Decentraland MANA: Can it Live Up to the Hype?
Decentraland is a virtual reality platform built on Ethereum where users can create, experience, and monetize a variety of content and application. Its native currency is MANA.
By offering a vibrant and expanding community of developers, creators, and users keen to explore the possibilities of the digital universe, this virtual world provides the opportunity to carve out your own corner and participate in the digital economy.
Decentraland came into existence in 2017 after an initial coin offering raised $24 million. After a series of closed Beta tests, the official public launch occurred in February 2020. Today, the platform remains a popular place for creatives to build online worlds that offer games, 3D environments, and a variety of interactive experiences.
Decentraland was co-founded by blockchain entrepreneurs Ari Meilich and Esteban Ordano. Although neither founder is currently on the board of directors, they both continue to work alongside the project in an advisory capacity with the Decentraland Foundation.
Both founders have long and varied careers in cryptocurrency development and continue to work, with Ordano responsible for both Smart Contract Solutions and Zeppelin Solutions.
In addition to creating and building anything in a virtual world, Decentraland users have unbridled access to interactive applications, in-world payments, and peer-to-peer communications. This means that Decentraland can support various users, from entertainment to gamers to professional businesses and investors.
Indeed, in early 2022 famed investment bank J.P. Morgan announced it was to open a 'virtual lounge' to capitalise on the anticipated $1 trillion worth of investment expected to come to the Metaverse in the next few years.
This Metaverse is powered by two core components, LAND and Decentraland MANA, the native currency.
LAND represents each parcel of cyber real estate and exists as an individual NFT. Decentraland MANA is primarily used to buy and sell virtual goods and services, and to vote on community governance.
Decentraland MANA is an Ethereum-based ERC-20 token, which must be burned to obtain LAND ERC-721 NFT tokens.
This unique environment is completely owned by its users, and, true to the blockchain ethos, the digital platform is governed by the Decentraland DAO (Decentralised Autonomous Organisation). This means that each community member has a say and influences the growth curve of the project.
Decentraland MANA must be wrapped and converted into wMANA before users can commit the cryptocurrency to a vote. One wMANA equals one vote. MANA is easily purchased on various leading cryptocurrency exchanges. It can also be obtained by selling digital items in this online universe.
The LAND token is used to distinguish real estate ownership and exists as an NFT on the Ethereum network in its own right. As with MANA, LAND can be used to secure voting rights. However, LAND does not need to be submitted to the DAO. As you might expect, LAND is a powerful token to hold, with each coin representing 2,000 voting rights.
LAND and Decentraland MANA tokens play a big part in the use of the platform. As a virtual world, Decentraland users can spend their tokens in whichever way they like and use the in-game marketplace to transact and transfer items bought and sold. Every transaction is conducted, regulated, and recorded on the Ethereum blockchain.
This project is creating a digital ecosystem featuring almost every aspect of our everyday lives. One of the platform's biggest attractions is the ability to get involved in daily commercial or governmental life without leaving the comfort of your own home.
The early vision was to provide a virtual world to anyone interested. However, it is now generally accepted that due to the prices of Decentraland MANA and LAND, barriers to entry can appear high for the average user.
Players have total control and are allowed to vote on all in-game and organisational policies. While the original aim of the platform was to develop a form of decentralised virtual reality, many players believe that in its current form, Decentraland has turned into one large NFT market.
Decentraland has been built in a three-layer structure using Ethereum smart contracts. The base-level consensus layer determines, tracks, and manages LAND ownership. The second layer deals with the actual content of the virtual world. Finally, the third layer - the real-time layer - deals with user interaction.
The total game world, or Metaverse, is divided into 90,601 individual parcels of LAND. Each parcel is represented by an ERC-721, Ethereum-hosted NFT. Each LAND represents a square of 16m x 16m and has a unique identifier that records its location in the Metaverse.
Although LAND owners are free to develop their plot in any way they choose, most of the environment falls into one of 39 districts, each with a unique name, size, and theme. At the time of writing, the Aetheria Cyber Punk district is the largest, closely followed by the gambling district of Vegas City.
At the time of writing, some 1.8 billion Decentraland MANA tokens are in current circulation, representing 82% of the total supply of 2.19 billion. With a current price of $0.679, this gives Decentraland a market capitalisation of $1.259 billion.
At launch, there were 2.8 billion Decentraland MANA tokens minted. However, due to burning due to LAND auctions, that figure has reduced by 22% to the number we have today. The circulation of MANA is managed further by another 2.5% burn of all tokens involved in marketplace transactions.
As far as we know, 40% of MANA's total supply was sold during the initial coin offering (ICO) in 2017. A further 20% has been reserved for community incentives, and another 20% was given to developers and early contributors. Decentraland itself holds the remaining 20%.
Decentraland has been built specifically for content creators, businesses, and individuals looking for a new artistic medium, business opportunities, and sources of income.
The platform provides a creative outlet and allows many users to monetise their LAND through leasing arrangements that enable users to generate income in the virtual economy.
The project represents the intersection of real and virtual worlds and is the oldest and biggest platform to do so. Once considered niche, virtual worlds and the Metaverse are slowly becoming the place to conduct business, socialise and shop as work-from-home policies and sky-high rents force consumers to rethink their approach to everyday life.
As we become more familiar with the idea of the Metaverse, we are beginning to see a flow of real-world artists who want to showcase their talent in the virtual world. In April, Decentraland hosted Nashville singer/songwriter Jhett Black, who performed his first show in the Metaverse.
Decentraland is poised to benefit from the expected growth of the Metaverse and virtual worlds. Figures differ, but it is generally agreed that there will be massive value in the Metaverse and related platforms by 2030. The World Economic Forum projects a market worth in the region of $3 trillion by the end of the decade.
As long as the team behind the project can continue to scale and onboard customers at the same rate as the first five years, there is no reason why this innovative platform cannot secure a significant portion of the industry for itself.
Author: Mark Harridge
Mark Harridge first came across Bitcoin and began to use its peer-to-peer payment network in mid to late-2011. He quickly understood that this technology would change the world. Mark is passionate about crypto adoption, from a macro economic and institutional perspective, and the numerous factors that fuel the relentless march towards individual self sovereignty and the decentralised society of the future.