Image source @ Visual China
Source | Overseas unicorn, author | Mario Gabriele, compiled by | jessie，penny
In 1905, a railroad connecting Salt Lake City and Los Angeles had just been built, winding its way along a sparsely populated town. Due to its advantage as a railway transit station, the town gradually expanded to 110 acres and developed into a city. It's called Las Vegas.
In the decades that followed, Las Vegas developed into a thriving metropolis. It attracted a lot of investment (initially from the mafia, then from more formal channels) and became a global icon tourist city. By 2000, it had a population of less than 500,000, but it was the largest city in the United States founded in the 20th century. In 2019, Las Vegas' GDP reached $131 billion.
A few older people may remember the first decades of Las Vegas – how it felt to be ahead of its time? Can you sense the opportunity? Can you smell the money?
I think it's similar to what it feels like to walk into Decentraland today. This blockchain-based "metacosm" has cheesy colors and nineties-style graphics that are remarkably similar to sin cities in the United States. There are casinos with green tablecloths, lavish art galleries, dimly lit bars, ticket-selling nightclubs and hidden sound and color fields.
Decentraland has about 800,000 registered users and has a population larger than Las Vegas. According to its current CTO, the "city" expanded by 3,300% between December 2020 and December 2021. This figure does not include about 70% of visitors who are not recorded in the system.
Decentraland's token MANA price increased by more than 4,100% compared to last year. At the time of writing, the project's fully diluted market capitalization (coin price * total amount of coins fully released) is $6.5 billion.
How should we look at such amazing developments and price increases?
It depends on who you ask. Among those I interviewed, some pointed out that Decentraland's performance has stagnated, users are getting low, and perhaps Zuckerberg's focus on the "metacosm" is a more important reason for the rise.
Others argue that Decentraland is undervalued and has the potential to become the gateway to the next big social network, a thriving business city, and a new "spatial" internet.
The following is the table of contents of this article, and it is recommended to read it in conjunction with the main points.
01 What is a metacosm?
02 Origin: World Builder
Voltaire House
A new continent
Tens of millions of dollars and MANA
Open the door
Meta effect
03 Product: A Wonderful Journey
world
platform
agreement
Tokens
KNIFE
04 Value: Price the virtual world
Decentraland with Roblox
"Sky-high" real estate
Meta-cosmic mall
05 The Future: A Nascent Frontier
01. What is a metacosm?
It sounds tempting to think of experiences like Second Life, Fortnite, and Roblox as metaverses, and it might make you wonder if any large online game or collaboration tool fits the requirements of the metaverse. Is World of Warcraft a metaverse? Is Slack?
"Moments"
To balance this apparent ambiguity, some have proposed alternatives. Entrepreneur and creator Shaan Puri believes that the metaverse is a moment — a moment when "our digital lives are more valuable than physical ones." To meet Puri's standards, no technical changes are required. By this measure, many digital natives believe they already live in virtual worlds, their best friends are spread across Discord servers, and their main assets are virtual currencies. For some, digital life has transcended physical existence. When did the "metacosm era" begin – when digital life was more valuable to 51% of the world's people? Or 100%?
Puri overlooks one very basic thing: location. In the science fiction novel Avalanche, writer Neal Stephenson depicts a virtual world of a single 66,553-kilometer street, accessed through a VR-like headset. While words don't need to retain their original meaning entirely, the connotation of "metaverse" largely means that it allows users to experience the virtual world as if they were in a physical world. Space and avatars are inevitable.
Space Internet
The best and most concise definition comes from Tony Parisi, the pioneer of virtual reality and creator of the Virtual Reality Modeling Language (VRML). Parisi summarizes seven "axioms":
There is only one metaverse. There are no multiple "metaversms". Fortnite and Roblox are not competing metaversms, but "virtual worlds" or "games" that could one day exist in a larger metaverse. Parisi advocates that we use the concept of a "metacosm" as we would use the "Internet."
The metaverse applies to everyone. According to Parisi's definition, the metaverse is ubiquitous and global. Therefore, it should not be too expensive to use, nor should it be too esoteric.
