Branded as "the first-ever virtual world created by users", Decentraland is nothing short of real-life sci-fi. A world confined to our screens, it is powered by Ethereum and based on blockchain technology. You can experience, create and sell whatever you produce here. It is dubbed the "world's largest alternate reality economy on the blockchain" (1).
You can socialize, play games, buy-sell-auction land, hold virtual events, and create-trade NFTs. And this is just the beginning. Creating businesses and shopping is taken to a whole new level as Decentraland is an original virtual world and digital items as NFTs are sold. As the name suggests is a decentralized world but is really more than a marketplace.
Never heard of it, please elaborate
A revolutionary platform, it is the next best step in the evolution of AI and the metaverse's practical applications. It promises an array of uses which this article refers to. Simply put it is akin to an online marketplace where a wide variety of digital assets like domain names, land, and other collectibles are up for grabs. One look at the Decentraland's official website will be enough to convince of its potential (2).
For instance, at the time of writing, this author found that Mastercard was holding a Pride month celebration with an NFT gallery exhibition. The difference between Decentraland and VR gaming experience is that one can actually buy stuff here. The largest US bank JP Morgan bought a lounge here (3). One can also learn at Decentraland University.
What is MANA, the money of Decentraland?
The native currency of Decentraland, you can use it to buy land and earn rewards on the platform, etc. As a project utilizing DAO for content management, governance, and other operational issues, MANA can be leveraged here (4). Thus it is more than a medium of exchange but a tokenized tool of interaction in the virtual community of creators, businesses, gamers, and buyers.
As a decentralized platform, MANA users aka holders decide on land voting rights, auctions and policies, and events to hold among others. Though popular among gaming enthusiasts, it is much more than a mere entertainment portal enabling a steady building up of a "world".
More to metaverse than just coins
A few years ago not many could have predicted that a digital world actually meant that one could "live" there, for which you obviously need to buy property. Currently, most real estate metaverse interventions are limited to 3D and VR tours of listed physical properties, a business that boomed during the pandemic. But this is a whole new ball game with smart contracts (created by Esteban Ordano and Ari Meilich) being worked out by the DAO guidelines.
One can buy using three tokens- MANA (an ERC-20 token), LAND (an ERC-20 NFT referring to parcels of digital land), and ESTATE (ERC-721 token for merging digital land pieces). The difference here is that MANA is transferable as it is fungible unlike the other two. On the contrary LAND and ESTATE have their own distinctive digital signature and you cannot interchange them. So they are not a currency but can create unique digital products like avatars and wearables like accessories for the former. (5)
One can start the journey of owning a digital land by logging on to Coinbase to mine MANAs. After registering with a valid ID and address, select the payment options. Then opt for the Trade option and choose Decentraland. Feed the amount of your native (fiat) currency that you want to use to buy on Decentraland and that amount will be converted for use in this virtual world. Another option is a Kraken account. Here one can buy MANAs using cryptos or fiat currencies. An account with Binance, a popular crypto trading platform with its compendium of different currencies can also be considered. One can link a bank account or buy MANA directly using Binance's peer-to-peer services.
The other issue is the storage of the mined MANAs. Options abound. One can make use of offline and hardware wallets like Ledger Nano X and Ledger Nano S. The former is for newbies and is mainly concerned with keeping the amount in safe hands whereas the other is advanced with added features like Bluetooth connectivity. Both are impossible to hack. Software wallets, on the other hand, are usually used for short-term storage.
It is really that simple
You need not be an expert in technology or well versed with cryptos. You first create an avatar, your digital self or representative in Decentraland. You can distinguish this avatar by purchasing accessories like wearables and thus individualizing your identity. Since there are around 90,000 plots available- it is a scarce asset. Each parcel is 52 wide and feet long. Selecting the "Parcel and Estate" option explores the viability of different plots. Look out for things like location, proximity to major spots, roads, etc. For example, a property near the Genesis Plaza will cost more as it is a prime location (6). After you have zeroed in your favorite, make sure to ensure enough MANAs or Ethereum coins are in your wallet. Some additional tokens will be required due to gas costs.
