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Since Facebook rebranded to Meta and announced its plans to create a virtual world, the metaverse has been among the hottest topics within and outside the cryptocurrency space.
As a result, many corporate players, tech giants, and gaming companies have joined in the race to compete with Facebook’s upcoming metaverse and leverage this trending concept to expand their offerings and generate more revenue via virtual worlds.
At the same time, the recent events within this field also accelerated development and sparked new interest in decentralized metaverse projects. In fact, there are already projects that feature working virtual worlds within the crypto industry.
In this article, we will explore the Sandbox and Decentraland, two of the largest decentralized metaverse projects, as well as compare and analyze them based on several factors that help determine their performance, value, and future potential.
What Is the Sandbox?
Before we dive deeper into our topic, it’s essential to re-visit the basics about the two metaverse projects, starting with the Sandbox.
Originally founded in 2012 as a 2D mobile game (available now as the Sandbox Evolution), the Sandbox evolved into a 3D blockchain game on Ethereum in 2017 to create a decentralized metaverse utilizing the Play-to-Earn (P2E) model.
It’s important to mention that, while it was acquired by the Hong Kong-based software firm and blockchain game maker Animoca Brands, the Sandbox is a decentralized project that is governed by its community instead of a centralized entity or development team (although community governance functionality is still in development and expected to be released in Q2 2022).
Like its name suggests, the Sandbox is a decentralized metaverse project featuring a voxel graphics-based sandbox that allows users to build, own, and monetize unique experiences by unleashing their creativity within a large virtual world.
As one of its key features, Sandbox has its own virtual real estate called LAND. With a total of 166,464 plots, the project directly sells LAND to users and investors, which they can populate with in-game assets, use to create and run games, as well as rent out to other players for a fee. Basically, it’s like owning and operating your own server where you can decide the rules of the game.
LAND and all user-generated assets are present in the Sandbox as Ethereum-based non-fungible tokens, which players can own, trade, or use in the game. In the case of NFT assets, gamers can add gems and catalysts to their items to define their tier and scarcity as well as customize them.
The Sandbox is powered by its native SAND token, which features numerous functionalities, such as governance, staking, and a medium of exchange on the project’s official NFT marketplace. Regarding the latter, since users can trade the items they created or earned in the game for real-world money, the Sandbox’s P2E model offers the opportunity for users to generate revenue.
After years of development, the Sandbox launched the alpha version of its metaverse (with multiplayer functionality) on November 29, 2021. It successfully closed its first season and is preparing to roll out its second round of alpha content in the coming weeks.
What Is Decentraland?
Interestingly, Decentraland also started out as a 2D gaming project. However, unlike the Sandbox, the team focused on building a blockchain-based virtual world from the beginning in 2015 as a proof-of-concept for allocating ownership of digital real estate for DLT users. Since 2016, the project moved on to creating its 3D metaverse.
While Animoca Brands is among Decentraland’s investors, its community controls and maintains the project under the Decentraland Foundation, a non-profit organization that fulfills a similar role as the Ethereum Foundation in the smart contract blockchain’s ecosystem.
Based on Ethereum, Decentraland is a 3D decentralized metaverse and virtual reality platform in which users can create, experience, and monetize the content and applications they have built.
Like with the Sandbox, Decentraland also utilizes the Play-to-Earn model to incentivize players for active engagement and the creation of user-generated content by allowing them to own, trade, and generate revenue from NFTs and token rewards.
Similar to the Sandbox, virtual real estate – that is finite and traversable – is called LAND and is present in the form of non-fungible tokens. However, instead of referring to a single plot, LAND represents Decentraland’s whole virtual world. Players can purchase, own, sell, rent, and populate a total of 90,601 parcels of land with their own applications and content.
In the Sandbox, LAND can be grouped into ESTATES (multiple plots of land) and DISTRICTS (plots with similar themes). The same can be done in Decentraland with one additional category called plazas representing untradeable parcels owned by the community.
In Decentraland, LAND parcels are directly sold to buyers, who can utilize the native MANA token for the transaction as well as for governing the project via a DAO, trading NFTs on the marketplace, and other functionalities.
Each parcel has unique coordinates, an owner, and a reference to the content description file, which (as its name suggests) explains briefly to other users what the landowner is doing with his virtual real estate.
Unlike the Sandbox that launched its multiplayer mode’s alpha only recently, Decentraland opened its virtual world to the public in February 2020, which means it has been up and running for roughly two years.
The Sandbox vs. Decentraland: the Ultimate Comparison
Now that you know the essentials about the Sandbox and Decentraland, it’s time to see how the two metaverse projects compare with each other based on various factors, such as tokenomics, governance, and user activity.
Let’s find out below!
Governance
Just like with DeFi, NFTs, and other dApps within the broader crypto space, governance is among the most important factors to explore in the case of metaverse projects.
