One of the biggest independent players in the metaverse right now is a company called The Decentraland Foundation, creators of ‘Decentraland’. The purpose of Decentraland is to build a virtual world, where users can buy and sell digital real estate, as well as exploring, playing, and interacting in this world with others around the real world. Currently, this virtual world is roughly the equivalent size of Hamilton, New Zealand.
Established in 2015 by Esteban Ordano and Ariel Meilich, the team held an Initial Coin Offering (ICO) in 2017. This move was incredibly successful and helped form a solid base for their future. The ICO raised nearly $38 million (NZD) in the cryptocurrency Ethereum, within 30 seconds of launching.
Unlike the more established players in the metaverse space, like Facebook/Meta and Microsoft, who are building augmented and virtual reality experiences, Decentraland is currently built to be accessed within browsers. This makes the entry point a lot easier for people, though does not make it feel all that revolutionary at this time.
Why is this important?
There has been a lot of focus recently on the decentralisation of the internet, as people look to take control away from the few and give to the many. This lies at the heart of Web3. For those unfamiliar, Web 1.0 looked to establish a decentralised and open internet, filled with individual webpages for users to navigate between. Web 2.0, which we are currently in, shifted this to a more centralised internet, where the majority of user interactions occur within closed platforms, or walled gardens, that are controlled by major corporations, such as Facebook, Google, and Amazon.
Web3 looks to leverage the blockchain to decentralise the online ecosystem, where the people will own the platforms and apps they use, rather than any gatekeepers. Decentraland is one of the first major movers into this space, as they look to establish a world that is owned by those who engage it, with The Decentraland Foundation helping to maintain it.
How much does it cost to buy land?
Units of land are bought and sold in the form of non-fungible tokens (NFTs), with plots of land measuring 10×10 metres.In June last year, investment company Republic Realm made headlines after it purchased 259 units of land within Decentraland, at a cost of $1.3 million (NZD). At the time, this was the largest amount ever paid for NFT land.
While $1.3 million is a lot, it actually equates to around $5k per unit of land. However, prices in the Virtual Estate, or Surreal Estate, market have increased since that time, with current plots selling for around $17,500 NZD at the time of writing.
What’s happening in Decentraland right now?
Having spent a bit of time exploring this virtual world, and while there does appear to be a number of people getting involved, it is still very much in its infancy with large vacant areas and limited things to do. But it is definitely clear what is trying to be achieved.
As more users begin to ‘build’ within this world, we’re starting to see personal expression taking shape. Some are using this as an opportunity to store and show their purchased NFTs, early evidence of Dectraland’s connection with the wider metaverse as these NFTs can be purchased from anywhere outside of Decentraland.
Let’s also consider the land mentioned earlier which was purchased by Republic Realm, this space has now been turned into a space known as Metajuku mall. This sprawling area is designed to look like a futuristic mall for people to explore and shop for virtual clothes for their avatar, which can be purchased using Decentraland’s own cryptocurrency MANA. Taking its inspiration from Harajuku, the home of street fashion in Tokyo, Metajuku is home to digital-only fashion brands, but is also seeing increased interest from major real-world businesses.
Major brands have begun moving more into this space. Samsung, for example, established a store in Decentraland to showcase their latest announcements during the Consumer Electronics Show (CES) in Las Vegas. Three main areas were created for visitors to explore: Connectivity Theatre, the Sustainability Forrest, and the Customisation Stage. While only set up as a temporary space in Decentraland, Samsung have plans to do more of these, and across multiple platforms.
One other example is J.P.Morgan, who now owns a space in Metajuku mall for people to visit. Functionality is limited, with the first floor containing a lobby with a picture of CEO Jamie Dimon on the wall and a virtual tiger roaming around, though the second floor has experts, represented in avatar form, discussing cryptocurrency.
Despite this minimalist introduction to the metaverse, J.P.Morgan have ambitious goals around services offered through this, with plans to eventually include allowing people to discuss credit card options and even apply for a mortgage. This is driven by J.P.Morgan’s analysis that suggests that the metaverse could become a $1 trillion annual revenue business.
Is this really going to be the future of a decentralised internet?
Short answer is probably not. This is not a reflection of Decentraland, but more of the metaverse concept overall. The biggest obstacle ahead for the metaverse, is trying to shift the user mindset away from the instantaneous gratification the internet provides. Technology has evolved to the point that people can quickly look on their phones any time they have a question, and get the answer in a matter of seconds. The concept of them getting people to move away from this and to then begin to ‘live’ in this world might be a step too far for some.
The most likely comparison with regard to media consumption in a livable state to what Decentraland is trying to achieve, is the endless scroll of social media. The gamification of exploring the internet is intriguing, though is nothing revolutionary, but does give people a space to express themselves, connect and explore with friends. There will always be a need for this within a globalised society, where it is becoming increasingly difficult to remain connected with people in real life.
Decentraland’s ability to capture the minds of major brands is encouraging, and highlights that there are a number of people seeing this as an emerging space to reach consumers. In addition, adding real world brands into a virtual world adds credence to this potential future for consumers.
The business case is sound, and their approach to working with external parties is encouraging. The team at Decentraland will need to remain true to their brand, and ensure that everything is owned by the people. The real test will be when revenue begins to climb, or a competitor surreal estate player enters the market. Decentraland needs to ensure they continue to work collaboratively with everyone, irrespective of someone coming in who may be seen as a direct competitor or not, otherwise they will become the same walled garden that they are trying to eliminate as we attempt to move towards Web3.