Decentraland is a software functioning on Ethereum that aims at incentivizing a worldwide network of users to run a shared virtual world.
Decentraland has a virtual world where you can buy and sell digital real estate while you explore, interact, and play games in this virtual world. The platform has evolved volumes with peer-to-peer communications and in-world payments.
There are two types of tokens present in Decentraland.
- MANA: To own land parcels as digital real estate, you need MANA, a non-fungible token (NFT).
- LAND: is a cryptocurrency that allows you to purchase MANA and other goods and services used in Decentraland.
The software changes of Decentraland rely on a collection of blockchain-based intelligent contracts. Participants who own MANA can vote for policy changes, land auctions, and subsidies for new development.
How Does Decentraland Work?
The Decentraland software was designed by the Decentraland Foundation, founded by Ariel Meilich and Esteban Ordano in 2015. The foundation held its Initial Coin Offering in 2017, which was worth 86,206 ether, i.e., approximately $26 million at that time.
The foundation retains 20% of the initial token supply. They hold intellectual property rights and maintain the Decentraland website.
The Decentraland Foundation also created a Decentralized Autonomous Organization (DAO) to turn the management project to the users. However, the team revealed that the private key that controlled Decentraland’s smart contract had been compromised.
Decentraland is synonymous with games like Skyrim and Fallout, an all-immersive virtual universe. However, the difference is that instead of a two-dimensional, you play in the three-dimensional world.
What Is LAND?
In Decentraland, the land parcels you interact with are LAND, which are non-fungible digital assets you can purchase in the game. If you own a land parcel, you can manipulate it in ways you want.
You can create anything, games, gambling services, bars, restaurants, and even dynamic 3D scenes. You can also go beyond all of this to use your digital real estate to develop services around education, health, tourism, professional development, sports, and beyond.
Each land parcel is capped at 33 feet by 33 feet. However, there is no limit as to how much you expand vertically. Decentraland recently introduced a feature called LAND estates, where you can manage your assets more smoothly by associating adjacent land plots. You should check out the LAND marketplace.
A group of LAND forms a district. You can imagine Districts as communities that are based on a central theme — for instance, a crypto-themed district for crypto-enthusiasts where you’ll only find crypto-based services and products.
Users can also vote for District issues Decentraland’s voting app called Agora. The weightage of your vote is directly proportional to the LAND you hold in a specific district. Agora is an excellent way to give you more control over what happens in your districts, along with providing feedback and improvements on the platform.
What Is MANA?
Decentraland has its own universal cryptocurrency token called MANA. It is an ERC20 token used in exchange for the parcels of LAND you purchase in Decentraland.
For every LAND purchase, MANA is burned by the Decentraland software. Initially, each plot of LAND cost 1,000 MANA. However, now there is a secondary market, and LAND prices vary. Currently, the cheapest land on Decentraland is 11,750 MANA, while lands in more popular areas cost above a million MANA. The highest selling plot was approximately 2,000,000 MANA or %175,578 in March 2018. This amount was significantly elevated for a virtual field of land, which left the user with excellent profits.
Why Does MANA Have Value?
The very reason MANA has value is due to its role in Decentraland, where it can be used for transactions within the ecosystem. The crypto-token also allows you to participate in the management of Decentraland software.
For instance, Decentraland enables a user to create avatars to interact with other users and explore the metaverse. Also, owning MANA is Decentraland implies you can vote for policy changes, LAND auctions, and subsidies to enhance platform experience.
After a LAND is auctioned, the MANA used to own the piece of land is burned, making the crypto-token deflationary. As more users are added to the platform, this could put pressure on the token value.
The Technology Architecture
Decentraland uses Ethereum smart contracts to build many layers of components.
The consensus layer tracks the ownership of a LAND by maintaining ledgers. In the virtual world, each LAND parcel has its coordinates, an owner, and a reference to a description file that reveals the contents within the parcel.
Content layers control the occurrences of each parcel. The content layers also include various files required to render them.
- Content Files: Referencing all static audio and visuals.
- Interaction Definition: Voice chat, gesturing, and messaging, which are a port of peer-to-peer interactions.
- Script Files: The placement and behavior of the referenced content.
Marketplace and Builder
The Decentraland team has developed a marketplace that has drag-and-drop editor features to create and build scenes outside the gaming environment. The marketplace also offers a space for the participants to exchange LAND tokens that are priced in MANA.
The marketplace is a perfect space also to transact and transfer parcels and in-game items like wearables and unique names. All transactions are a hundred percent decentralized and safe. Every transaction is settled between Ethereum wallets and, therefore, verified by Ethereum’s network.
The builder tools in the software allow users to create their own unique experience on the LAND parcel they own. There are interactive scenes that can be curated through its editing tool. Developers can also access payment implementations and customization libraries.
The Decentraland software runs on a decentralized virtual world, which has the trust and authenticity of the Ethereum blockchain. Decentraland aims to facilitate metaverse projects in the realm of cryptocurrency. The system is a holistic space where you can own digital assets, build them, trade them, and monetize them as you wish.