Decentraland
The decentralised land located at 104.19.217.110
Hey there,
Welcome to the third issue of 2 cents on a coin!
Today, my 2 cents are on Decentraland (MANA), the digital environment promising to usher in the Metaverse. Check out other Metaverse projects I wrote about: The SandBox & Metahero.
First of all, if the word ‘metaverse’ is starting to make you fidgety - the kind of nervousness you get when all the cool kids seem to have caught on to something and you are still slow to understand. Don’t worry, you are not alone. In fact, many other ‘cool kids’ hope you don’t ask them to explain it.
The metaverse is the new name for the future internet. You can think of it as internet 3.0 - a digital environment that will be more immersive than the one you are used to. One that jumps across your screen and right into your living room, where online shopping is transformed from a buy after viewing 10 images of the cloth on your laptop to a buy after your avatar tries on the cloth in an online store. The metaverse is meant to be a world that mirrors the real one - one where you can shop, play, learn & socialise with people thousands of miles away as if they were in your city. What might confuse you is the fact that each blockchain-enabled digital environment today, like The SandBox and Decentraland calls itself the metaverse when most likely they will simply be a location or an environment in The Metaverse.
Isn’t this how Virtual Reality (VR)/Augmented Reality (AR) currently works? Yes, to a large extent, it’s what you get when you buy a headset from Oculus. You can currently join a virtual conference and sit next to someone 3000 miles away. So why the frenzy now?
There is now a realisation that we can be sold more things now that NFTs - digital items with ownership that can be verified, are a thing. With the invention of NFTs, one can buy digital art, real estate, clothes, even food and know that those possessions will always be yours unless you choose to give them away or sell them. So which is it? Are we all going to be spending more of our time in a 3D digital environment or are companies just assuming we will? …or… is the current assumption, emphasis & investment in a digital world exactly what is going to make it materialise? Time will tell.
What’s certain now is that for us to choose to spend more of our time on internet 3.0 (a.k.a the metaverse),
1. It has to be a better environment than the current internet (with more and/or better-curated information)
2. Most of us need to have the tools/media to access it. As of 2020, only 26 million VR headsets have been sold globally. If the metaverse is to be immersive, it will be experienced in 3D through Virtual/Augmented Reality or some new technology that doesn’t exist yet. Either way, we’d need a medium to experience this immersive digital environment and most of us don’t have access to that medium yet.
3. Most of us should want to use the available media to access it: Although there is no conclusive evidence of long term damage due to the use of VR headsets, prolonged usage can cause eye muscle strain and discomfort. Current VR headsets are also quite bogus. For the adoption of VR technology and indirectly, the metaverse to increase, VR technology must improve. This is what Meta (formerly Facebook) looks poised to focus on in the coming years.
At the moment, The Metaverse doesn’t tick all 3 points above. It is largely a buzzword for online gaming environments where one can buy and sell NFTs. Most of these don’t have interoperability i.e you can’t really drive the same car from Decentraland’s environment to the Sandbox’s and to your next online lecture like you can in the real world. You’d have to exit one, come to physical reality and then log in to the other. (Check out this proposal by Kim Nevelsteen to introduce interoperability through IPSME)
Also, you can only access these ‘metaverse’s’ in your laptop browser, not through a VR headset so, in essence, it’s not a different experience from being on Facebook and then switching to Instagram on your laptop’s browser. Decentraland is betting that all that will change soon and that it will be one of the most important environments in the future internet, run and governed by its users. However, accessibility on VR headsets is currently not on their proposed roadmap for 2022.
Decentraland is 23 square kilometres of digital real estate divided into about 90,000 parcels of land of 16m x 16m each. The platform was opened to the public in February 2020 and has since attracted 300,000 monthly active users - a small number compared to environments like Roblox/Minecraft. MANA’s price spike came shortly after Facebook announced a name switch to Meta, showing the company’s focus on investing into making the metaverse a reality (If any company could do it, it’d be Meta, the world’s leader in VR technology) Since Facebook’s name change, any company with even a remote focus on the metaverse had their valuations sprinkled in gold. MANA has gained significantly this year, especially since October. If you had invested $10 in January 2021, you’d have seen a +4000% increase to $407 today.
MANA’s marketplace performance
1. 3-month price trend: Of the top 30 coins in CoinMarketCap’s Metaverse category, Decentraland ranks #13 by the 90-day price change. It’s also the most tradable token in its category with close to 6000 market pairs.
2. Volume: At the time this data was pulled on 21.12.2021, MANA had the highest volume in trades, close to $1 billion in transactions within 24 hours. This speaks to the level of interest in the coin and its liquidity.
3. Unique value proposition: Decentraland is similar to The SandBox (Check out my 2 cents on The SandBox) Both are blockchain-based alternatives to gaming platforms, Roblox/Minecraft. Where Decentraland differs from The SandBox is in its level of decentralisation. Decentraland is run by a decentralised autonomous organisation, a DAO (think of it as a massive board of directors consisting of token holders), while The SandBox is managed by its founders & executives. With Decentraland, every owner of MANA can be an executive and vote on key initiatives while decision making on The SandBox is restricted to a few people.
Does MANA’s great performance year-to-date suggest a continued rally into the future? I don’t think so.
Drawbacks
Low Agility - Decentralisation can have negative consequences. In Decentraland, every key decision has to pass through a process of proposal submission and then voting. This distribution of power to MANA token holders comes at the expense of speedy decision making associated with more centralised authority. However, decentralisation is at the core of the ethos of this project and that is how it will be run for the foreseeable future.
Having no central authority can mean slower implementation of key changes and a less nimble organisation in general - one which cannot react as quickly to competitive changes in the broader market.Poor Accessibility: Decentraland is only accessible only on the web and worse, it currently has no roadmap for mobile deployment. The SandBox on the other hand, which has a more centralised authority has committed to enabling mobile accessibility by the end of 2022.
Tech mismatch: It’s meant to be a virtual reality game but doesn’t exist on any VR interface. If you look for Decentraland on Oculus VR headset (or any other VR headset at all), you won’t find it.
Poor Choice - There aren’t many creators on the platform yet. Roblox’s 1.3 million creators and builders are expected to earn around $500m in 2021. With 300,000 monthly active users compared to Roblox’s +200 million, Decentraland hasn’t achieved that critical mass of users to pull in enough creators nor does it provide the incentive to attract/retain them.
In summary,
I think the MANA token could live up to its hype in the next 12 months if Decentraland:
1. Improves accessibility: deploys the mobile version & is accessible via VR headsets like Oculus.
2. Is able to compete on the choice of games/worlds available versus blockchain competitors like The SandBox & off-blockchain alternatives like Roblox.
3. Is able to compete on speed of execution of key initiatives that will guarantee it a spot in tomorrow’s metaverse.
Otherwise, it could very well be another Myspace.
Would you invest 2 cents in MANA, yes or no, and why?
Please leave a comment below.