In the future, luxury brands might have storefronts in virtual worlds where users can browse their stores as if they were walking through a real store. But between buggy software, a minimal user base, and a system that allows users to buy and sell insults with only a complicated governance system to potentially stop them, the odds seem against them. this the platform being the one that builds them.
And yet investors seem to believe there is money to be made here.
Decentraland’s big point is that users can come and “buy land” in the game, but the process of doing so is complicated. Users cannot purchase Land Tokens directly with Regular Dollars. Most can’t even be purchased with ether, the popular alternative to bitcoin. Instead, like many crypto projects, Decentraland has its own cryptocurrency called mana that lives on a side chain of Ethereum.
Side chains are complex, but in simplistic terms, they allow projects to offload tokens or data to a separate blockchain which may have different functionality (and often lower transaction fees) than the main chain. Importantly, this means that even though Decentraland is based on Ether, the price of Mana can be much more volatile than Ether.
Currently the the cheapest land in Decentraland typically sell for around 4,000 mana, which at the time of writing this would cost close to $ 15,000. However, once a user purchases a land, they own that asset until someone wants to buy that specific land – tokens aren’t fungible, after all. On the other hand, the mana is fungible, which means that if a user has huge amounts of mana, they can sell those tokens to anyone who needs to buy mana, including any new users who may have turned up to buy land.
Since Earth is so expensive and the mana market is so small, it doesn’t take a lot of activity to shake things up on the price of one or the other. “If you put out a press release, will that change the price of ether?” Yes, that could change the price of ether, ”says Olson. “But you know what that will definitely change the price, is the price of mana and the price of land.”
This has happened with mana a few times before. Within two days of rebranding from Facebook to Meta, the price of mana, which at the time had rarely exceeded $ 1, skyrocketed to $ 3.71. At the time, the media, starting with niche sites for crypto-enthusiasts like CoinDesk, then later CNBC– signaled the rise in the price of mana and interpreted it as a positive interest in the “metaverse”.
A few weeks later, on November 22, the “domain” of 116 plots of the Decentraland fashion district mentioned above has been sold for 618,000 mana. The next day, Tokens.com issued a press release announcing “the largest acquisition of metaverse land in history,” which was picked up by a number of crypto sites, as well as Reuters and the National post. When the press release has been published, the price of mana was around $ 4.10.