Decentraland – Background Information on the Virtual Reality Game

The digital world is constantly growing and, as a result of these developments, is constantly producing new offshoots. Some trends are not met with understanding by everyone. The emergence of virtual worlds is one such phenomenon, the rapid boom of which triggers storms of enthusiasm among fans, but at the same time causes others to shake their heads. The Decentraland platform (to the website) has received a great deal of media attention since its market launch at the beginning of 2020. It is a so-called virtual reality game. The technical basis is the blockchain of the Ethereum system, the number two behind the market leader Bitcoin. Just a short time after Decentraland first appeared on the Internet, the number of users worldwide rose dramatically. To understand the trend, a brief introduction to the service follows in the first step.

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This not only highlights the potential of the game, but also makes it all the more important to explore the opportunities of the MANA token used in the system. Flash in the pan or here to stay? So let’s get an impression of the Decentraland phenomenon.

Trading in Virtual Land and Goods is Booming

As mentioned at the beginning, Decentraland is a game in the virtual world. Members of the community can build virtual properties via the platform, buy them or sell their own property to other users. There are also “LAND” packages in the Decentraland universe. These packages not only enable the acquisition of land. Goods and services can also be traded in this way. Users need the system-internal token MANA for the purchase. According to the underlying Ethereum blockchain, this is a native ERC20 token. In this context, the blockchain provides for the recording of all owners of virtual properties (or “residents” of Decentraland) on the blockchain. This in turn is recorded through the use of smart contracts on the Ethereum blockchain.

Rapid Success of Decentraland since its Market Launch at the Beginning of 2020

What began as a game for many users in February 2020 quickly developed into a thoroughly lucrative business model. This becomes clear at the latest when one considers that not only many trade media reported in mid-June 2021 about a record sale via Decentraland. The report referred to the sale of a virtual property, which brought the seller the proud sum of almost 914,000 US dollars in MANA tokens (at the then current exchange rate). The buyer of the property on the basis of a non-fungible token (NFT) was Republic Realm, a company from the real estate investment sector. How fitting, one might think. The company paid almost 1.3 million MANA tokens and thus goes down in the history books of the platform.

The NFT was a LAND token according to the definition above. Looking at the amount of tokens may prompt Decentraland connoisseurs to point to higher MANA sums paid since the game’s existence. And rightly so. However, in view of the now significantly increased MANA price, the aforementioned transaction in US dollars initially occupies first place.

New Record Purchase at Decentraland in June 2021

The buyer announced via Twitter that they are currently working on future plans for the acquired property and will announce more details in due course. It is clear that the company wants to become much more active in the Decentraland metaverse. This example could set a precedent and encourage imitators to make similarly committed investments. For readers who are not familiar with NFTs, such a large investment may seem strange. But the fact is that non-fungible tokens are playing an increasingly important role in many artistic areas. Large portals such as eBay are also working increasingly on expanding trade with such collectibles – regardless of whether they are image, video or audio files. Or as virtual land as in the case of Decentraland. For Republic Realm, it was not the first investment of this kind. Rather, the New York company has been speculating and investing in digital real estate for some time.

According to its own statement, the company owns a number of its own plots that could continue to grow on the Decentraland map in the coming years. To illustrate the dimension of the investment mentioned, it should be mentioned that the previous record was the equivalent of USD 700,000. The previous record holder was none other than the blockchain protocol Boson Protocol.

What Distinguishes Decentraland as a Platform?

Decentraland belongs to a steadily growing group of so-called “play-to-earn” gaming platforms. Players collect rewards through their activities. This also includes earning MANA tokens. Many similarly functioning games in turn use the Ethereum blockchain. MANA is still considered by many experts to be a kind of insider tip on the crypto market. But it is precisely this token that has benefited dramatically from the boom in the NFTs sector mentioned, which seems unbroken for months. As in all sectors of the crypto market, however, there have been repeated more or less significant price declines here due to volatility. For example, due to the temporarily decreased trading volume on the NFT market. Decentraland is the right place for anyone who wants to build their own virtual property online and participate in the creation of a digital world. In – nomen est omen – the form of a decentralized virtual reality environment.

