There's a big buzz that's been stirring lately around the idea of a digital universe, or "metaverse". This recent spark in popularity has given some older projects some light as this idea isn't old. How has one of the projects that been in development to create their own metaverse the longest factor in to this latest hype? How good of an investment is Decentraland?
Background
Decentraland as a project was started by Ariel Meilich and Esteban Ordano. They aren't directly active with the development anymore as they have stepped down and are currently acting as advisors. The project itself has been in development for a long time, with one of the first major milestones being back in 2015, that was the ability to create a pixel grid where things could be placed.
The main-net saw its release in 2020, that was when the early investors got their MANA sent out to them. The project had a token sale in August of 2017 where they successfully raised 86 620 ETH. Out of all the tokens currently sent out in circulation (more is slowly being added as rewards), the core dev team holds 20%. How the games function, prices for things and how new features will function is decided by a DAO, where users vote on changes. The locations or LAND users can own essentially work as a digital broker marketplace where location and nearby assets play an important role.
Decentraland is built using smart contracts on Ethereum and is secured through the underlying network. The project exists in three layers to achieve their intended gaming experience. These being: content layer, land layer and p2p layer.
- Content layer: This is where all the files are stored; assets, textures and all gaming files are found here. This is done through the IPFS network as a decentralized storage solution.
- Land layer: The layer where users can build and create their own games on their plot of land as well as see if they own any. The underlying content layer fills up the Land layer with assets.
- P2P layer: This is where the actual game take place. The world is built up using the Land layer and grabbing files from the Content layer and allows users to connect and play the game.
In order to make use of the creation aspect of the game users have to own LAND which they can buy with MANA. Tokens are given out on a set basis that is decreasing over time. This has caused the token to be inflationary and after a recent change the tokens are burned in a 2.5% marketplace fee. This change came from the on-chain governance DAO system where holders of MANA can vote and propose changes.
The use case for Decentraland is crystal clear, either create and host your own game on-chain or participate and play the games. If you want to invest or develop for the game you'll need to own LAND. You buy this with MANA (price is decided by the DAO) and each LAND corresponds to a 16m x 16m square on the game map. Here you can build or place your assets to create a game, show, store or whatever you want. There are districts that follow a theme where you can participate in but not own.
People create and sell digital assets in the Decentraland marketplace. You can also lease your land or put advertisements in it to earn passive income. There's not much stopping you! (apart from the player to player interaction). LAND is scarce and slowly being rolled out as people build their own tiny game hubs.
Decentraland today
Decentraland has become very popular lately, most of this can be attributed to Facebook's attempt to make a new name for themselves before they fade into obscurity. Decentraland has the benefit of being one of the first "metaverse" type games, or at least slightly older with sufficient popularity. They have also gotten several partnerships that put them on the map with the mainstream audience, one of those being the old gaming veteran Atari. If Decentraland will have a place in the new Metaverse narrative or is simply living on short-lived hype we'll have to see. Their decentralized nature does give them a big edge over the biggest future competitor; Meta.
- Ability to earn
- Good partnerships
- Limited user interaction
- Gas fees
