As technology advances, new ways of investing appear. One of the new ways is to buy a piece of land in a virtual space, which became possible thanks to the blockchain technology. In this article, we will talk about the Decentraland metaverse, in which this method of investing first appeared. We will list what can be done with such a piece of virtual land, name the price range, investment conditions and tell you how to buy land in Decentraland.
The consultants who helped to prepare the article:
- Synoptic — Metaverse deep diver. Built an observatory in Decentraland and a gallery in Voxels (CryptoVoxels). Creates and sells digital art.
- Demian — CEO DappCraft Metaverse Studio. The DappCraft Metaverse studio provides full-cycle production, NFT and user experience creation for the metaverses. The company develops smart contracts, NFTs, 3D skins, and 3D scenes. One of the latest works is the scene for the Free TON project.
About the Decentraland metaverse
Decentraland is a virtual world powered by blockchain technology. It is similar to an online game, but with a focus on social and economic interactions between users rather than the gameplay itself. Users communicate, attend lectures, open stores, explore the world, and create new objects in it. Decentraland runs from a browser or through a desktop client — to view it yourself, you need a computer and the Internet. To save the progress, you need to log in through a crypto wallet.
The economy of this world is provided by the Ethereum blockchain, which is the main difference between Decentraland and other online games. The in-game currency MANA has been released on the Ethereum blockchain. These are ERC-20 tokens, all transactions with which are recorded in the blockchain. The virtual world of Decentraland is divided into plots of virtual land. Each plot is an ERC-721 LAND token that verifies ownership of the land. And in order to buy virtual land, users buy a LAND token. Therefore, the ownership of virtual land is also recorded on the blockchain. This article is about the LAND tokens.
ERC-721 is the Ethereum blockchain token standard used in NFTs. This means that each token is unique and cannot be split into multiple parts. For example, you can buy 1 token, but you cannot buy 0.5 tokens.
The public release took place on February 20, 2020. By March 2021, Decentraland users had made transactions worth 74,000 ETH. The total volume of transactions in virtual worlds on the blockchain amounted to 116 thousand ETH. That is, Decentraland accounts for approximately 64% of all virtual land transactions. During the first week of March 2021, the trading volume in the project was 880 ETH.
Who develops Decentraland
The development of the project began in 2015, and in 2017 the team held a successful ICO, where in 35 seconds they raised the $24 million needed to complete the development. At this stage, the project team included:
- Ari Meilich. Head of the Decentraland project. Previously worked on Streamium video streaming service and Bitcore cryptocurrency.
- Esteban Ordano. CTO Decentraland. Worked with Meilich on Streamium and Bitcore. Founder of Smart Contract Solutions, one of the creators of Bitpay, a payment system for cryptocurrencies.
- Jake Brukhman. Advisor. The founder of the investment company CoinFund and the lead developer of Aragon.
- Luis Cuende. Advisor. CEO of the Aragon Association.
- Giotto De Filippi. Project consultant. Crypto Economy Advisor.
The team has extensive experience in the development of blockchain projects, however, there is no experience in creating video games. Decentraland is the first game that the team is creating. The development office is located in Buenos Aires, Argentina. After the successful ICO, the development team working on the project consisted of about 30 people. Decentraland Partners:
- HTC. The developers have agreed to place the Decentraland marketplace on HTC smartphones that support blockchain, for example, on EXODUS 1.
- Binance. The developers have added the ability to buy LAND at an auction that took place in December 2018 for BNB tokens. Also, the project team integrated the Trust Wallet, developed by Binance, into Decentraland.
- CoinGecko. The developers are helping CoinGecko set up their virtual office in the world of Decentraland. In it, users can see the current exchange rates of the main cryptocurrencies and listen to information about them.
- Dapper Labs. Developers integrated Dapper Wallet and NFT Dapper Labs into Decentraland. For example, collectible NFTs with cats from the CryptoKitties blockchain game became available in the project.
The list of project partners also includes: Chain Partners, SuperRare, KnownOrigin, MakersPlace, ChainGuardians, Strategic Partners, Ripio Credit Network (RCN).
The project is managed by the users through Agora. It is a decentralized autonomous organization (DAO) in which users vote on changes to the project. For example, they determine which functions to interact with virtual land to add, the size of the fees in the Decentraland marketplace, the establishment and distribution of grants to developers, the details and dates of auctions for the sale of LAND. Decentraland developers do not have the technical ability to make such decisions without voting.