No one controls the metaverse. While the company will try to control the metaverse, Parisi believes they are doomed to failure because they can't meet all their needs. Decentralization will enable creators to better rebel against monopolies.
The metacosm is open. Parisi argues that it will be built on public standards, just like Internet products. New standards may need to be established to accommodate 3D environments.
The metacosm is hardware-independent. Although much of the metaverse will be consumed in 3D, immersion is not necessary. Parisi expects 3D "virtual products" to be accessible from 2D displays.
The metacosm is a network. The metaverse is not a single program, but a vast network of information. Users can communicate, trade, and spend in it.
The metacosm is the Internet. The concept is similar to Puri's. Puri believes that over time, the Internet will evolve into a metacosm. But the most important thing is not that digital value outweighs physical value (although digital life will certainly become richer), but rather the new experiences and technologies that the Internet brings with it in an open, collaborative way.
At the end of the article, Parisi best defines it in one sentence:
"The metaverse is an enhanced and upgraded Internet that continuously delivers 3D content, information and experiences in space, and instant messaging."
Interestingly, Agustin Ferreira, the current leader of Decentraland, believes the term is not appropriate for the project.
"I really don't like the term 'metaverse.' That's not the focus of what we're building. Instead, Ferreira advocates terms like "space networks" or "immersive networks."
Decentraland is not a metaverse, but the technology it develops, the communities it builds, and the capital it accumulates may play a key role in the transition of current networks into the future. But despite its inspiring mission, Decentraland has a very humble origin.
02. Origins: World Builders
In 2011, Manuel Araoz was a computer science student at ITBA (Instituto Tecnológico de Buenos Aires), known as the "MIT of Argentina". In a cryptography course, he discovered Satoshi Nakamoto's Bitcoin white paper. Argentina's economic turmoil over the past two decades and the rapid depreciation of its currency strongly support Satoshi Nakamoto's view. Araoz was fascinated, as he said in his Decentraland blog post:
"This paper looks interesting. But when I shared it with my professors, they thought it was nonsense. And I think this technology can change the world. ”
Araoz began experimenting with new areas, launching Proof of Existence (POE), hailed as "the first non-financial blockchain application ever made." PoEs act as notaries, allowing anyone to "prove" the existence of a document by adding an encrypted "digest" to the blockchain, adding a timestamp to it. As its website notes, it's "the first one that allows you to publicly prove that you have certain information without revealing data or your own online services."
Araoz also joined BitPay, which was a Bitcoin payments business at the time. As Head of Technology, his responsibilities included opening an office in Buenos Aires, where he chose a two-story house at Palermo Hollywood.
The "Voltaire House," made up of BitPay engineers, friends of ITBA, and other early crypto enthusiasts, quickly became a gathering place for deep thinkers. These include Esteban Ordano, one of decentraland's founders. He recalls part of what makes this place different:
"We all work from home, and at lunch we often have in-depth conversations about technology, science, politics. It was a very beautiful experience, a place to express yourself openly and learn together. ”
Note: Voltaire, Voltaire, an 18th-century French Enlightenment writer, historian and philosopher, is known for his critique of the Catholic Church and for advocating for freedom of expression and belief among citizens.
The members of Voltaire tried to put their ideas into action, building some of the most interesting early experiments and infrastructure for cryptocurrencies. include:
OpenZeppelin: After the DAO was hacked, Araoz co-founded OpenZeppelin, a smart contract auditing firm. It has become the standard in the field, adopted by the Ethereum Foundation, Brave, Coinbase, Compound, and others.
Streamium: Although no longer active, Streamium was a competitor to Araoz and Ordano creating web3 Periscope. Streamers are paid through Bitcoin micropayments.
Nomic Labs: Nomic is the maker of Hardhat, an Ethereum development environment used by AAVE, Sushi, Uniswap, Celo, Aragon, and many other teams. The founders are Franco Zeoli and Patricio Palladino.
Muun: This self-hosted Bitcoin wallet uses the Lightning Network and is appreciated for its ease of use and fluid design, founded by Dario Sneidermanis.
