Decentraland (MANA): An overview
Source: Decentraland.org
Decentraland (MANA)is a fully decentralized virtual reality platform built on theEthereum (ETH)blockchain. Within the Decentraland platform, users can create, experience, and monetize their content and applications.
The rationale behind Decentraland's creation lies in the increasing human tendency to spend more time in thevirtual world. Until now, however, two-dimensional interfaces (e.g., mobile phones) have assumed strong dominance. Thus, a potential 3D world could enhance the virtual reality experience by leveraging its immersive characteristics to create a cluster of communities.
MANA
Source: Decentraland.org
MANA is anERC-20token and is Decentraland’s native cryptocurrency. The original total supply of MANA was capped at2.8 billion, which was reduced with time to2.19 billion. As of October 2023,1.89 billion MANA are in circulation.
A notable aspect of MANA's tokenomics is the mechanism of burning tokens, which is instrumental in reducing the overall supply over time.
MANA serves multiple purposes within Decentraland:
- Users employ MANA to purchase parcels of virtual land known asLAND.
- MANA is used for buying, selling, and trading assets in the Decentralandmarketplace, including wearables and collectibles.
- The token facilitates engagement in various activities within Decentraland, like attending events or playing games.
- Specific areas within Decentraland are frequented more due to user interactions, games, events, or shopping, creating opportunities foradvertising and brand development using MANA.
Wrapped MANA (wMANA)
When users lock up their MANA tokens in theDecentraland DAO, these are converted intowMANA, which is used for voting in the governance process of Decentraland.
How does Decentraland work?
Source: Decentraland.org
In essence, Decentraland represents a virtual reality ecosystem where people can buy LAND, which is anERC-721 token ornon-fungible token (NFT)representing a piece of the virtual map.
The land is divided intoparcels that are identified by cartesian coordinates (x,y). Each basic plot of LAND is16m x 16mor52ft x 52ft, though users can combine multiple plots to create largerestates.
The parcels are permanently owned by members of the community and are purchased using the native token. This paves a path toward complete control in the hands of the users over the applications they create. Initially, LAND could be purchased during Decentraland's public auctions. Now, it can be bought and sold on secondary markets or through peer-to-peer (P2P) transactions.
Additionally, while not a token, there's the concept ofwearables within Decentraland. These are customizable avatar items that users can buy, wear, and trade. Some wearables are ERC-721 tokens (similar to LAND) and can be easily traded on the Ethereum blockchain.
Here’s an outline of the platform's architecture:
Consensus layer
Central to maintaining a trustworthy digital record, the consensus layer tracksLAND ownership in virtual realms. It ensures transparency and verifies the rightful ownership and content of each parcel, creating a decentralized and reliableregistry system for virtual properties.
Land content layer
This layer focuses on the assets placed within virtual lands. It allows users to download and interact with assets using adecentralized distribution system, ensuring that content is accessed and shared in a P2P manner without centralized control or interference.
Real-time layer
Vital for enhancing user experience, the real-time layer facilitates interactions between users in the virtual world. It enables world viewers to connect, interact, and share experiences seamlessly, making virtual spaces feel as vibrant and dynamic as physical interactions.
Additional key systems
- Payment channels:These enable fast, low-risk in-worldpurchases and also help incentivize quality service delivery, promoting a seamless transaction experience within Decentraland.
- Decentralized identity systems:This system ensures content creators are recognized and rewarded. Linkingpublic keys with names, it provides a layer of ownership, promoting unique content creation.
History of Decentraland
Source: Decentraland/Twitter
Decentraland was conceived in 2015 by Argentinians Ari Meilich and Esteban Ordano as aproof-of-conceptfor assigning digital real estate ownership on the blockchain.
The journey began with theStone Age, where digital real estate was represented bypixels on a 2D grid. Each pixel identified its owner and color. This was the basic foundation of digital ownership.
The project then advanced to theBronze Age by late 2016. This phase introduced a 3D virtual world segmented into land parcels. Users could access and view content for each land parcel usingDistributed Hash TablesandBitTorrent.
TheIron Age aimed to transform Decentraland into a bustling virtual society. It envisioned a platform where developers could build applications, making the digital space interactive and monetizable.
This phase introduces P2P communication, ascripting system for interactivity, and a rapid cryptocurrency payment mechanism.
Decentraland initiated a token sale through an initial coin offering (ICO) in 2017, during which they raised a total of86,206 ether(about $26 millionat the time). Themarketplace and LAND estates were introduced in 2018. Finally, in 2020, the platform went public.
The pandemic further bolstered the platform's growth, with more and more people and brands associating with the oldestmetaverse.
As per a recent McKinsey & Company report, global spending in the metaverse could reach$5 trillion by 2030. This report goes on to expand the value creation prospects in the metaverse. It further states:
“It has the potential to impact everything from employee engagement to the customer experience, omnichannel sales and marketing, product innovation, and community building.”
These outcomes could ultimately put Decentraland in an excellent position to capture a sizable portion of the increasing market. Even after extrapolating the projected growth on a yearly basis, Decentraland's growth potential for the coming months seems quite promising.