Considering that both the Sandbox and Decentraland want to compete with the (upcoming) centralized virtual worlds of Facebook and other tech giants, it’s crucial to analyze how their communities manage their platforms.
It’s important to note that both projects have already handed over or have plans to hand over the governance of their platforms to their communities, who can utilize their SAND and MANA tokens to propose, vote, and decide on future changes related to the two metaverse solutions’ future.
While Decentraland has been already operating in the form of a decentralized autonomous organization (DAO) in which MANA holders decide on the project’s fate, the Sandbox will introduce this functionality in the near future (Q2 2022, according to its roadmap).
There is also a difference in how the two projects fund their future developments as well as the allocation of their tokens. In the case of Decentraland, the DAO fund acts as the metaverse’s community treasury that receives the official marketplace’s 2% transaction fees and a portion of the 2.5% charge on OpenSea.
At the same time, the Sandbox charges a 5% fee on SAND transactions (e.g., NFT sales, game subscriptions, LAND rental transactions), which it distributes (along with its revenue from other sources, such as LAND and premium NFT sales) to the Foundation as well as the Company Reserve and Company Treasury. Based on the project’s whitepaper, company funds and the Foundation should share this income in a 50-50% ratio.
While the Company Treasure is utilized to sell back SAND to the market to cover operational expenses, the Foundation Pool is responsible for maintaining the ecosystem, which is expected to be fully managed by the community after the team implements the DAO model. At the same time, the Company Reserve represents the SAND owned by the development team that was collected from the proceeds of company-owned assets.
In terms of allocation, for Decentraland, 40% of the total MANA supply was allocated to token sale participants, with the remaining 60% distributed among the development team, Decentraland Foundation, and the community reserve in a 20-20% ratio.
In the Sandbox’s case, SAND’s initial distribution was carried out in the following way:
- 10% to advisors
- 17.2% to seed sale participants
- 19% to the founders and the team
- 4% to strategic sale
- 12% to launchpad sale
- 12% to the Foundation Pool
- 25.8% to Company Reserves
As you can see, both in terms of revenue flows and initial token allocation, Decentraland follows a more decentralized approach, with most of the proceeds and assets controlled by community members.
On the other hand, the Sandbox utilizes a governance model where the development team and the community share the responsibility of managing the project.
User Activity and NFT Sales
One of the best features of dApps is that you don’t have to rely on the statistics companies publish about their platforms to see how they perform. Instead, you can gain insight into user activity by simply utilizing an independent third-party provider that sources data directly from the blockchain.
However, it’s important to note a potential downside here, which we could observe when comparing Decentraland’s user activity with the Sandbox’s. While most service providers have advanced features and mechanisms in place to increase accuracy, sometimes they don’t track the right smart contracts, which makes stats about a decentralized application inaccurate.
For that reason, we will utilize multiple data providers to compare user activity and NFT sales between Decentraland and the Sandbox to minimize the risks of inaccurate data influencing the results of our comparison.
In terms of NFTs, the Sandbox a $8.74 million and Decentraland a $5.2 million 7-day volume of secondary market sales on OpenSea, based on NFT Stats’ data. On Dune Analytics, we also have statistics on Decentraland’s primary market sales volume, which $12.5 million in the last 30 days.
Regarding dApp activity, while Dapp.com 710 unique users, 793 transactions – these two are possibly inaccurate – and a $9.32 million volume for the Sandbox, Decentraland nearly 133,000 users and 383,000 transactions but only $32,400 (this is likely inaccurate as well) volume in the last 90 days.
At the same time, based on DappRadar’s statistics, the Sandbox’s 30-day data 3,200 unique users, 4,100 transactions, $1.18 million volume, and a total $3.55 million balance in the dApp’s smart contracts. On the other hand, the site displays 1,300 unique users, 3,600 transactions, no volume (the data here is likely missing), and a $92,000 total smart contract balance (this is likely inaccurate as well) for Decentraland for the last 30 days.
Based on all these data, we can safely conclude that both metaverses feature similar performance metrics with only some minor differences. While the data suggests that Decentraland has more user activity, the Sandbox’s volume is greater than the other project’s.
Investors and Partners
Considering the hype around the sector and the fact that Decentraland and the Sandbox are among the most popular metaverse projects, it’s not surprising to see that both have secured quite some funding from investors.
In the case of the Sandbox, we have already mentioned that developer Pixowl was acquired by Animoca Brands in 2018. However, that was only a relatively small deal in the project’s history. In November 2021, the Sandbox secured $93 million funding through a Series B round, with key investors including:
- SoftBank
- Liberty City Ventures
- Galaxy Interactive
- LG Technology Ventures
- Samsung Next
In addition to multiple VC rounds earlier, the project held a token sale in August 2020 in which it collected $3 million from IEO contributors.
