At the beginning of last year, we wrote about the idea of a Metaverse and what it may look like. Little did we know there would be such excitement and adoption within 2021 alone, with even huge companies like Facebook changing their name to Meta.
This brought the idea of a Metaverse into the mainstream as nothing had before; it also catapulted two of the largest blockchain-based Metaverses, Decentraland and The Sandbox, into the limelight and significantly increased user adoption of the networks.
Over the next few weeks, we will explore the concept of the Metaverse in greater detail and look at several projects paving the way for a more digital future
What is a Metaverse?
Before we start exploring our project this week, Decentraland, it is worth taking a step back and investigating what a Metaverse is in the first place. There is no set definition of what a Metaverse is; that is why it can appeal to so many people for different reasons. However, it generally is the broad shift in how we interact with technology and the environment around us. Virtual Reality (VR) and Augmented Reality (AR) are the two technologies that generally characterise a Metaverse.
The term originated from a 1992 science fiction novel called Snow Crash and combined the two words “meta”, a Greek prefix for more comprehensive or transcending and “universe”. This gives a general idea as to what it can be, a world or universe that transcends our own in some capacity. This will be through the use of technology that enables us to have new experiences and interact in ways not possible in our current environment. It will be an internet-based three-dimensional world.
Source: Bloomberg Intelligence
The acceptance of the Metaverse has been rapid, with Bloomberg predicting it to be an $800 billion market by 2024. Some of the largest companies in the world are competing to build their own virtual worlds, one where they control the client assets and profit off them. Blockchain promises us a different shared virtual experience where we can own and control the Metaverse as users see fit. One project pioneering this is Decentraland.
What is Decentraland?
Decentraland is a VR Metaverse powered by the Ethereum blockchain. Within the Decentraland Metaverse, users are free to create, experience and monetise their content and applications. Decentraland was one of the first blockchain-based Metaverse projects. It was envisioned by two Argentinians, Ari Meilich and Esteban Ordano, and they started development on it in 2015. In 2017 Decentraland did an Initial Coin Offering (ICO), selling off 90 601 portions of land in their Genesis City for around $20 each and MANA tokens for $0.02. Through the ICO, they raised $26 million and went back into build mode. Creating a virtual world as expansive and complex as Decentraland can take some time; therefore, the first official launch, where one could finally explore the Decentraland Metaverse, happened in February 2020.
Since then, Decentraland has continued to grow and improve, creating partnerships with some of the world’s best-known brands, including Samsung, Adidas, Atari, PricewaterhouseCoopers, Miller Lite and Sotheby’s. Music artists such as Deadmau5 and Grimes have held concerts on the platform. Netflix has launched movies such as The Gray Man in collaboration with Decentraland, where players could win limited edition wearables. Decentraland even hosted the world’s first Metaverse Fashion Week where fashion brands such as Dolce & Gabbana, Tommy Hilfiger, Elie Saab, Nicholas Kirkwood, Perry Ellis and Estée Lauder participated.
Decentraland has gone from strength to strength and has firmly positioned itself as one of the top blockchain-based Metaverses.
How Does Decentraland Work?
Decentraland has several components and assets that create the current user experience:
There are three native tokens in the Decentraland ecosystem:
LAND and ESTATE
LAND represents the traversable space within the Decentraland ecosystem. LAND and ESTATE tokens are built on the ERC-721 standard. This means that they are non-fungible and have unique properties that distinguish them from each other. This is important because, as with land in the real world, it needs to be identifiable and have a unique location; each plot of LAND is identifiable by its cartesian coordinates on the map.
An Overview of Decentraland – Source: NFT Plazas
Each plot of LAND represents a 16mx16m parcel in Decentraland. There is a limited supply of LAND in the game, and their value can vary depending on certain characteristics such as proximity to the Genesis Plaza, roads and popular districts; very similar to how property works in a traditional setting. By acquiring LAND, you have the exclusive right to build on it as you see fit, with certain restrictions in place, such as the height and number of objects you can place on each parcel.
This leads to demand for ESTATES; an ESTATE can be “built” if you have parcels adjacent to one another. If you build an estate, you can then combine the number of objects you can place on each parcel to create bigger buildings and so on.
The scarcity of LAND is what drives its price. What you can do on the land is currently up to the users, but you can build anything, from shopping malls and casinos to gaming districts. We have seen companies like Sotheby’s building an exact copy of their London auction house in Decentraland and using it to promote their NFT auctions. You can even use your avatar to explore the auction house and see the NFTs that are about to go up for auction. These are some of the first basic use cases we are seeing emerge, giving us a good idea of the project’s future and what it may be used for.
