What is Decentraland? (MANA)
The Beginner’s Guide
Decentraland is a software running on Ethereum that seeks to incentivize a global network of users to operate a shared virtual world.
Decentraland users can buy and sell digital real estate, while exploring, interacting and playing games within this virtual world. Over time, the platform has evolved to implement interactive apps, in-world payments and peer-to-peer communication for users.
Two different types of tokens govern operations in Decentraland.
- LAND – A non-fungible token (NFT) used to define the ownership of land parcels representing digital real estate.
- MANA – A cryptocurrency that facilitates purchases of LAND, as well as virtual goods and services used in Decentraland.
Changes to the Decentraland software are enacted through a collection of blockchain-based smart contacts, which allow participants who own MANA to vote on policy updates, land auctions and subsidies for new developments.
For new releases and to follow its regular updates, be sure to bookmark Decentraland's blog.
Who created Decentraland?
The Decentraland Foundation, the organization behind the development of the Decentraland software, was founded by Esteban Ordano and Ariel Meilich in 2015.
The Decentraland team held an Initial Coin Offering (ICO) in 2017 raising 86,206 ether (about $26 million at the time) to fund its future operations. The Foundation, which retains 20% of the initial token supply, holds the intellectual property rights and maintains the Decentraland website.
Prior to launching its platform, Decentraland launched a decentralized autonomous organization (DAO) to turn the management of the project over to its users. Further, the founding team claims the private key that controlled Decentraland’s smart contract has been destroyed.
How does Decentraland work?
The Decentraland application is built to track real estate parcels defined by LAND tokens.
The software leverages the Ethereum blockchain to track ownership of this digital land, and it requires users to hold its MANA token within an Ethereum wallet to engage with its ecosystem.
Further, developers are free to innovate within Decentraland’s platform by designing the animation and interactions experienced on their virtual real estate.
Decentraland has many layered components built using Ethereum smart contracts.
The consensus layer maintains a ledger that tracks the ownership of land parcels. Each parcel of LAND has a unique coordinate in the virtual world, an owner and a reference to a description file representing the content within the parcel.
The content layer controls what happens within each parcel, and includes various files required to render them:
- Content Files – referencing all static audio and visuals
- Script Files – defining the placement and behavior of the referenced content
- Interaction Definition – peer-to-peer interactions such as gesturing, voice chat, and messaging.
Finally, the real-time layer facilitates social interactions within Decentraland through user avatars, including voice chat and messaging.
Marketplace and Builder
Outside of the gaming environment, the Decentraland team has released a marketplace along with a drag-and-drop editor users can access to build scenes.
The marketplace enables participants to manage and exchange LAND tokens, priced in MANA. Owners can use the marketplace to transact or transfer parcels and other in-game items such as wearables and unique names.
Of note, all transactions are settled between Ethereum wallets, and therefore are verified by Ethereum’s network and logged on its blockchain.
Decentraland’s builder tools authorize owners to curate a unique experience within their LAND parcels. Interactive scenes are designed through its editing tool, where developers can access customization libraries and payment implementations.
Why does MANA have value?
MANA plays a vital role in Decentraland’s virtual world and can be used for transactions within the ecosystem and to participate in the management of its software.
For example, owning MANA also allows users to interact with the platform by customizing their avatars, interacting with other users and exploring its metaverse.
Further, owning MANA gives users the ability to vote on policy updates, LAND auctions and subsidies to improve the platform.
When LAND is auctioned, the MANA tokens used to purchase the parcels are burned, or removed from circulation, making the supply of MANA deflationary. This could put pressure on the token value as the platform grows with new users.
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Why use MANA?
Users may find Decentraland appealing as a customizable and shared virtual reality space.
The Decentraland ecosystem may also be interesting for gamers seeking to earn in-game currency that has monetary value, which could be exchanged for real-life goods and services.
Investors may seek to add MANA to their portfolio should they believe in the future of virtual reality and its ability to connect users all over the world.