The LAND remains non-fungible that it until someone wants to buy it from you. Once the purchase is made, you can create an entirely new city putting it to whatever use you deem fit. Metaverse Group reported a $2 million spend to buy parcels in "the heart of the Fashion District" (7). For a relatively younger marketplace (established only in 2020), a lot of sales have happened with the sky being the limit for what can you use your parcels for in the future. By letting the developers and users build their interactions and animations in this self-regulated world of worlds, for Decentraland the future is here now.
The nitty-gritty of the LAND
Smart contracts like LANDregistery, MANAtoken, and ESTATEregistery are the blockchain-powered backbone of the Decentraland. Every sale is fed into the network and recorded. Each parcel is represented with a square, a district is formed with like-minded parcels of LAND with some commonality. For instance, there is District X (earlier the Redlight District), Vegas City, Dragon City Fashion Street, Decentralised Museum, and others.
Further on there are three types of layered components to them- latent- content, consensus, and real-time layers. The consensus layer represents the Ethereum-powered blockchain technology keeping a tab on land ownership through ledgers. The land content layer takes care of what happens in each parcel of land basically the uses that its owners put it to. This can include audio, graphic files, and peer-to-peer interaction like messaging, etc. Of course, the LAND like all other items is tradable with each parcel's price listed as the number of MANAs required for a successful sale in the marketplace.
But what can I use this LAND for
Naysayers may argue about the actual utility of such land as different variables affect the value of physical land. But it is a real deal. You can hold conferences, process themed communities, and construct digital environments. Land parcels can be joined to establish estates. For example, Rarible a crypto firm established its offices and art galleries on Decentraland. Such land shall have tremendous upscaling opportunities as it caters to a global audience.
The users can create an interactive atmosphere on their properties through the editing tools and charge other users for digital libraries, movie screenings, live concerts, etc. You can buy NFTs (digital art and memorabilia) like a Shiba backpack or an electric beanie.
Some pros of buying land on Decentraland
Most obviously it will be a hassle-free exercise bypassing a host of restrictive laws and rules. The market sentiments on buying plots of virtual land have transitioned from being a fun and new experience to a serious business proposition. The unpredictable rising and ebbing fortunes of metaverse stocks seem not to have deterred investors in this segment.
The fees are low and the costs are less- if that is not enough- the rapid adoption of VR and AR technologies in the real world will sooner or later bridge the gap. The time to strike the iron is now to cash in on the first-mover advantage (8). Apart from renting their LANDs, owners can hold a variety of events and provide high-quality services in upcoming fields like digital fashion.
But should you invest now or wait?
Yes, the mind-blowing booms and crashes in crypto markets are enough to shock seasoned players not to mention other the sober lot of us. Concerns about true exchange and use values of coins like MANA remain but that does not inhibit highly speculative betting on its future. According to Kraken, a crypto exchange now is a good time to consider crypto options including coins like Decentraland as last month's returns on tokens compared to other sub-segments augur well with the metaverse promising around 400% of annual growth (9). And yet May also saw MANA's fall with nearly 57% of its being value wiped out. The encouraging boom busted fast enough as the carpet seems to be slipping under metaverse's feet.
A note of caution and hope
Decentraland is primarily a gaming space where one creates and trades NFTs. The futuristic projections of the metaverse need much time and investment to prove their worth. Even as the crypto market itself remains a highly risky and volatile investment, buying lands is even more so. Buying LAND on Decentraland might seem like a walk in the park, but developing viable business models call for significant creative and technical prowess. Supporters are banking on the creation of a world of enabling digital ecosystems where individuals and businesses can form meaningful communities.
It has already started with in-world payments and interactive apps driving the craze. In this fully immersive world (a class apart from the limited 2D world options) one "visits" online places, creates "experiences", plays games, trades in virtual currencies, and interacts with peers. In the coming decades, the metaverse flower shall bloom where we move on from it being an "alternative" to the mainstream where AR and VR technologies become a part of life.