Some readers will be reminded of the Second Life platform, which years ago served as a website for users around the globe to exchange ideas. Decentraland’s roots go back to 2015. Because at that time the project was launched as an open source model. The beta version started in 2019, another year passed until users could finally access Decentraland. The aim of the developers was to create a purely virtual world, in whose development the users should be significantly involved from the beginning. The essential distinguishing feature to other variants like Second Life is to be seen in the decentrality. Here, no single company is in the lead, but the decentralized community.

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Decentraland is not Only Interesting for Gaming Fans

In particular, the use of the “in-house” currency MANA distinguishes Decentraland from many other virtual reality games. The token is, in a sense, the linchpin of the platform. It is the foundation of the decentralized economic system on which the virtual world is based. In order to be able to become active in the world at all, users need MANA. In short: money rules the world – even if it is a digital one. Success proves the format right. In addition, the fact that land on Decentraland is not unlimitedly available comes into play. Here a parallel to the real world is shown. The upper limit is 90,601 plots. The consequence of this limitation is constantly rising prices, which in turn are the result of the impressive increase in demand.

Some users of the first hour were able to earn a small fortune early on through a land sale. This is best illustrated by an example. In the first Decentraland phase, the purchase of a plot cost an average of around 600 US dollars. In the meantime, buyers have to advise significantly more for a property. With a sum of less than 6,000 USD, it is no longer possible to make a state or here land, so to speak. For valuable virtual properties, private or commercial users have long been paying six-figure sums in some cases.

October Update: Thanks to Facebook for the Jump in Prices?

After Facebook communicated its future plans for the Metaverse at the end of October, the Mana token also received tailwind in the form of large price jumps. Not a few experts see in Decentraland exactly where the social media empire of Facebook wants to develop. With the renaming of Facebook to Meta and the investment of around 10 billion US dollars in its development, the company wants to become a leader in the world where physical and digital things merge. These announcements ensured that Krpyto projects that have already positioned themselves here received a lot of tailwind. These include, for example, projects such as Enjin and Axie Infinity, both of which were able to increase.

How Promising is an Investment in MANA Tokens?

The same question always arises when digital projects boom: How long will the boom last? When could the bubble burst? The fact that NFTs of many portals as digital assets could be traded exclusively in the respective universe via non-fungible tokens causes many systems to reach foreseeable limits. In exactly this point, however, Decentraland differs from some “competitors”. The properties can namely not only change hands via the platform’s own marketplace. In this case, trading via external portals (e.g. OpenSea) is also expressly an option for owners and interested parties. In addition, crypto investors can also trade or trade MANA in a very classic way. The first emission of the token already took place in the summer of 2017.

At this time, the developers started an Initial Coin Offering (ICO). The same brought a yield of the equivalent of 24 million US dollars. A lot has happened since this phase. Meanwhile, several renowned crypto exchanges such as Binance have included the token in their portfolio. This development has fueled the price once again in 2021. At the time of going to press, Decentraland’s MANA currency ranked 64th among the most important cryptocurrencies by market capitalization on the analysis page Coinmarketcap. The MANA price was just over 0.73 USD. The market capitalization amounted to around 1.233 billion USD. Many speculators are increasingly enthusiastic about the token. For comparison: At its peak in early May 2021, the price was almost 1.6 US dollars. Looking at the current MANA price shows where the journey could go again with the next outbreak of demand.

Decentraland
(MANA)
Price
$0.306
Market Cap
$587.54 M

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Possible Prospects for the MANA Price and Opportunities for Investors

It will be of decisive importance how the interest in Decentraland will develop in the future. Some companies certainly see investments more as a media-effective advertising campaign. But it is precisely these headlines about new record transactions that bring the virtual reality game a considerable media echo worldwide. In the temporal environment of such reports, the number of users usually increases noticeably. And thus in turn the trading volume on well-known exchanges such as that of the now NASDAQ-listed provider Coinbase from the USA. An important signal for hesitant interested parties was also and especially the news that the Atari Group announced at the end of the first quarter of 2021 that it wanted to start its own casino in the world of Decentraland.

The potential for the MANA token is therefore great. As always, this should not be understood as a purchase recommendation. Investments are always an individual decision of every crypto trader.

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