What Is Decentraland? Features, Tokenomics
Metaverse

What Is Decentraland? Features, Tokenomics

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What Is Decentraland? Features, Tokenomics

Table of Contents

Decentraland (MANA) is a metaverse platform built on Ethereum. It allows users to create and monetize content and applications, which all Decentraland users can experience. The community owns and fully controls the virtual land in Decentraland, which can be claimed by purchasing a blockchain-based parcel. Users are free to decide what to do with their virtual real estate. Example use cases are creating 3D scenes, games or virtual billboards.
Decentraland capitalizes on the metaverse trend that has taken the blockchain space by storm. Land in Decentraland is available as NFTs on Ethereum and can be used to purchase digital goods and services in the metaverse. Users can immerse themselves in a traversable 3D world without the constraints of a single centralized organization watching over them, according to the project.

Decentraland development started in 2015 when it was still a proof-of-concept for allocating ownership of digital real estate to users on a blockchain. It has since grown into a full-on metaverse with an in-world economy that can be used for applications, content curation, advertising, socialization and digital collectibles.

How Does Decentraland Work?

Decentraland is built on three layers:

  • A consensus layer that tracks land ownership and its content.
  • A land content layer that allows users to download assets using a decentralized distribution system.
  • A real-time layer where users can connect to one another.
Users own land on the consensus layer. Smart contracts on Ethereum maintain ownership records of the virtual land parcels, which come with unique (x, y) coordinates, an owner record and a reference to the content description file that encodes the purpose of the parcel. These LAND non-fungible tokens can be purchased with MANA, the fungible ERC-20 token of Decentraland. MANA is burned upon purchasing LAND.
The content that renders the Decentraland metaverse is distributed via a decentralized storage system at the content distribution layer. Each rendered parcel contains a reference to a file with the parcel’s content. This content is stored on popular decentralized storage solutions, like BitTorrent. That level of decentralization makes Decentraland a truly user-owned metaverse, since it is constantly being filled with new user-generated content. In the future, Decentraland plans to cover the bandwidth and hosting costs of the content through protocols, like Filecoin.
Furthermore, the real-time layer establishes a communication channel between users. Social interactions happen through peer-to-peer connections. For instance, landowners have to provide servers that allow users to communicate between different parcels. The social experience of users is a vital part of the Decentraland metaverse experience. Each user has their own avatar, and communication happens via voice chat or messaging.
Decentraland also uses decentralized identity systems to create a layer of ownership over in-world items. Ethereum Name Service is only one example that allows users to identify each other more easily with human-readable names.
Finally, Decentraland already has a thriving virtual economy. Different LAND parcels have different levels of utility based on their adjacency to other attention hubs. For that reason, parcels can be traded at different prices on secondary markets, like OpenSea, depending on their differences in adjacency and traffic. The Decentraland Foundation holds contests to create art, games and applications to fill the network with content and increase its utility.

Unique Features of Decentraland

Although metaverse projects are a dime a dozen in the blockchain industry, Decentraland stands out in several ways.

Application Creation

A variety of applications can be created with the Decentraland scripting language: games, gambling apps, dynamic 3D scenes and others. The flexibility of the scripting language allows for a wide range of use cases like creating objects, loading textures, handling physics, sounds, payments and more.

Longevity and Decentralization

In existence since 2015, Decentraland was one of the very first metaverse projects, long before any sort of metaverse hype was on the horizon. Furthermore, its longevity goes hand in hand with its high degree of decentralization. Decentraland is one of the few metaverses that is truly user-owned and actually leaves content creation entirely to its users.

Social Aspect

Unlike many other metaverses that solely focus on virtual advertising, Decentraland stresses that it is a “social metaverse.” For instance, groups that currently gather in forums or on social media may well do so in Decentraland too in the future. This could lead to the emergence of entirely new use cases and virtual industries, like professional development, or even virtual tourism.

Decentraland Tokenomics

MANA is the utility and governance token of Decentraland. 1.85 billion MANA are the current circulating supply, out of a total supply of 2.193 billion. As more LAND is purchased, more MANA is burned. Equally, all Decentraland marketplace transactions carry a 2.5% MANA token burn. The token allocation is as follows:
  • ICO: 40%
  • Community incentives: 20%
  • Development team and early contributors: 20%
  • Decentraland allocation: 20%

Team tokens are already past their vesting period.

Decentraland Price

Decentraland (MANA) is currently trading around $1.00 as of Aug. 1, 2022, down from its all-time high of $5.90 set in November 2021. Its 24-hour trading volume on exchanges is around $297 million and its fully diluted market cap is around $2.2 billion.

Decentraland Price Prediction and Future Outlook

Like all other cryptocurrencies, MANA was hit heavily by the market drawdown in 2022, and its token price is down more than 80% from its all-time high. Despite the bear market persists, according to one report by Citi, the metaverse could be worth a whopping $13 trillion in 2030 with more than five billion active users. However, even bullish growth prospects will have to outlast the current bear market conditions first.
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