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Video lesson

Decentraland Metaverse

Decentraland: Metaverse Virtual Landscapes

Decentraland is more than just a virtual game; it represents a revolutionary concept in property ownership within digital realms. With its unique capacity for users to buy, sell, and develop virtual land without the oversight of a centralized authority, it mirrors properties in the traditional world but operates on the blockchain. Understanding Decentraland and its native currency, MANA, is important not only for diving into the metaverse but also for grasping how cryptocurrencies like MANA embody new forms of assets and investments that are reshaping digital finance.

Core Concepts

Virtual Real Estate: In Decentraland, virtual real estate refers to the digital plots of land that users can buy and develop. Unlike traditional real estate, these digital parcels exist on the blockchain and are uniquely identified as non-fungible tokens (NFTs). Understanding virtual real estate is crucial as it represents a new frontier for investment and property rights in the digital age.
MANA: This is the native cryptocurrency of Decentraland, used to purchase land and in-game items. In traditional finance, currencies are widely used for transactions. MANA parallels this while also representing an investment opportunity, as its value fluctuates based on demand, much like stocks or fiat currencies.
Decentralized Autonomous Organization (DAO): A DAO is a system of governance used in Decentraland, where MANA holders vote on changes to the platform. It replaces top-down management in traditional organizations with community-led decision-making, a concept that’s gaining traction in various sectors.
Non-Fungible Tokens (NFTs): NFTs are digital assets that represent ownership of a unique item or piece of content on the blockchain, such as real estate in Decentraland. This contrasts with fungible assets like currencies, where each unit is interchangeable. NFTs create a distinct market for unique digital goods.
Tokenomics: This refers to the dynamics of the MANA cryptocurrency, including its supply and inflation rate. Unlike traditional currencies that governments control, MANA’s economics are governed by community votes and market forces, highlighting a shift towards democratized financial systems.
Smart Contracts: Smart contracts are self-executing contracts with the terms of the agreement directly written into code. They facilitate transactions in Decentraland without the need for intermediaries, similar to digital agreements in traditional finance but without the legal constraints or fees of physical contracts.
Gas Fees: These are transaction fees required to process actions on the Ethereum blockchain. In traditional finance, fees can often apply to transactions or transfers – similarly, gas fees represent costs users need to consider when engaging in the crypto space.

Key Steps

Section 1: Understanding Decentraland

What is Decentraland?: It is a decentralized virtual world where users can buy, develop, and trade parcels of virtual land.
Ownership: Users own land in the form of NFTs, creating a sense of real ownership digital users hadn’t previously enjoyed.

Decentraland Connection: Just as you can acquire and develop a home in the real world, in Decentraland, you do the same within a digital landscape that is secured by blockchain technology.

Section 2: Land Parcels and Value

Land Sales: Land value is influenced by location, similar to traditional real estate markets.
Types of Areas: Different zones (plazas, districts) offer varying opportunities for revenue generation through customization.

Decentraland Connection: Much like prime real estate in the real world, digital parcels near popular attractions command higher prices.

Section 3: The Use of MANA

Purchasing MANA: Users need MANA to interact and trade within Decentraland.
Investment Dynamics: The tokenomics reveal not only a resource for purchasing but a potential investment asset.

Decentraland Connection: See MANA as akin to corporate stocks: it has potential value based on market trends and community engagement.

Section 4: Governance and Community Control

DAO Governance: The community votes on proposals, affecting the future of Decentraland.
Voting Power: Token holders have voting rights proportional to their MANA holdings.

Decentraland Connection: The DAO reflects shareholder meetings in traditional corporations, allowing users to determine the project’s direction.

Blockchain

In relating these concepts to the crypto world, each showcases how decentralized systems can democratize ownership and governance. For instance, while NFTs typically exist as art or collectibles, in Decentraland they are actionable assets. The DAO structure parallels existing governance but enhances it through transparency and community engagement, allowing users to wield substantial influence.

Examples

While specific charts or graphs weren’t mentioned in the lesson, envision an art-driven infographic showcasing land parcel prices over time, paralleling them with a real estate market trend. Suppose you bought virtual land near a digital concert venue, akin to purchasing a cafe on a bustling city block—a prime position can lead to profitable returns in both worlds.

Real-World Applications

Decentraland seamlessly integrates the concepts of real estate and digital ownership. Its evolution illustrates parallels to historical changes in property ownership, from land grants to property rights, dynamically illustrating shifts in how wealth is represented in both realms.

Cause and Effect Relationships

In Decentraland, the demand for land and its resultant price increases illustrate economic theory: as scarcity rises, so does value. This principle holds true in real estate, providing a clear correlation that can potentially play out similarly within the crypto markets.

Challenges and Solutions

Challenges:

High transaction fees (gas fees) can diminish net profits in MANA transactions.
Understanding of terms and systems can be daunting for newcomers.

Solutions:

Integration with networks like Polygon allows lower transaction fees.
Educational resources can demystify processes for new users.

Misconceptions about cryptocurrency being a “”get-rich-quick”” scheme can deter potential users. Reassuring them about the long-term value creation opportunities found in Decentraland’s framework is crucial.