On the other hand, Decentraland secured nearly $25 million throughout an ICO in 2017. Also, the project collected an unspecified amount of funds from VC investors like the Digital Currency Group and Animoca Brands.
Like with investors, neither project is lacking in partnerships. While the Sandbox collaborates with over 50 prominent firms, such as Atari, Square Enix, Ubisoft, Walking Dead creator Skybound Entertainment, and Shaun the Sheep, Decentraland features deals with the likes of Samsung, Polygon, South Korea’s government, and even Tennis Australia to host a grand slam event in the metaverse.
Tokenomics
As detailed in my past article regarding tokenomics, it’s crucial to explore this concept further to evaluate the economy behind the Sandbox’s SAND and Decentraland’s MANA tokens.
Since we have already taken a look at governance and distribution, let’s see how SAND and MANA perform in terms of utility, supply, and price stability mechanisms.
In the case of the Sandbox, SAND features a total supply of 3 billion coins, from which around 925 million tokens are in circulation (31% of the coins), which is a 65% increase from the initial supply of 560 million SAND.
It’s important to mention that while the majority of the SAND supply is out of circulation, the token’s 3 billion supply is non-extendable, which means that the project won’t (be able to) mint more coins beyond this cap in the future.
In terms of utility, SAND is designed to serve as a governance token and the medium of exchange in the Sandbox ecosystem for transactions, such as:
- Buy and sell in-game assets, gems and catalysts, and LAND via the NFT marketplace
- Mint NFTs
- Combine multiple plots of LAND to form estates
- Stake SAND to boost revenue or generate passive income
- Rent LANDS to other players for a fee
- Publish a game as a developer or pay subscription fees to play a game as a user
- Earn rewards throughout different events
- Participate in community governance (from Q2 2022)
Unlike SAND, Decentraland’s MANA utilized an inflationary or a continuous token model at first. This means that, while the coin lacked a fixed total supply, the project could mint new tokens at an initial inflation rate of 8%, which would gradually decrease over time (e.g., to 6.06% by the fifth year and 4.65% by the tenth year). At least, that was the plan.
Later on, the community decided to eliminate MANA’s inflation rate, bringing it down to 0%. Instead of functioning as an inflationary token, users voted to introduce a deflationary mechanism that burns a portion of the MANA spent on land parcels, avatar registration, the resale of wearables, as well as other items.
As a result, despite the creators’ plan to make MANA an inflationary cryptocurrency, Decentraland’s native token’s total supply has decreased from the initial 2.8 billion to below 2.2 billion, with currently 1.82 billion coins circulating on the market.
Similar to SAND, MANA is utilized as a governance token and a medium of exchange within the project’s ecosystem, featuring functionalities, such as:
- Purchase land parcels
- Buy and sell NFTs on the official marketplace and on secondary markets
- Earn MANA for active engagement and participation (e.g., event rewards, contests, creating art)
- Create proposals and use MANA to vote on matters concerning Decentraland’s future
Coin Performance and ROI
Finally, let’s take a look at the historical performance of MANA and SAND to analyze how much profits they have generated for investors since their launch.
Since August 2020, SAND has grown from the initial $0.051 to $3.83 as of January 30, 2021, representing an over 7,400% all-time return on investment. The cryptocurrency had an even greater ROI for 2021, as it surged a whopping 15,700% between January 1 and December 31.
Just like SAND, MANA also features an excellent all-time ROI at 13,500% – although we must note that it launched almost three years earlier than SAND. However, despite accumulating great gains throughout 2021, Decentraland’s native token “only” increased by 3,800% during the last year, which is about four times less than the Sandbox’s growth.
That said, we can conclude that both metaverse coins have provided astonishing returns for early investors as well as for those who have bought MANA and SAND in January 2021 and refrained from selling their holdings throughout the year.
Decentraland and the Sandbox: Two Leading Projects Shaping the Metaverse Space
As two of the most popular metaverse projects in crypto, Decentraland and the Sandbox have many similarities.
While they aim to build decentralized virtual worlds and utilize the Play-to-Earn model to incentivize engagement and user-generated content, Decentraland and the Sandbox feature similar trajectories in terms of historical coin performance and recent NFT sales and user activity. At the same time, digital real estate plays a vital role in both projects’ ecosystems.
On the other hand, while Decentraland aims to operate its platform in a fully decentralized way, the community and the core development team share the responsibility of governing the Sandbox. Also, while the latter project launched the Alpha of its multiplayer feature only recently, Decentraland’s virtual world has been operating since February 2020.
That said, both metaverse projects has the unique features, growth rate, community support, and business models that make them major players within the decentralized metaverse space. And when Facebook and other tech giants launch their own virtual worlds, Decentraland and the Sandbox will possess the necessary market experience to challenge them.
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