Big Time Games: While not yet fully available, Big Time is a blockchain-based multiplayer RPG game where users can purchase virtual "spaces." It was founded by Ari Meilich, one of the founders of Decentraland.
Even before its most successful products came along, the impact of the Voltaire group made sense.
Note: The Lightning Network is a decentralized network that uses smart contract functions in the blockchain to enable instant payments across network participants.
In 2015, members of Voltaire pooled their money to buy an HTC Vive. VR devices allow them to see the potential of spatial experiences. Ordano describes it as a moment of awakening:
"When I was first exposed to immersive VR experiences, it felt like I was learning about blockchain for the first time. I think we've only hit the tip of the iceberg. ”
Ordano joined Manuel Araoz, Ari Meilich, and Yemel Jardi to discuss the possibility of creating a new blockchain environment, and those early conversations had the tone of Voltaire's free-range philosophical lunch talk. In our exchange, Ordano describes it this way:
"Our initial thought was 'How do we build blockchain-powered virtual experiences?'" It's just an experiment of ideas, and it's mostly unrealistic, but the idea that the owner of a 3D space can decide what exists in a certain part of the space is starting to make sense. ”
Like many others of his generation, Ordano grew up in massively multiplayer online role-playing games (MMORPGs). In particular, he was inspired by his exposure to Argentum Online and began working on coding (note: Argentum Online is an MMORPG video game that mimics Ultima Online's production specifically for the Argentine market). As he and his colleagues pondered the potential to build virtual worlds, these experiences all played a key role. Ordano notes that they were also greatly inspired by the virtual world Second Life developed by Linden Lab.
Over the next two years, the team of four advanced their idea, returning again and again to the idea of building "a completely transparent game/experience, something that is open source and regulated by its community," a new type of virtual world, a decentralized land.
He admits that this is a challenge that only "crazy people" would accept, trying to build 3D MMORPG in the browser is very difficult, open source, with a peer-to-peer server architecture, leveraging an immature blockchain ecosystem? At the time, it seemed like a fantasy. When I asked Ordano what people's biggest misconceptions were, he sent me a meme:
But the team wasn't intimidated. Beginning in 2016, the team began developing a "Bronze Age" version of "Decentraland," essentially a 3D world divided into plots. In March 2017, Bronze Age was deployed on the testnet.
Decentraland
A few months after the team tested, a white paper was released outlining their vision: to build a virtual world managed by the community and featuring an on-chain economy. The topography of the field is subdivided into pieces of land, with details stored on a "blockchain-based ledger." These NFTs — a term that has not yet become widespread and is not mentioned in the whitepaper — are available through Decentraland's unique token , MANA . Users can also make money and spend money on goods and experiences. Intended uses include advertising (think virtual billboards), social interaction, and digital collectibles.
It's worth noting that Decentraland's whitepapers predate OpenSea and even before the CryptoKitties craze.
On August 17, 2017, Decentraland launched an ICO to raise 86,206 Ethereum (equivalent to $26 million at the time). In less than 35 seconds, the shares were snapped up. While this gave Decentraland enough money to build and 2,000 buyers to close, many still didn't get it and were frustrated by the large share of the large buy pool. An organization called ico.info pooled the funds of more than a thousand participants and ended up with a distribution of nearly 21 percent.
Max Mersch of Fabric Ventures, Decentraland's first outside investor, was impressed with the core team after learning about the project in 2017:
"At the time, the team included Ari, Esteban and Manuel... They're a bunch of crypto "old guns" from Argentina who work together at Voltaire House and work on it day in and day out – in an era when cryptocurrencies and the metaverse are far from reaching a craze. ”
Decentraland introduced a software development kit (SDK) in 2018 that enables developers to create virtual "scenarios" that can be deployed on a land. Around the same time, the platform trading home "LAND Marketplace" went online. By the end of 2019, it had processed $16.6 million in MANA transactions. Nowadays, the market offers a wider variety of NFTs, including the "decoration" and "name" of the avatar.
In January 2020, Decentraland finally opened its virtual world to the public, kicking off with a massive treasure hunt where participants had the opportunity to win CryptoKitties, Axies and tokens.
