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The Decentraland Metaverse and its MANA token

By 2sats | 2sats | 3 Dec 2021


*obligatory not financial advice*

 

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What is Decentraland?

Decentraland is a browser game where players can interact with other people in a colourful virtual world that hosts different places and applications that are built by its users, kinda like Second Life or Habbo Hotel. What makes Decentraland unique is that all its virtual real estate are NFTs running on the Ethereum blockchain. Decentraland is basically a decentralized virtual world, hence the name.

It is not really a game itself but more a platform where users can launch their own games and applications for a common audience. If you want to run any kind of application on Decentraland you need to own LAND and run your application there. LAND is virtual real estate that hosts your applications that take the form of three dimensional structures. Since LAND has a limited supply and owners will want to catch the attention of their target audiences instead of just a random audience, there will sooner or later "neighbourhoods" emerge for each type of content.

You can technically use Decentraland for anything you want but this virtual world is primarily used for games and for advertisement, other use cases could be education, socializing or selling digital goods and services. Anyone who wants to launch an application there needs to buy a LAND parcel and then you can let Decentraland reference the applications and assets that belong to your parcel from decentralized storage so that players all around the world can access it in the virtual world. If you want to see this world for yourself you can do that for free.

 

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This LAND applications can be anything but ideally something that grabs attention and attracts people. There was recently a Halloween special event on a LAND parcel where users could play a trick or treat kind of game. Another parcel is used for a Decentraland Museum that educates visitors about the history of the Metaverse. Most of the applications are mini games.

What I think is really awesome is that there are multiple NFT art galleries and marketplaces on Decentraland. Yeah most NFT art really are just overpriced jpegs, but the point is that there are interactive 3D marketplaces, this could be used for all kinds of products. Imagine if IKEA would have a 3D online store were you could walk thru and look at different furniture in the same way you would in a real life IKEA, but you can do that while taking a dump at home. There are many possible use cases.

 

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Decentraland offers a very creative way for creators to provide content to their players and to monetize it, but it’s far from perfect. One issue is that there aren't many players and the content currently available is most of the time very boring. Most games are eye catching and attantion grabbing at first but get boring very quickly, that is if they even work properly.

Another issue is that LAND parcels are owned by very few people who are hoarding them, that’s the main reason why their value is so high in some cases. Honestly, I am not sure if I should complain about the high cost of becoming a content provider on Decentraland, or if I should applaud the Metaverse for having such a realistic real estate market.

One big problem a completely decentralized world like Decentraland could face, is the content moderation. If enough people join any network where they can freely interact with each other there will be sooner or later be topics like porn, drugs and other adult stuffs. This is fine but kids could play the game too and there is no way to really moderate the content if it’s really decentralized. They are already working on possible solutions like a trust based system where users can tag content as a certain type and parents could blacklist the tagged content so that their kids can't see or enter this LAND parcels from their device.

Despite its flaws there are still many interesting things you can do with this world and it’s fun to explore, especially since Decentraland keeps changing all the time and new content is added almost daily.

 

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The MANA Token and the LAND NFTs

The Decentraland Metaverse is divided into 90,601 parcels of LAND. Each LAND parcel is exactly 16m x 16m big and is a NFT on the Ethereum blockchain and has its own coordinates in the virtual world. Limited supply is supposed to force high quality content in areas that have similar content. This scarcity means that LAND owners need to actually consider what they are using their LAND for and what the other LAND owners around them are doing with theirs to be profitable.

Each unclaimed LAND can be bought by burning 1000 MANA tokens. However, once a LAND parcel is owned by someone they can sell it for any price they want, because the value of their LAND will depend on how popular its location in the Metaverse is, just like with actual real estate.

 

 

MANA is a fungible token used for buying LAND, purchasing goods and services inside of Decentraland and for governance over the virtual world. It had an initial supply of 2,8 billion but at least 600 million were burned by unclaimed LAND purchases. There are also other burn mechanisms for MANA, like a 2,5% fee for transactions on the Decentraland marketplace that is burned. There was originally an 8% inflation rate but this inflation was shut off by the governance and it seems that there are no plans of bringing it back again for the foreseeable future.

40% of the initial supply were sold in its ICO in 2017, 20% where put aside for user incentives to help the first few LAND owners launch their projects, another 20% was given to the devs and the remaining 20% were put in a treasury. All in all most of the initial supply is controlled by the developers.

The value of both MANA and LAND obviously depend on how many people interact with the virtual world. MANA especially will grow in value the more Decentraland is being used thanks to its deflation. The value of each LAND parcel will be different depending on its location. It is worth mentioning that anything related to NFTs is really pumping for months now, even if it’s unjustified and it could be that the NFT market has a correction within a few months.

 

 

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