Key Takeaways

Decentraland offers true ownership of digital land — a leap towards democratized property rights.
MANA is a versatile currency for transaction and investment alike; understand its market behaviors.
DAOs lead to community empowerment; you can influence the metaverse’s future.
Tokenomics is critical; the shift from inflationary to deflationary states can drive value.
High transaction fees are a reality; remedying this through understanding of networks is vital for your success.
Familiarity with NFTs broadens your financial toolbox.
Explore and engage with the community to maximize your Decentraland journey.

Discussion Questions and Scenarios

How does virtual real estate differ from physical real estate in terms of investment risks and rewards?
What advantages does the DAO system provide compared to traditional corporate governance?
Compare and contrast MANA’s role in Decentraland with traditional currencies in a marketplace.
Discuss the importance of location in determining the value of land in both Decentraland and reality.
If you were to buy virtual land, what criteria would you use to determine its potential value?
What are the psychological barriers to accepting virtual assets as real investments?

Glossary

Virtual Real Estate: Digital properties owned in virtual worlds, typically represented as NFTs.
MANA: The currency for purchasing assets within Decentraland, similar to how fiat currency is used in traditional marketplaces.
DAO: A decentralized method of governance enabling collective decision-making by token holders.
NFTs (Non-Fungible Tokens): Unique digital items with ownership logged on the blockchain, differing from interchangeable assets.
Tokenomics: The economic model that underpins the functionality and distribution of a cryptocurrency.
Smart Contracts: Programs automatically executing contractual agreements without the need for intermediaries.
Gas Fees: Costs incurred while executing transactions on the Ethereum blockchain.

Continue your exploration and understanding of innovative financial landscapes in the Crypto is FIRE (CFIRE) training program. Ready for the next enlightening lesson? Let’s continue on this journey together!

Read Video Transcript

What is Decentraland? MANA Explained with Animations

https://www.youtube.com/watch?v=yDctL0gx9uk

Transcript:

If you own a piece of land, what can you do with it? Well, you can build a building on it, you can rent it, you can use it for advertising purposes, or sell it after a while. You can do whatever you want, it is your land after all. Well, that is what Decentraland is but in the virtual world.

Decentraland is an online game or virtual world that lets you do just that, own a piece of land that is yours and only yours and do whatever you want with it. In this video, you will know exactly what Decentraland is and what is the Monotoken, how Decentraland works under the hood, some tokenomics of the Monotoken, and finally, how you can buy some Monotokens. We have included timestamps so you can skip to any part you want.

So, grab a snack and let’s dive into Decentraland. Decentraland is a decentralized online game or a metaverse. In Decentraland, you play and explore the virtual world with an avatar, which you can customize however you like, from body to face, hairstyle, and clothing.

Decentralized here means that no one authority or company controlling it. Meaning that no one party can modify the software, contents of your land, or even block you from accessing the game, which is from where comes the name Decentraland. There is some confusion here between Decentraland and the Monotoken. Decentraland is the game or virtual world you play in.

MANA, on the other hand, is the digital currency you use to pay for the digital real estate you own or for any goods or services you buy like clothes or any other avatar customizations. Decentraland was created in 2017 by Ari Malek and Estevan Ordano. Ari Malek is a serial entrepreneur who has created other companies and was at the project lead role at Decentraland.

Estevan Ordano was Decentraland’s former tech lead. He has a lot of experience in the crypto world as he was a software engineer at BitPay, launched his own smart contracts development company, Smart Contracts Solution, and worked as an advisor to the MAG network, now called Polygon. Both of them have stepped down from their roles in leading Decentraland, with the Decentraland Foundation leading the development of Decentraland right now.

Decentraland Foundation is a non-profit company based in California, with Agustin Mendez in the head of engineering role. The space in Decentraland’s virtual world is called land, and it is split up into parcels. There are 90,601 parcels of land in Decentraland. These parcels are owned by the players, and you can buy one for yourself using Monotokens.

Each land is 256 square meters, and each land has specific coordinates in the metaverse. Two or more adjacent parcels of land are called estates. Take a look at Decentraland’s world map. The dark gray areas are the parcels of land. The blue areas are districts, which are pieces of land with common themes like music, gaming, or tech.

The light gray lines are the rows, which are not for sale. And the green areas are called plazas, and it is where players respawn, and they are also not for sale. Landowners can customize their land however they like. From 3D scenes, interactive applications, and games, they can earn money of their land using these customizations.

Also, they can lease it and earn a rent from it, put advertisements on it, or sell it for a profit after a while when it raises in price. Decentraland’s in-game currency is the Monotoken. With Monotokens, you can buy parcels of land, names, and wearables to your avatar, including clothing, shoes, and accessories.

Each parcel of land has its price, which is determined mainly by its location. Land parcels closed to the Genesis Plaza or Main Roads are the most expensive, as they are the easiest to monetize. Although these parcels of land are in the virtual world only, they can get really expensive. The highest purchase in the history of Decentraland was 116 parcels of land sold recently for an astonishing price of 2.