At the beginning of 2021, Decentraland's MAU (monthly active users) has reached about 20,000, and with the crypto frenzy onset, MAU more than doubled to more than 50,000 in the first quarter. Throughout the spring and summer, that number hovers between 60,000 and 80,000. The MAU grew further in the fall to 140,000.
Then something happened.
Zuckerberg said at Facebook's Connect conference:
"The next platform and media will be more immersive – in such an immersive internet, we can 'experience' it, not just look at it. We call it the metacosm. ”
To express all-in-metaverse determination, the company, called Facebook, officially changed its name to Meta.
The metaverse once existed only in science fiction, and Zuckerberg's manifesto made its prospects and potential profits suddenly very real, attracting the attention of the world. In the two months since the word was announced, 12,000 articles have reportedly mentioned the word — 30 times more than the previous year — with an influx of users and funds.
In those two months, Decentraland's MAU has almost tripled. MANA's price action was close to vertical, soaring from $0.75 to $3.56 and finally closing at $5.50.
CoinMarketCap
Decentraland's fully diluted market capitalization jumped from $1.6 billion to more than $7 billion in four days. Since that leap, MANA has fallen back along with many other tokens, but is still several times higher than before Meta was announced.
But the product is not as stable and mature as one would expect. Faced with one of the hottest projects in the crypto space, current head Agustin Ferreira points out that Decentraland is still in the POC (proof of concept) stage in many ways. And CTO Agustin Mendez explains how tricky the influx of a large number of users can be:
"I often think that the 'word of the year' could be a metacosm. Meta's new direction and new name have undoubtedly raised awareness of such projects... Decentraland's monthly user growth in December was as high as 33 times. Keeping the performance of servers and distributed nodes matching such a user size is a challenge. ”
03. Product: A Wonderful Journey
What is Decentraland? Is it a world? A protocol? A token? A DAO?
The answer is "Yes", and Decentraland is all of the above, or even more. Let's take a look at the different elements of it.
I want to introduce you to Sutherland. He had a beard, a Mohican head, a radiation hat, and yellow shorts. He's my Decentraland avatar.
I've used Sutherland to tour Decentraland over the past week. We stumble from the fountains of "Genesis Square", stumble in the casinos of Vegas, stumble upon grand parades, mine fallen asteroids in exchange for gems, go to stables, gaze at the spinning spiral dwellings, at the Sotheby's Gallery, and try to ride the Wyverns.
After hearing about Decentraland's Red Light District X, I wanted to interview the most modern worker in the world's oldest profession, but couldn't find it. (How do they work?) What do people buy? Is VR involved? Is money easy to earn? ）。 But I stumbled upon "Waifu HQ," a bewildering monument to female anime characters featuring a scantily clad breakdancing dancer.
Are these excursions enjoyable? somewhat. But despite spending hours in the world, I couldn't find a game or activity that captured my attention for more than a few minutes.
I suspect that if I were an avid gambler, I might feel differently. Decentraland's casinos are the most crowded, and many casinos are run by Decentral Games. The startup reportedly raised $5 million from investors such as Digital Currency Group and operates on a DAO model. Its properties include Satoshi Nakamoto Castle, the Aquarium, the Boring Ape Yacht Club, the Riverside Casino, and more.
I experienced Decentraland, similar to Las Vegas, and while not a happy trip, it was interesting as an anthropological study.
Spending time on Decentraland can also be frustrating. People who don't have a new M1 Macbook or gaming rig may even have a hard time getting started. Even those with powerful processing abilities have to wait a few minutes to get started and can encounter all sorts of bugs.
Decentraland is addressing this issue. Ferreira told me that the team wanted to roll out desktop clients to improve performance and build new experiences. Over time, he hopes that Decentraland will be able to operate across devices and through different clients.
