Decentraland is the most eye-catching project in what will become the Metaverse, currently with a developed platform hosting users from all over the world. But what is Decentraland?
This platform shows how much blockchain technology has evolved and what we can expect from the Metaverse. It is a virtual world designed on the Ethereum network, which follows the same standard guidelines as the NFT video games with the difference that we can acquire land to create businesses or have fun as if it were the real world.
However, its decentralised approach is the most appealing, as there is no organisation that controls what happens on the land. In Decentraland, it is the owners who have the power to delete or not a creation, as even the developers cannot undo the changes. In other words, this platform is designed with an open economy where users have the freedom to create the world with their own visions. Although it may sound fanciful, it has captivated the public’s attention, with users paying more than USD 28 million for a 10x10m plot of land at its initial auction.
In the following, we will outline how Decentraland works, what are the minimum requirements to access this platform, what is Decentraland’s business form, we will analyse its native tokens, the price of MANA, what is Decentraland’s profitability today and going forward.
The virtual world in the blockchain: What is Decentraland?
Decentraland, a virtual reality project designed on the Ethereum blockchain, shares great execution qualities with cryptocurrencies or NFT video games. Its main objective is to create a virtual world where users can perform the same activities they do in the physical world.
In other words, within Decentraland we will be able to create avatars with Non-Fungible Token (NFT) characteristics that will allow us to socialise, make payments with cryptocurrencies, make purchases, play in the first person, study in virtual classrooms, trade crypto-assets, interact with applications, explore territories and more.
However, one of the most striking aspects of this project is that it allows users to acquire virtual land where it is possible to develop online businesses, which are called LAND. Likewise, the monetisation process in Decentraland can be carried out through the use of its native token, MANA, which can be exchanged for other cryptocurrencies or fiat money through exchanges. In short, on this platform, we will be able to perform various activities, such as:
- Create a business.
- Buying a property (the land in LAND).
- Design a landscape on the virtual plot.
- Make purchases.
- Socialising and meeting other users.
On the other hand, Decentraland is compatible with any web browser, which makes it an easily accessible platform for users, being able to provide great benefits in terms of convenience and financial possibilities for anyone wishing to use this platform.
This feature differentiates it considerably from other Metaverse projects, such as the one proposed by Meta CEO Mark Zuckerberg, who plans to create a site where users must access it through the use of an Oculus VR Viewer, whose value ranges from $400 to $1300 USD. However, Decentraland’s level of accessibility is made possible by Ethereum’s blockchain technology, which has the capacity to host a project of this magnitude.
Decentraland: From Idea to Reality
The idea of creating Decentraland was born in 2015 by Argentine engineers Ariel Meilich and Esteban Ordaño, who officially launched the project in August 2017. During that period of time, funding was raised through an Initial Coin Offering (ICO) that managed to raise 66,206 ETH ($26 million USD at the time) in exchange for obtaining MANA, the main token used in the platform.
However, the funds were managed by the Decentraland Foundation, which was created for the specific purpose of furthering the development of the project, for which it had to retain 20% of the initial token offering, the platform’s website and intellectual property rights.
Currently, the Decentraland Foundation is in charge of updating and maintaining the website in optimal conditions. Likewise, while carrying out the ICO and prior to the launch of the platform, the developers set up the Decentralised Autonomous Organisation (DAO), with which they handed over the management of the project to the users. In addition, they have stated that the private key that controls the smart contract has been destroyed, thus guaranteeing an autonomously functioning system.
Features: How Decentraland works
To achieve the level of development required by the platform, the team that makes up the Decentraland Foundation had to build a structure of three main elements that allow it to function correctly. Additionally, the project takes full advantage of the Smart Contracts of the Ethereum network through several layers, these parts being the following:
This is responsible for tracking and recording all property transactions that take place within the platform. When a user acquires a virtual land using their NFT avatar, the consensus layer creates a record in the blockchain where it reflects the actions carried out and confers ownership of the land. In addition, each LAND has unique coordinates and a content description file on the land
It has the function of storing the information used in the rendering of the content present on the platform. Decentraland is designed so that each user has power over their data, making the system more efficient. Additionally, the content layer controls the activity that is executed on the plots and includes files that allow their presentation:
- Script Files: Defines the behaviour and location of the referenced content.
- Content Files: Contains all static audio and visual elements of the platform.
- Interaction Definition: Covers all interactions between users: voice chats, messages, gestures, among others.
- Real-time Interaction Layer (real-time layer)
- Allows users to interact in real-time within the portal, so it keeps a record of all avatars, text and voice messages.
Additionally, Decentraland’s software uses the Ethereum blockchain to control the registration of ownership of virtual plots and requires users to possess MANA tokens in their Ethereum wallets in order to start their adventure on the portal. However, it is through the layers of architecture on which Decentraland is built that developers can update, innovate and create new tools within the platform, thus enhancing the user experience.
Native tokens: MANA and LAND
Decentraland has two native tokens: MANA and LAND, we can establish that MANA tokens allow players to buy LAND. The functions of both tokens are detailed below:
It is the main asset of the platform and the currency for transactions within the ecosystem. By using it, users will have the power to participate in the governance decisions of the project, in addition to acquiring virtual land parcels.
In turn, MANA tokens can be used to customise avatars, buy unique usernames or interact with other characters in a more personalised way. Like most cryptocurrencies, MANA is a standard Ethereum ERC-20 token; they can be transferred seamlessly between users and are easy to integrate into DEX, DeFi and other dApps platforms because of their fast exchange.