What determines the cost of virtual land
All land in Decentraland is divided into 90,000 lots called Parcels. The initial size of one Parcel is 10 by 10 meters of in-game space. However, in a user vote in February 2019, the size of each Parcel was increased to 16 by 16 meters. Each Parcel is an ERC-721 LAND token.
The total land area in Decentraland is 90,000 Parcels. Of which are not available for purchase:
- 3608 Parcels — the total area of 9 large Plazas;
- 8 Parcels — the total area of 2 small Plazas;
- 34,575 Parcels — the total area of thematic Districts;
- 9428 Parcels — the total area of roads.
42381 Parcel remains for users to trade At the beginning of March 2021, 652 Parcels and 298 Estates are for sale in the official Decentraland marketplace. Estates are the plots of several Parcels.
The cost of a single LAND token depends on the following factors:
Proximity to the objects created by the Decentraland developers. In addition to Parcels, Decentraland has roads and Plazas. They cannot be purchased, and only developers can create objects on them. Roads are needed so that users can move around the virtual world. Plazas are points of attraction for users: public parks, navigation centers. The closer to roads and Plazas, the more expensive the land. The area around the Central Plaza is the most expensive.
Proximity to Districts. There are Districts in the world of Decentraland. For example, on Fashion Street there are shops, and on the territory of Decentraland University there are lecture halls. Each District is owned and operated by the local community, and it is no longer possible to buy land in these Districts. Each District is a point of attraction for different categories of users. The closer to a District the Parcel is, the more expensive it will be.
Districts are jointly owned by several users who purchased them during the first land auction. Each District has one or more leaders who determine the rules by which the District will be built. Some of them are managed by all landowners through DAO or in other ways depending on the District.
To open your store or build an office in the area, you need to negotiate with the leaders or land owners in the District.
The number of Parcels in a piece of land. If the user has bought several Parcels, which are located next to each other, they can be combined into one plot — Estate. Estates are bought and sold as a whole, without division into Parcels. The larger the area of the Estate in Parcels, the more expensive it will be.
These factors are similar to how land prices are formed in the real world. The better the location and the higher the traffic of people, the more expensive the land is.
Now all the LAND NFT available for purchase is the secondary market. Users bought the LAND from the developers even before the public release of Decentraland.
In March 2021, the price of land in Decentraland starts from 8-9 thousand MANA per 1 Parcel — with a MANA cost of 25 cents, this is about $2000-$2250. Estates of 100 and more Parcels are the most expensive. Their value can exceed 10M MANA — with a MANA cost of 25 cents, the price of such Estates is $ 2.5M and more.
Virtual land use cases
Owners of virtual land can use it as they wish within Decentraland’s capabilities. Otherwise, the options for interacting with the virtual land are similar to real life.
Resell the land later for a higher price. It is likely that as Decentraland becomes more popular, the price of land will also increase. The sale of virtual land is carried out through the Decentraland marketplace or through the OpenSea NFT marketplace. Both services take a fee from the sale of the LAND NFT. Virtual lands’ trade is organized on the basis of an auction: there is a time limit and the opportunity to outbid other buyers or to offer your own price.
Let’s take as an example the trading history of one Parcel from the Decentraland marketplace. The piece of virtual land is located 4 Parcels from a Plaza, 2 Parcels from a road:
- November 15, 2018 — sold for 12,300 MANA;
- November 23, 2018 — sold for 13,300 MANA;
- January 11, 2019 — sold for 17,999 MANA;
- March 2021 — up for sale for 24,000 MANA.
An example of information about a land plot in Decentraland with a trading history. The page of this Parcel in the Decentraland marketplace
Rent out land. Opportunity to receive passive income from the acquired virtual land.
For renting land in Decentraland, it is possible to give another user a building permit on a plot of land. At the same time, ownership, the LAND token, remains with the landlord. There are also separate services for renting land in Decentraland like DCLrenting.com.
The leaders of some Districts are ready to give land for good projects and brands for free for temporary use, as such objects bring new users to the District.
Place an ad for your business. Users can build any objects on their land. For example, place an advertising banner for their company or open a showroom for their products.
