Table of Contents

πŸ€” What is Decentraland ?

Decentraland is a decentralized, shared 3D virtual world built on Etherium blockchain. It is called decentraland because its decentralized virtual world.

Its like a decentralized version of MMO(massively multiplayer online game) where players can:

  • Customize their avatar
  • Buy in-game items like wearables
  • Interact with other players
  • Buy land
  • Develop purchased land etc.

πŸ’‘ What role does MANA token play ?

MANA token is an ERC-20 token. It is used as native currency in Decentraland. All items on Decentraland marketplace are priced in MANA tokens. All trades are conducted in MANA tokens in Decentraland economy.

MANA token is used for:

  • Pay for in-game experiences eg entertainment, gambling etc.
  • Β Buy:
    • Land
    • Collectables
    • Names etc

Decentraland is governed by Decentraland DAO. MANA holders propose and vote on future updates to Decentraland. They influence the future development of Decentraland.

πŸ“ Origin of Decentraland

Ari Meilich and Esteban Ordano created Decentraland in 2015. The project started as 2D grid. The players could buy pixels on grid and change its color.

The team developed the project to 3D virtual world in 2017. The 3D world was divided into plots that could be owned and developed by players.

The team also raised 86,206 Ether(26 million dollars at that time) by selling 40% of total supply during ICO sale in 2016.

Decentraland was open to the public for exploration in Feb 2020.

The team handed over the governance of decentraland to decentraland DAO in May 2021.

πŸ‘΄ Founders

  • Ari Meilich:
    • He studied philosophy at the University of Buenos Aires and neuroscience from City University of New York-Hunter College.
    • He also worked as Market Research Analyst at Charles River Ventures, a leading Silicon Valley venture fund in 2015, before founding Benchrise, a big-data company.
    • He co-founded Decentraland in 2017 and works as Project lead and advisor to the project.
  • Esteban Ordano:
    • He studied software engineering from Instituto TecnolΓ³gico de Buenos Aires in 2014.
    • He worked as a Software Engineer at BitPay from 2014 to 2015.
    • He co-founded Decentraland in 2017 and works as CTO of the project.

😌 What problems does it solve ?

  • Districts are community areas in Decentraland. Each district has its own theme. Players can go to these districts to find people with shared interests.
  • Centralized social media platforms like Facebook and Instagram make money by selling attention of their users to advertisers. This requires them to tune their AI algorithms to exploit biases of their users and force them to spend maximum time on their platforms. Decentralized platforms such as Decentraland do not have any such incentives.
  • Most of us live in an environment and are surrounded by people who force us to behave a certain way. However, people can be whatever they want in the virtual world. Some people will just have fun, others will explore boundaries of their creativity.
  • Players have already started using Decentraland for:
    • Selling advertisement billboards on their land.
    • Virtual tourism.
    • Having community meetups, concerts and events.
    • Developing in-games such as gambling etc.

Halloween party at Decentraland πŸ‘‡

Casinos at Decentraland πŸ‘‡

Advertising at Decentraland πŸ‘‡

πŸ€– How does it work ?

Decentraland architecture

Decentraland virtual world is made using 3 layers:

  • Consensus layer:
    • Decentraland uses Etherium as the base layer to establish trust and consensus. Etherium blockchain is used to record all transactions and account balances of players in Decentraland economy. It records which player owns which land and what are their MANA balance.
    • Each land token stored on Etherium has following associated information:
      • X and Y coordinates of location
      • Reference to the content of the land
  • Land content layer:
    • Owners customize their land as per their likings using the land builder. This land content is referenced through a hash of the file’s content. Browser uses this reference to fetch and download content using IPFS or BitTorrent protocols when a player interacts with that land. The downloaded file contains information to render the land ie:
      • Objects
      • Textures
      • Sounds etc.
    • Currently, the content is stored on a network of content servers run by the community. Decentraland DAO approves/ rejects applications of community members willing to run content servers.
  • Real-time layer:
    • It enable players to interact with each other through:
      • Messaging
      • Voice chat
    • All the interactions are P2P and are not relayed through any central server.

Land

Land in Decentraland is divided into 90,651 parcels of 16m X 16m each. Each land parcel is unique because of its location(x and y coordinate) and is represented by ERC 721 token.

Various types of land are:

  • Private land: These parcels of land can be owned, bought and sold in the secondary market. Price of a land parcel depends on factors such as:
    • Its size
    • Location
    • Neighborhood
    • Traffic: How many people visit etc.

Tutorial on how to buy land parcel in Decentraland πŸ‘‡

  • Estate: Owners can merge parcels of land which are adjacent to each other to make a single estate. This enables players to place large objects and develop land which was not possible before
  • Districts: They are community areas within Decentraland. Each district varies in size and has its own theme ranging from gambling to video games etc. Each district governs itself and has its rules and way of running things.

Tour of Dragon city πŸ‘‡

  • Genesis plaza: It is located in the center of the map. All the players are born here once they enter Decentraland. Decentraland’s team maintains it. It has boards that display history, auctions and upcoming events in Decentraland.
  • Genesis plaza: It is located in the center of the map. All the players are born here once they enter Decentraland. Decentraland’s team maintains it. It has boards that display history, auctions and upcoming events in Decentraland.