On the other hand, the Decentraland Foundation decided that the MANA token would have a limited existence so that it would become more valuable as its use within the platform grows and becomes more common. Therefore, a limit of 2,195,460,527 tokens was set, of which 2,034,827,581 are in circulation (February 2022), making MANA a deflationary token.
For now, the easiest way to buy the MANA token is through platforms such as Bit2Me or PancakeSwap.
The LAND token is an ERC-721 token that complies with Ethereum Smart Contracts standards, has NFT qualities, i.e. it has unique characteristics and is irreplaceable.
LAND tokens are tokens that uniquely identify the virtual land parcels present on the platform so that when they are acquired, an ownership record is generated that links the user to the lot. Additionally, when a user owns two or more LAND tokens together, on contiguous plots of land, they become known as ESTATE, having great power over the governance of the platform’s protocol.
As with other NFT games, the only available way to acquire LAND is by trading MANA tokens on the Decentraland Marketplace, by having to participate in the plot auctions.
However, this action burns MANA or removes them from circulation, which will eventually cause them to become scarcer and more valuable, due to the token creation limit. Due to the link between the MANA and the LAND, the existence of the latter is considerably more limited, so the developers established that its creation responds to a smart contract that participates when exchanging these tokens.
Minimum requirements for implementation
One of Decentraland’s best qualities is that it is designed with advanced Web3 and WebGL technology, which allows users to access it from any web browser. It is also capable of running on a computer with a hardware-accelerated operating system, with the following minimum requirements:
- CPU: i3 or AMD Ryzen 2.
- RAM: 4 GB.
- Graphics card: NVIDIA GeForce GT 730 or AMD Radeon R7 240.
- Web browser: Any, but keep it up to date and avoid buggy plugins.
- Internet connection: 10 MB downstream, but can operate at lower speeds as long as the ping is not excessive.
- Operating system: Windows, Mac OS and Linux (with updated graphics drivers).
- Wallet: MetaMask to interact with the Ethereum blockchain.
- API support: WebGL and Vulkan.
On the other hand, Decentraland’s platform allows users to test the system on their computers, so that they can check how the game would work on their equipment and if any component needs to be updated.
How profitable is Decentraland?
Blockchain and virtual reality are industries that have piqued the interest of many investors globally, so it’s no surprise that, with the expansion of the Metaverse, people visualise the greater long-term potential in platforms like Decentraland.
Since its launch in 2017, the business model has proven to be the right one to operate smoothly, as the ecosystem continues to grow, while the value of the cryptocurrency increases. Therefore, it is safe to say that the platform seems to be heading in the right direction for the years to come.
Currently, many users are using the platform to generate active or passive income, taking advantage of all the opportunities that owning one or more LAND provides. However, it is necessary to consider that the Metaverse is a project that is just taking its first steps, which means that in a few years the prices could be considerably higher. At the same time, we must remember that the MANA token is deflationary, which makes it a good investment and even more so if we consider the burning of coins to acquire LAND, which will generate an increase in its price in the future.
The full potential of Decentraland is yet to be seen, but the platform is constantly being updated and is expected to continue to grow into a parallel copy of the real world.
Decentraland’s way of doing business: How to earn money?
There are several active and passive ways to earn money within the Decentraland ecosystem, here are the five most profitable methods to monetize this platform:
- Buying and selling virtual land. The main method to earn money in Decentraland is through the sale of plots of land. As in the real estate market, there will always be people who want to buy and people who want to sell, so it is an excellent way to generate income. However, to be successful with this technique it is necessary to find the right sellers or clients, as it is essential to get the best price.
- Property rental. Some LAND owners do not have programming or software development skills, so they do not build buildings on their plots. However, these plots can be rented to other users in exchange for the MANA token, who can set up their businesses without having to purchase a virtual plot. They could also work for the owners of the plots and generate income.
- Showcase and products. Generate income by showing your artistic talents, similar to a gallery in the real world. In the space, you can exhibit designs, paintings or whatever you want.
- Design attractions. Not all Decentraland users use the platform to establish a business, some access it for fun, so it is an excellent idea to focus on this sector. By building attractions that users can visit and purchase their tickets with MANA, it helps to generate revenue. Some ideas that can be attractive are museums, parks, planetariums, science halls, exhibitions, among others.
- Providing services. Another method that can be used by users who do not wish to make an initial investment in a LAND, but who have programming and software development skills, is to offer their services to other people who own virtual plots or who want to open a business. Create pre-designed templates (referred to in the ecosystem as scenes) for users who want certain types of buildings. In this way, people will be able to upload the templates directly on their virtual plots, while monetising their skills.
So far, Decentraland’s business model has allowed it to become an eye-catching, stable NFT video game with a lot of potential for the future. For this reason, it could be considered a good investment to acquire one or more LAND, as well as to take advantage of the MANA price.
However, as with any project that involves the blockchain or requires major technology pushes to be implemented, it is necessary to be aware that they will require time, they are just taking their first steps. Therefore, when we ask ourselves: What is the profitability of Decentraland?
It is essential to know that these are very long-term investments, even so, it is possible to earn money using the methods described above, but the big game will begin when the Metaverse becomes present.
On the other hand, there are many companies betting on the future of this industry, based on the current performance of social networks, MMO video games and global interconnection thanks to the internet and blockchain. Therefore, we can see companies such as Meta, Enjin (leader in the NFT market worldwide), Microsoft and Apple (as manufacturers) seeing how Decentraland works to further accelerate the growth of this new universe.
Now that you know what Decentraland is, will you join the virtual reality adventure?