Aside from the amount of processing required to use Decentraland, the biggest problem seems to be that it's still too empty and there's a lot to be done. Many landowners seem content to let their property appreciate in value without building on the land. Andrew Steinwold, managing partner at Sfermion, a fund focused on metacosmity investments, believes decentraland's biggest weakness is "lack of content," arguing that
"The barrier to entry for actually creating content in Decentraland is high, and you need to understand 3D modeling. They have a drag-and-drop creation tool, but with very limited functionality. ”
Some companies are trying to fill this gap. After discovering that most of decentraland's maps were empty, Ed Radion decided to create Squiggly School. The Metaverse Academy is producing courses to help creators build content in this new field. Notably, Squiggly School is suitable for different virtual platforms, and they are particularly partial to The Sandbox. According to Radion, this new world has simpler, more intuitive tools:
"We're all in The Sandbox. Their code-free game engine and design tools are easy to get started with, which means the ecosystem will have more interesting experiences than Decentraland... It is very difficult for Decentraland to attract non-landowners because their experience must be built in production-grade tools (Blender, Unity). Most people don't know how to do this and don't have time to learn. ”
Decentraland needed to find ways to involve landowners and make creation easier to reach its full potential.
While the primary way users interact with Decentraland is through its virtual world, it does have a more traditional 2D platform. This includes Active Directory, the previously mentioned Marketplace, and the build tools Steinwold mentioned.
Decentraland's events include comedy shows, charity events and corporate showcases in addition to concerts, gift-giving and games. As part of the Consumer Electronics Show (CES), Samsung unveiled the "837X," their "official launch in the virtual world." As part of the experience, the phone maker hired a DJ and distributed NFTs.
Since its launch in 2018, the Decentraland Marketplace's merchandise category has expanded to avatar decorations and names. You can use MANA to purchase a new jacket, a faucet, wings, or any number of other accessories. These were made by other creators, making Decentraland a place to grow its business.
To create a new scene, the user must go to builder. There, users can upload collections, register unique names, or build scenes. I find builders interesting and easy to play with, even though I create things without any taste.
Over time, developing virtual real estate may be similar to real real estate. Renovi aims to be a destination for buying building NFTs, says co-founder Adonis Zachariades:
"Soon, your digital space will be the next hot topic in the virtual world. What if your virtual space was designed by Zaha Hadid Architects? Or Foster ? More importantly, can everyone come and see? What if you could also monetize virtual buildings? We believe this will be the next Metaverse/NFT frontier. ”
Note: Zaha Hadid, an Iraqi architect, is recognized as an important figure in the field of architecture in the late 20th and early 21st centuries; Foster, a British architect, is one of the most outstanding architects in the world.
In the future, Decentraland may be filled with amazing professional creations, and those who want to build themselves can use a dedicated SDK (software development kit).
Decentraland's "world" is powered by its protocols. The best description of the project construction here still comes from the original white paper.
Adapted from the Decentraland white paper
As shown in the figure above, the protocol is divided into three layers:
1. Consensus layer. LAND is an NFT that has unique (x, y) coordinates.
2. Land content layer. Decentralized storage systems distribute content around the world, including text, audio, visual information, animations, and more.
3. Real-time layer. With peer-to-peer connectivity, the protocol can create social interactions around the world, including voice chat, messaging, and avatars.
Together, these create a complete experience of the virtual world. Decentraland also manages payment flows within its domain.
Because of Decentraland's peer-to-peer architecture, interesting things sometimes happen. When Decentraland's NFT API failed, CTO Mendez noted that not the entire system failed, but that 404 errors were propagated among a subset of users. Unable to find their "outfits", they appeared naked.
MANA is the token of Decentraland. In ICOs, the supply of tokens is slightly more than 2.8 billion. Over the next five years, it has shrunk to just under 2.2 billion. This reduction has already occurred due to decentraland's economic mechanisms. Whenever a user buys LAND, registers a new name, or buys a collectible, a percentage of mana is consumed.
As the supply of MANA decreases, it should theoretically become more valuable. This is even more true if Decentraland can make MANA more useful, increasing the way it is used and earned.
In addition to being a means of exchange, MANA is also used as a governance token. Holders of LAND or MANA can participate in the development direction of the project through Decentraland's DAO.