Marketplace

The Marketplace is the go-to place to trade and manage all Decentraland on-chain assets. Various items listed on Decentraland marketplace are:

  • Private land parcels: Buyers can browse through various lands on sale using filters. They can bid and see the transaction history of each land listed for sale on the marketplace.
  • Wearables: Players customize their avatars using wearables for feet, lower body, upper body, face and head. Designers can create and sell wearables in the marketplace. The price of wearables depends on their design, history and rarity.

Making and selling wearables for Decentraland πŸ‘‡

Buying wearables in Decentraland πŸ‘‡

  • Names: Players can also buy name for their avatar on Decentraland marketplace.

Buying name for avatar πŸ‘‡

Tools

  • Drag and drop builder for developing land πŸ‘‡
  • Making new animations for avatar πŸ‘‡
  • Decentraland SDK for developers πŸ‘‡

πŸ›οΈ Governance model

Decentraland is governed by Decentraland DAO, made up of MANA holders. It owns smart contracts and assets that makeup Decentraland. It also owns a substantial amount of MANA which are used to fund future development.

MANA token holders submit proposals to DAO. Other holders vote on the proposal. Proposals with majority vote are enacted automatically using smart contracts.

  • DAO dashboard πŸ‘‡

Security advisory board

Decentraland is a new project with a substantial economy. It is possible that it has undiscovered bugs. Decentraland’s DAO has appointed Security Advisory Board (SAB) to provide security and fix bugs quickly.

It has 5 members on board who ensure effective oversight on technology risk and guarantee contract security for the protocol. Their primary task is providing a swift response to bug reports.

😨Competitors

πŸ€‘ How much money does Decentraland have for future development ?

  • The team raised 86,206 Ether(26 million dollars at that time) by selling 40% of total supply during ICO sale in 2016. Ether has appreciated quite a lot since then.
  • Decentraland DAO holds:
    • 20% of MANA supply to fund community initiatives.
    • 20% of MANA supply for development.
    • 20% of MANA supply is held by Decentraland fund.
  • 2.5% of MANA of every transaction on Decentraland marketplace goes to decentraland fund.

πŸ‘ Tailwinds

Emerging trends that benefit Decentraland growth are:

  • Access to mobiles and internet has gone up. As a result, people are spending more time online
  • More and more players are playing online games.
  • VR and AR products market is growing.
  • NFTs are becoming popular
  • People will look for alternative ways to socialize because of COVID restrictions.
  • Decentraland is an old project and which has undergone several bear markets. It is first to the market and does not have any significant competitors.
  • Players would not want to migrate to another virtual world even if it is better because:
    • They have spent countless hours building stuff they are proud of.
    • They have built a community and made friends in Decentraland.
    • They have invested a significant amount of money buying land and collectibles.
  • Brands will start using the platform to market once sufficient players are online. More players will join Decentraland once they find their favorite brand is on the platform. This positive feedback loop has the potential to cause exponential growth.

😨 Risks and challenges

  • Currently, there are very few people logging in to Decentraland. Also, players logged in on different servers cannot interact with each other. The world will become more interactive and fun by onboarding more players.
  • Decentraland is a decentralized world without any central governing authority. Players are free to upload and build whatever they want. It is possible some players choose to upload explicit content like child porn etc. The community will have to decide whether they will allow such content and how will they moderate it.
  • Decentraland leverages several crypto projects like:
    • Etherium: As consensus layer
    • IPFS: For storing and distributing content
    • Aragon: For DAO

This can expose the project to external risks outside its control

πŸ’° Tokenomics

MANA tokens have fix max supply of 2.8 billion tokens. These tokens were distributed in 2016 as follows:

  • Crowdsale: 40%
  • Community: 20%
  • Development team: 20%
  • Held in Decentraland fund: 20%

Token Inflation

MANA token does not have any inflation because it has fixed max supply, all of which is already in circulation.

Demand pressure

Token’s price increases due to demand pressure.

Demand pressure on MANA token will come from:

  • Players: They will buy MANA tokens to purchase collectibles from the marketplace and interact with in-game items in Decentraland.
  • Speculators: There will buy MANA tokens for future price appreciation.

πŸ’° Market opportunity

Similar centralized virtual world games like Minecraft and second life are worth billions of dollars. MANA token has tremendous room to grow if it continues to onboard new players.

🧐 Indicators to watch out for

  • Decentraland YouTube channel is growing:
  • Their Twitter following is growing:

Future possibilities

Some possible future scenarios:

  • It can happen that brands open up shops in Decentraland. Players will place orders in Decentraland and the actual products will be delivered to their home.
  • Games like football etc will be organised in Decentraland. Players will organise themselves in teams and compete. There will also be many players who will attend the games as fans to cheer for their favorite team.
  • It is possible that Decentraland partners with other blockchain games like Axie Infinity. This will allow players to bring their characters to Decentraland.
  • Brands and content creators will open their headquarters and organize events for their fans in Decentraland. Binance organised its birthday party in Decentraland πŸ‘‡
  • Decentraland is a nice place to socialize and find others with similar interests. It is possible to even fall in love with someone just by seeing their avatar and talking to them in Decentraland without ever knowing their real identity.
  • It is also possible that the future turns out to be quite dystopian where people would rather live in Decentraland than being productive in real world.

πŸ‘‹ Final remarks

Decentraland has the potential to be much more than just a crypto project. It can shape how we socialize and view the real world. It can be the perfect place for people to be truly themselves and express their creativity.

The project has excellent tokenomics: no inflation and has sufficient reserves to fund future developments. Buying MANA tokens is a nice asymmetric bet on how the future could turn out to be.

😊 Do further research

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