Binance, Rarible, MakersPlace, and other companies have built their offices in Decentraland. Note that Decentraland has a separate page where the land owner can see the statistics on his Parcel and estimate how many people passed through it.
Open an NFT store. Decentraland is compatible with the NFT of the ERC-721 standard. For example, digital artists can open a gallery with the NFT art. At the same time, Decentraland does not take any fees from trading on the user’s land. All the money goes directly to the user’s wallet.
Give the virtual land as a gift. Ownership of the purchased land is stored in your wallet in the form of a LAND token. You can send this token to another user’s wallet. For this, there is a special “Transfer” item in the Decentraland marketplace.
All pieces of virtual land have in common that they can be used to promote your business. For example, open an office or a store there, hold a meetup or an interactive quest. The Maff Metaverse agency will help you present your brand in Decentraland and other metaverses.
What do you need to buy land in Decentraland
The ownership of a piece of virtual land in Decentaland is given by the LAND NFTs. It is better to buy them in the official Decentraland marketplace. To do this, you will need:
- Install a Decentraland-compatible crypto wallet. Users connect to the marketplace through such wallets and buy land. The developers recommend using the MetaMask browser wallet or the Ledger hardware wallet to work with the marketplace.
- Buy ETH cryptocurrency. It is needed to pay blockchain fees. It can also be used to buy LAND on other websites that are not associated with the official Decentraland marketplace. For example, on the OpenSea NFT marketplace.
- Buy ERC-20 MANA tokens to buy the LAND NFT. This is the in-game currency that players use to buy and sell land, wearables for the in-game avatar, and other in-game items. MANA is the main component of the Decentraland economy. At the beginning of March 2021, the cost of MANA was in the range from 24 to 43 cents. There were 1.3 billion tokens in circulation in total.
With the development of the ERC-721 standard, NFT marketplaces, and financial services, there will be more and more ways to purchase LAND. For example, it is already possible to buy land for ETH, DAI, MANA, USDC and WBTC on the OpenSea marketplace. The payment method depends more on the specific website or marketplace.
In the official Decentraland marketplace, you can both buy land and set a name for the purchased Parcel. For example, if you are buying land to house your company’s showroom, you can give it your company’s name. And if you have agreed with someone to rent or advertise on your land, then the marketplace has the ability to give another user a building permit on your land.
Where to follow the news of the Decentraland metaverse
The official Decentraland blog contains most of the sections necessary for the landowner:
- Announcements — here the developers inform the player community about news and upcoming in-game events. For example, about the opening of a new object or holding a party in honor of the birthday of the Decentraland.
- Project Updates — a selection of technical updates and annual reports on Decentraland.
- Platform — a compilation of platform news. Contests for builders of in-game objects and for game developers for Decentraland are published here.
- Technology — news about the Decentraland technology. For example, about updating the API and the game engine.
- Tutorials — tutorials on working with Decentraland. For example, how to place your NFT in the game world or how to construct your building.
Decentraland social networks:
Decentraland is a virtual world powered by blockchain technology. In this world, users communicate, build objects, play games and create their own economy. In Decentraland, you can both play and only invest.
The cost of one Parcel consists of the following factors:
- Proximity to the Plazas. The most expensive Parcels near the Central Plaza. The closer to the center of the world the Parcel is, the more expensive it is.
- Proximity to Districts and roads. The closer Parcel is to them, the more expensive it is.
- Estate size. Parcels located next to each other can be combined into Estates. The larger the estate, the more expensive it will be.
The cost of a piece of land starts from 8-9 thousand MANA tokens per Parcel and reaches 10M or more MANA tokens per Estate. At the beginning of March 2021, 1 MANA token was trading within 24-43 cents.
Why buy land in the Decentraland metaverse:
- To sell it at a higher price later. As Decentraland grows in popularity, the LAND NFTs will increase in value.
- To become a landlord and rent out the land.
- To place an ad or a showroom of your business on it.
- To open your NFT shop on it. For example, a digital art gallery. The developers of Decentraland do not charge fees from trading on the virtual land.
How to buy virtual land in the official Decentraland marketplace:
- Get a Decentraland-compatible crypto wallet.
- Buy MANA to pay for the LAND NFT and ETH to pay the gas fees.
- Buy the LAND token in the Decentraland marketplace.