In early 2020, Decentraland accomplished one of its original goals – handing over control of the project to the community. It does this by building a DAO and handing it over to basic smart contracts that control LAND, dress up, market, and more. If these are to change, it will be because the community voted for it, not because individual developers think it's a good idea.
As part of this transition, decentraland's founders took a step back. Although Araoz and Jardi co-authored the white paper, neither went on to work on the project full-time. Instead, it was led primarily by Ari Meilich and Esteban Ordano. Starting in April 2020, both will serve as advisors. Around the same time, Meilich seems to have started working on the cryptocurrency MMPORG, Big Time. The two's exits, whether genuine or not, have kept Metaverse investor Andrew Steinwold on guard:
"Whenever a founder leaves a project, I get pessimistic because you need visionaries to turn something into reality until it goes mainstream... We are still in the very early days of the metaverse, so the founders need to be determined and deeply rooted in it. ”
To fill this gap, Decentraland turned to Agustin Ferreira. Not only was he a member of voltaire House, but he also contributed to the project early in the project. He now leads the foundation with COO Agustin Ferreira and CTO Justin Edwards. Like Ferreira, Mendez has a long history with Decentraland, working full-time on the project between 2018 and 2019.
Ordano's role also seems far from over. Asked why he backed down, he replied:
"I want to make sure decentraland is a 'good gift for humanity': just because we can build something doesn't mean we should. After spending most of the months offline, I felt the world needed more open information networks like Decentraland, so I started getting more and more involved in the community to see how/where I could help more. ”
Decentraland may have completed the transition flawlessly, bringing new blood, while providing an opportunity to rejuvenate one of its original architects.
Although it's still in its early stages, decentraland's community seems to have embraced the shift. The project's page shows it has 8,840 members, higher than popular protocols like Yearn, Polygon, The Graph, and Compound. There are currently more than 50 proposals active, both serious and trivial.
Crucially, mana's price increase also gives Decentraland's DAO the ability to invest in its community at a new level. DAO received 222 million MANA, which was worth $166.5 million at the beginning of 2021 and is now about $650 million. Real money will be invested in community initiatives, and time will tell how it will be distributed.
04. Value: Pricing the virtual world
Last year's hot NFT market forced investors to rethink valuations. How do you assess the potential appreciation space of a rock painting? What will happen to the digital monkey market by 2025? Pricing the virtual world is so difficult that maybe we have to abandon the DCF model and start thinking about social signals, imitation values, and community power.
Note: DCF, Discounted cash flow, i.e. discounted cash flow valuation model. It belongs to the absolute valuation method, which is to discount the free cash flow that an asset can generate in the future (usually 15 to 30 years) according to a reasonable discount rate, and obtain the value of the asset, if the discounted value is higher than the current price of the asset, it is profitable and can be bought, if it is lower than the current price, it means that the current price is overvalued and needs to be avoided or sold.
Decentraland has a market capitalization of $5.5 billion, more than 800,000 registered accounts, and a MAU of 465,000 in December. Over the past 30 days, Decentraland's marketplace has processed $15 million in GMV and charged approximately $380,000. Revenue doubled 1425 times.
We can compare Decentraland with Roblox, the best public reference object in the metaverse. According to the last quarterly report, web2 virtual world games have a market capitalization of $49 billion and annual revenue of $2.4 billion. Quarterly revenue doubled from the same period last year, doubling the company's revenue by approximately 20 times. Roblox's daily active users reached 47 million in the third quarter of 2021.
Such a comparison may be limited, taking into account Decentraland's higher growth or the $650 million in the DAO vault. But from a revenue-based valuation perspective, the web3 world has sparked a frenzied chase by investors.
Others think Decentraland is overrated. A metacostem investor and expert said decentraland's boom was followed by "baby boomers" on the concept of "real estate." Despite optimism about the field, the expert said the virtual world still has a long way to go."
Metaverse Group, a subsidiary of Tokens.com, is a virtual real estate investor and one of Decentraland's largest developers. The company caught the public's attention with the completion of "the most expensive meta-cosmic land acquisition in history." Last November, Gord's team bought 116 plots in decentraland's fashion district for a total of 618,000 MANA, the equivalent of $2.43 million.