MANA is the in-game currency of Decentraland; as it stands, the maximum supply of MANA tokens is 2.2 billion. MANA is built on the ERC-20 token standard, and therefore it is fungible. You require it to purchase in-game items and LAND. When the initial sale of LAND was done, you were required to burn the token to acquire the LAND; however, it can now be used to trade for other parcels, and in this instance, you aren’t required to burn the token. Nevertheless, this will probably apply to any future land sales as the Metaverse expands. MANA tokens are also used to govern the Decentraland DAO. The DAO was created by the developers to give users control of the platform. Through the DAO, holders of the token are able to vote on how the project develops over time and can control important decisions, such as if developers can add more LAND parcels or change the way the MANA token functions.
To keep track of assets and allow for the efficient functioning of the Decentraland Metaverse, the network has been designed using three layered core components.
1) Consensus layer – Track land ownership and its content.
2) Land content layer – Download assets using a decentralised distribution system.
3) Real-time layer – Enable users’ world viewers to connect to each other
Source: Decentraland Whitepaper
The first layer is the Consensus layer, which uses Ethereum smart contracts to maintain a ledger of ownership of LAND, ESTATE and MANA tokens; it also maintains a record of the in-game assets such as wearables and items. This is one of the core premises of a decentralised Metaverse, as you own the assets yourself and can trade them as you see fit.
The second layer is the land content layer, which is crucial to your VR experience when exploring Decentraland. As you traverse the world, computers need to render the parcel of land you see while playing the game. Each parcel of land points to a reference file in a smart contract that contains a description of what is on that piece of LAND. Decentraland uses the decentralised file storage system IPFS to distribute the content needed to render the world; this also provides it with censorship resistance and shifts the costs of running the system to the users who benefit from it. As Filecoin and IPFS continue to build, those who choose to host the files will also be rewarded for doing so.
The third and final layer is the real-time layer. This is what users of Decentraland will use to communicate with one another. This includes services such as instant messaging, voice chat, interactions with the virtual environment and applications built within that parcel of LAND. It will allow it to be a more interactive world and create a greater sense of community, fostering the network.
These are all core pieces of Decentraland architecture. However, these layers you won’t be aware of or will ever see. Where a Metaverse like Decentraland wins is on its features and the experience it offers its users.
Decentraland has spent time working on creating a user experience that will encourage further adoption. They have created handy features such as an easy way to create your Decentraland Avatar and your Decentraland buildings.
Your avatar represents you in the world of Decentraland; therefore, it should be customisable to represent you in any way you want. When starting your Decentraland journey creating your custom avatar is the first step.
Anyone who visits Decentraland can view your property, your NFT collection or even participate in a game you have made and deployed to Decentraland. We expect brands to start advertising this way in the Metaverse and use these types of tools as a new way of engaging with their clients.
Getting Started With Decentraland
With a basic overview of what a Metaverse is and how Decentraland works, we can get started with using it.
It is very simple, and it is so comprehensive that it is beyond the scope of this article. Nevertheless, we can start with the basics.
Step 1: Set Up MetaMask Wallet
In order to interact with Ethereum and Decentraland, you require a wallet. Our wallet of choice is MetaMask, but you are free to choose your own Ethereum-compatible wallet. Please find our guide to setting up your own MetaMask wallet here.
Step 2: Visit the Decentraland Website
Visit the Decentraland Website
Make sure you land on “https://decentraland.org/”
Click Start Exploring in the top right hand of the screen
You should see the below page:
Step 3: Create Avatar
Click CREATE AN ACCOUNT
Log in with your MetaMask
You will now be prompted to create an avatar. Feel free to try out different combinations. Also, remember you can purchase new wearables and accessories through the Decentraland Marketplace.
Step 4: Start Exploring!
Now that you have created your avatar, you can start exploring Decentraland. You aren’t required to purchase any land or anything else to start your adventure. You are free to explore as you want!
Decentraland is one of the first instances we have seen of a community-owned Metaverse. The team has built a vast and comprehensive world that can be explored for countless hours. The number of users and people building has been increasing, and it is looking like it will be one of the top contenders for a Metaverse in the future.
We look forward to seeing how the network develops over time and whether it continues to gain traction and increase user growth.
Next week we will continue exploring the different Metaverses with a focus on The Sandbox. If you have any questions or have trouble using the network, please feel free to reach out and ask us questions. We always look forward to chatting with our readers. Otherwise, please feel free to share this article if you know anyone who is interested in learning more about the Metaverse and Decentraland.
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This is not financial advice. All opinions expressed here are our own. We encourage investors to do their own research before making any investments.