4 million us dollars equivalent to 600 000 mana tokens now you know what decentraland is and what is ma we are now moving over to how does decentraland work under the hood first you should know that land parcels in decentraland are stored on the ethereum blockchain in the form of non-fungible tokens, also called NFT. You can think of these NFT as digital art. Each piece has its own characteristics and value.

For example, a $1 bill has the same value as any other $1 bill, which makes the $1 bill a fungible asset. A parcel of land, on the other hand, is non-fungible, as each parcel has its own coordinates on the map, specific characteristics, and unique contents with varying prices, which makes a parcel of land a non-fungible asset.

When you buy one of these parcels of land, you are the only owner of the land, and your ownership of the land is stored on the Ethereum decentralized blockchain. You should also know that the MonoToken is also built on the Ethereum blockchain, which means that it shares a lot of features with Ethereum like the smart contracts, for example.

But it also means that it suffers from the same drawbacks as Ethereum, such as the very high transaction fees, which are called gas fees, which sometimes can make purchasing a simple wearable in Decentraland double its price. The Decentraland system is composed of three layers. The first layer is called the consensus layer. This layer uses the Ethereum blockchain smart contracts feature to track and store land ownership data.

The second layer is called the content distribution layer, which is the layer that contains land’s content data. These data are hosted on many decentralized servers, eliminating the need for centralized servers and the authority and censorship that come with them, which means that Decentraland can be hosted by its players, without the need for any authority. Each land NFT on the blockchain has the date of its ownership and a link to a file that contains the content of a land, which is chosen by the owner of the land.

These data are transferred between servers using the well-known BitTorrent protocol. The third layer is the real-time layer, which is the layer that enables Decentraland players to see and interact with each other through messages and voice chat.

These social interactions use peer-to-peer communication protocols. However, they also need servers to coordinate the connections, and these servers are provided by landowners. The Decentraland team has recently launched a builder, which allows landowners to create seams for their lands using drag-and-drop tools without the need for technical knowledge.

Also, you should know that all purchases of land are done on Decentraland’s marketplace, from which also you can buy other items like names and customizations. As we have said earlier, Decentraland is a decentralized metaverse, with no centralized authority to control it or make its decisions. Instead, Decentraland is controlled by its users, the holders of the monotokens and the owners of the land parcels.

These users control De control decentraland through what is called a decentralized autonomous organization dow which is a mechanism by which these users vote on the decisions and changes that happen to decentraland holder of mana tokens and landowners get votes based on the number of token they hold.

Mana holders get one vote for each mana token they have and landowners get 2000 votes for each land parcel they own. When a proposal is issued and voted on, it gets executed automatically through smart contracts. We need to mention here that Decentraland’s DAO is built using Aragon platform software. Another point you should know before getting into the tokenomics is that Decentraland completed an integration with the Polygon network in April this year.

This allows users to move their Mono tokens to the MAG network, where they can execute transactions significantly faster with very low transaction fees. Now, let’s talk about some topnomics of the Mono token. Mono was an inflationary cryptocurrency at launch, with an 8% inflation rate that decreases with time.

What that means is that the supply of Mono was supposed to increase each year, with an 8% increase in supply in the first year, 7.4% in the second year, and so on. in supply in the first year, 7.4% in the second year, and so on. After a community vote done in November 2018, the yearly increase in supply was removed and 1% burn rate was introduced on all land parcels sales in the marketplace.

In a nutshell, burning a token means sending it to an unusable crypto wallet, removing it from the circulating supply. This burn rate was then raised to 2.5% on land parcels and expanded to include names and wearables. For example, if someone wants to sell a parcel of land on the marketplace for 5,000 mana, he will need to pay a 2.5% fee in mana,, which will equal 125 MANA.

These tokens will be burned and removed from the supply. What that means is that MANA is now a deflationary cryptocurrency, with its supply decreasing over time. The original total supply of MANA was 2.8 billion tokens. 600 million MANA tokens have been burned to date, leaving the current total supply at 2.19 billion Mono tokens, and 83% only of this total supply are circulating in the market.

During the 2017 ICO, Decentraland succeeded in raising 26 million US dollars, equivalent to 86,260 Ether at the time. equivalent to 86,260 Ether at the time. 40% of the total MANA supply was sold, with 20% going to early development team. 20% went to Decentraland Foundation and the last 20% for the community reserve.

So, how do you buy some MANA tokens? If you are buying MANA to use it in Decentraland to buy parcels of land and customizations, then you can buy it directly on the official marketplace by exchanging Ethereum to MANA. And you can then store it on any crypto wallet that supports Ethereum tokens like MetaMask or Trust Wallet.

If you are buying MANA for investing purposes only waiting for its price to increase, then you can buy it on multiple exchanges with normal fiat currencies like the US dollars or Euro. Monotoken is currently available on Coinbase, Binance, Kraken, Kucoin, Uniswap, and Crypto.com. Keep in mind that this video is for entertainment and educational purposes only, and it is not by any means a financial or an investment advice.