For the Metaverse Group team, Decentraland has a chance not only to be the hottest real estate market, but also to be the next social network. Gord says:
"Decentraland is positioning itself as the number one social network in the world for social gatherings... The metacosm will completely encroach on the social media market, and today, Facebook and other social media platforms have a market capitalization of hundreds of billions. I think that's where Decentraland should go in the coming years... In the future, it has the potential to grow from 600,000 monthly active users to 600 million per month. ”
How long does this take? Gord has developed an informal timeline that predicts we could see Decentraland reach 20 million users this year, 800 million the year after, and likely reach global dominance by 2025. He believes that in the future everyone in the world will use the metacosm.
Metaverse Group is pushing this forward, hosting events on its land, such as concerts. In March, the company will partner with UNXD, a digital marketplace that manages Dolce & Gabbana's first NFT collection, to host Decentraland "Fashion Week."
Decentraland has hosted well-known personalities. Last October, DJ Deadmau5 did a 30-minute show at the Meta-Universe Music Festival. We look forward to more celebrities joining in the future.
These plans illustrate where the value of digital land comes from. Kevin Clark, an associate professor of real estate economics and market analysis at New York University, believes that "income potential" can be valued through commercial operations (such as retail) or rents generated by leasing. Imagine a future where renting a piece of LAND for digital conferencing, NFT pop-up shops, consulting businesses, or any other form of activity is commonplace. In order to promote business development, the location of the land is important. Just as in the real world, areas with high traffic and abundant commercial activities always have higher commercial value.
One day, we will not only buy digital goods in the metaverse. Aaryaman Vir, founder of the NFT project Ludo Labs, introduced me to the Boson Protocol, a decentralized network that supports the purchase of physical objects in the "virtual world." The project purchased $704,000 worth of property in Decentraland and developed into a virtual shopping mall.
Over time, we may make purchases over the spatial internet, using our digital twin bodies to "try on" clothes to determine if they fit. Such a purchase would be a true mixture of virtual and real.
Ultimately, the valuation of Decentraland depends largely on what you choose to focus on. Looking at its revenue, it is almost impossible to justify its market capitalization. But looking at the recent rapid growth and the possibilities of future development, you might think that there is still a lot of room for growth.
05. The Future: A Nascent Frontier
Decentraland isn't the only virtual world builder. Other players are chasing the dividends of the new paradigm shift, and Meta is the leader.
Meta
Should Decentraland be worried about the progress of Zuckerberg's metacosmonic army? Despite Meta's claims to want to build an "open" metaverse, many have expressed skepticism about whether it will follow through on this rhetoric. Is Meta kind enough for true interoperability? Esteban Ordano thinks this can be quite difficult:
"You want to make sure you're consistent across experiences and prevent impersonation, but it's unlikely that Facebook will allow your avatar to appear alongside your name in Decentraland... Interoperability sounds great, but it's a harder problem than many people think. Inside Facebook, some people are faced with a choice where the answer is obvious: Should I risk my career to participate in a 9-month program involving hundreds of designers and engineers to complicate the user experience of a product in order to support a competitor's identity system? ”
Andrew Steinwold couldn't believe it:
"Facebook has lied about the damage its platform has done to mental health and encouraged anger on the platform in order to increase engagement. They claim that their "metaverse" is open and that people will be able to earn and own their assets, but I don't believe it. They have lied countless times in the pursuit of power, how can they suddenly become kind? ”
Meta still has the potential to succeed and has shown some friendliness to open source projects. CTO Agustin Mendez highlighted his significant contribution to the open source movement, noting their support for glTF files, an open standard for displaying 3D models. He also refers to Meta's Oculus products as "the key to the metacosm."
The virtual world has enough space to accommodate multiple winners. In a specific application, Meta is unlikely to meet all needs. Many other interesting projects are bringing new ideas.
competitor
Right after Decentraland, The Sandbox showed momentum that should not be underestimated. As a subsidiary of blockchain gaming company Animoca Brands, Sandbox is more gamified than Decentraland.
