at work on Phantom Galaxies ).

Our freshly announced financial information for January-September 2021 signals not only the transformation of our business, but also that of the wider industry, suggesting that the new future economy that we have talked about so frequently is well on track to becoming a reality.?

Our income from investments and digital assets for the first 9 months of 2021 grew to approximately US$529.6 million, bookings increased to US$140 million, and we held over US$600 million in liquid digital assets (including BTC, ETH, USDC as well as other alt-coins such as AXS, FLOW, etc.) at the end of the period.?

The reserve of digital assets belonging to the Animoca Brands ecosystem of products and platforms (which includes REVV , SAND , TOWER , and GMEE and could be considered our treasury) has risen from a value of about US$2.9 billion at the end of September 2021 to about US$15.9 billion at the end November 2021 - a more than five-fold increase in only two months.

One year ago , we compared the combined monthly trade volume of SAND and REVV (our two primary tokens at the time) to the economic output of small nations: US$245 million, when annualized, is just behind the GDP of Greenland and ahead of Djibouti and Bhutan. We noted then (and do so again now) that this is not a rigorous analysis and is intended for illustration only. But we really thought that was impressive.

Today, just one year later, the combined monthly trade volume of SAND and REVV tokens is over US$10 billion. Extending the illustration we made a year ago, on an annualized basis that volume of trade would see us sandwiched between the GDPs of Morocco and Slovakia .?

If we look at the entire family and friends of Animoca Brands - not just our own tokens and subsidiaries, but also the tokens issued by the many projects that we have invested in -? the daily trade volume is US$3 billion, as tracked by CoinMarketCap .

These results reinforce our view that building the open metaverse - which encompasses a multitude of metaverses within it -? is extremely similar to building an entirely new society, akin to a community-based nation. And, just like nations, the metaverses that serve the interests of their communities will be the most successful ones.?

One of the fundamental ways in which nations and metaverses serve their citizens is by delivering value to them. We believe that true digital ownership (virtual property rights) is the foundational block underpinning the entire open metaverse: ownership of digital assets enables control over them, which leads to economic freedom, which unlocks economic opportunities (e.g., profiting from the sale of an asset), which brings GameFi opportunities (e.g., play-to-earn), which creates a pathway to a more equitable society.?

This is why we strongly believe that any system worthy of bearing the name “metaverse” should - and must - be an open one that allows users to own a piece of it, so that all can benefit from the shared network effect that ensues. We do not see digital equity and inclusion as options; we see them as basic requirements.

2021 has been an absolutely remarkable year for Animoca Brands and the wider open metaverse. Sales of NFTs - the foundational component of the open metaverse - totalled US$13.2 billion in the first three quarters of this year , and US$293 million just this past week. The continuing adoption of blockchain applications into the mainstream and the stunning growth in trade of NFTs are very encouraging indicators not just for Animoca Brands but for the entire movement supporting the open metaverse.?

Once again, I extend my deepest thanks to all shareholders and partners for the dedication and support you have shown toward Animoca Brands and our efforts to create a new reality. I am also extremely appreciative of our highly talented (and growing!) teams of visionaries and creators who have made the past year a terrific success. As always, I am grateful to all of you as we stride into the bold new future of play and work.

Yat Siu

Co-Founder and Executive Chairman

Animoca Brands