What Is Decentraland [MANA]? How It Works? Complete Guides 2024

Decentraland MANA 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.

These are:

• 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. 

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 is a virtual world built on the Ethereum blockchain, functioning like a metaverse where users can play, create, and even monetize their experiences. Here’s a closer look at how Decentraland works:

Underpinnings:

• Decentraland sits on the Ethereum blockchain, leveraging the security and transparency it offers. This blockchain technology also enables features like non-fungible tokens (NFTs) for digital ownership within Decentraland.

Key Elements:

• LAND: The virtual world of Decentraland is divided into LAND parcels. These LAND parcels are NFTs, essentially digital plots of land that users can buy, own, and customize.
• MANA: MANA is Decentraland’s native cryptocurrency. It serves multiple purposes within the platform, including buying LAND, paying for in-world goods and services, and participating in governance.

Building and Creating:

• Decentraland Builder: This free, browser-based tool allows users to design and create interactive experiences on their LAND. No coding knowledge is required! Users can build scenes, structures, and even interactive games using the Builder.
• Marketplace: The Decentraland Marketplace serves as a platform for users to buy and sell various NFT wearables, avatars, and other digital assets that can be used within Decentraland. These assets can be created with the Builder or purchased from other users.

Experiences and Activities:

• Social Interaction: Decentraland allows users to explore the virtual world, socialize with other avatars, and participate in various events and activities hosted on different LAND parcels.
• Games: Users can play games built by other users on their LAND. These games can range from simple experiences to more complex creations, offering a variety of entertainment options within Decentraland.

Monetization:

• LAND Ownership: LAND owners can potentially generate income by:
  • Charging entry fees: For experiences or games they build on their LAND.
  • Advertising: Integrating advertising displays within their creations.
  • Renting out LAND: Leasing their LAND to others for various purposes.
• Content Creation: Users can create and sell wearables, avatars, and other NFT assets in the marketplace, potentially earning income from their creativity.

Overall, Decentraland fosters a user-driven virtual world where creativity and ownership are central. By providing accessible creation tools, a marketplace for NFTs, and a native currency (MANA), Decentraland empowers users to build, play, and potentially earn within this metaverse.

Architecture

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. 

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.

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.

The value of MANA, the cryptocurrency that fuels Decentraland’s virtual world, stems from its utility within the Decentraland ecosystem. Here’s a breakdown of the key factors that contribute to MANA’s value:

Essential for Decentraland’s Economy:

• Currency for LAND Acquisition: MANA is the primary currency used to purchase LAND NFTs in Decentraland. LAND ownership grants users a digital plot of land within the metaverse where they can build experiences, games, or social spaces. The potential value of LAND as virtual real estate within Decentraland directly influences the demand for MANA to acquire it.
• In-world Transactions: MANA serves as the main currency for various transactions within Decentraland. This includes buying and selling wearables, avatars, and other NFT assets in the marketplace, potentially paying entry fees for user-created games and experiences, and interacting with various features within LAND. As Decentraland grows and user-generated content flourishes, the demand for MANA to participate in these activities could increase.
• Governance (Future Potential): There are talks about expanding MANA’s utility to include governance rights within Decentraland. MANA holders might one day have a say in the evolution and development of the metaverse through voting mechanisms. While not fully implemented yet, the prospect of governance adds another layer of potential utility to MANA.

Scarcity and Tokenomics:

• Limited Supply: There’s a finite supply of MANA tokens, capped at 2.1 billion. This creates scarcity, a basic economic principle where limited supply can influence value.

Growth Potential:

• Decentraland’s Adoption: The success and user adoption of the Decentraland metaverse directly impacts the value of MANA. If Decentraland attracts a large user base and thrives as a platform for user-created content and experiences, the demand for MANA to participate within this metaverse could rise.
• The Metaverse Hype: The broader concept of the metaverse is gaining significant attention. As the idea of interconnected virtual worlds becomes more prominent, projects like Decentraland and their tokens, like MANA, could benefit from this overall trend.

It’s important to remember that the value of MANA, like most cryptocurrencies, is still relatively volatile and speculative. While the factors mentioned above contribute to its value, there are also inherent risks. The success of the Decentraland metaverse and the overall adoption of metaverse concepts are uncertain.

In conclusion, MANA’s value is primarily driven by its utility within the Decentraland metaverse. Owning LAND, participating in gameplay and in-world transactions, and the potential for future governance rights all contribute to the demand for MANA. However, the value of MANA is also influenced by broader factors like the growth of Decentraland and the hype surrounding the metaverse concept. As with any investment, careful consideration of these factors and the inherent risks involved is crucial.

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.

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