Since its emergence in 2020, it has also benefited from the dividends of Zuckerberg's Meta-Universe Declaration. Its token SAND soared from around $0.80 to more than $8 in less than a month. Its fully diluted market capitalization exceeds $14 billion (its outstanding market capitalization is $4.3 billion). In the past month, it has surpassed Decentraland's secondary trading volume on OpenSea.
Cryptovoxels is another contender with a loyal player base. Piers Kicks, founding partner of Delphi Digital and head of crypto at Bitkraft Ventures, commented that it was a small development team that made an impressive project. Sfermion's Andrew Steinwold praised its "fairer" land pricing and content-building features. Even Mendez, CTO of Decentraland, when asked which other worlds he thought were attractive, replied:
"I admire the CryptoVoxels project, they put a lot of effort into it, and they're the first to roll out something that really works. I think they retain the essence of cypherpunk (cypherpunk) in the project, and from my point of view, they're doing what they think is best, rather than being distracted by anything else. ”
Somnium has also earned a core following. Kicks said: "This is the only encryption project that is close to VR. While accessible on the web, Somnium is more active in Oculus. Kicks marveled at the seamless connection to the virtual world and the enthusiasm of the project community.
More players are pouring in, some of them clearly positioned as games, while others pursue multiple uses. The first category includes Bright Star Studios' Ember Sword, Meilich's Big Time, Faraway and DeFi Kingdoms. The second includes NFT Oasis, NFT Worlds, Nifty Island, and virtual worlds that stick to our real-world maps, such as SuperWorld and Upland. Each new project can bring new ideas for building a metacosm.
Open design space
As things stand, buying a floor piece of LAND on Decentraland costs more than $10,000, which is a lot of demand, but it also sets a high bar for many people who want to devote themselves to the virtual world. However, in order to maintain scarcity, Decentraland is unlikely to want to expand its supply. While newcomers cannot buy land, many existing landowners are unable to use the land they hold to create value.
How does the virtual world solve this puzzle? One way might be to lower the barrier to entry while allowing whales and "old cannons" to express their identities.
Kicks, for example, proposes the possibility of "dynamic land," where property moves around a fixed point. Valuable locations near the center of the map are only open to those who developed and mortgaged it. A variety of factors are taken into account, including capital invested, number of visitors and holding time. With this construction, projects can expand their boundaries and increase the supply of land, while rewarding those with deep pockets and reducing the "dead zone" plots that make Decentraland barren.
Another example cited by Kicks is increasing the rating of its properties. While their property size will not increase, their topography will have a higher status and attract more attention. Nifty Island is experimenting with this mechanism.
There are many more ways to try. What if some properties were black and white and others were in color? What if some are low resolution and some are high resolution? What if your community changed based on an asset's price, wallet activity, social graph, time zone, or other factors? The cities of the future will not have to function like the cities of today. Maps are no longer territories.
Financial innovation is also necessary. Although DeFi can achieve double-digit interest rates through pledges and stablecoins, this does not seem to have entered the virtual world. In our study of Terra, we noticed how the new project allowed users to pay for the product through interest earned on Terra's Anchor protocol. There are no fees other than interest.
What if you could do something similar with Decentraland? Instead of buying LAND directly, investors can pledge their Terra through Anchor and buy slowly over time. Similarly, existing holders may choose to increase their stake in their existing assets to fund development, expansion or push funds back into the project itself.
In the next few years, we should see a wave of new models emerge.
Decentraland is not yet a thriving city. While it may have ample capital and a rapidly growing number of users, for now, it is a metropolis in motion, a city that is still maturing. Despite its art and commerce, its economy and its governance system, it still doesn't have the vibrant qualities of a city that attracts us in the real world.
Voltaire, the author who was used to name decentraland's birthplace, suggested that we should "judge a person by his questions, not by his answers." This quote is useful for evaluating what Ordano and his team have built.
Decentraland is not perfect. But in the past seven years, few people have asked more interesting questions. One day, perhaps soon, they will find the answer.
[This article was originally published in Linkde, authorized by Titanium Media App, author: Friends of Chainde]