Analysis of Decentraland – Blockchain-Based Virtual World - Crush Crypto

Analysis of Decentraland – Blockchain-Based Virtual World

Summary

  • Project Name: Decentraland
  • Token ticker: MANA
  • Websitehttps://decentraland.org/
  • Whitepaper: https://decentraland.org/whitepaper.pdf
  • Hard cap: US$25 million (ICO contributors own 40% of total token supply if hard cap is reached)
  • Soft Cap: No soft cap
  • Conversion rate: 1 MANA = US$0.04
  • Maximum market cap at ICO: US$50 million
  • Bonus structure: 40% discount on the first day, discount decrease by 5% each subsequent day
  • ERC20 token: Yes
  • Timeline: August 8 to 16 (please refer to Decentraland’s website for most up-to-date information)
  • Token distribution date: Immediately after the end of the crowdsale

Project Overview

What does the company/project do?

Decentraland is creating a virtual world, similar to the game Second Life, powered by the Ethereum blockchain. The platform enables developers to build and monetize applications on top of it.

Users will be able to explore the world, interact with each other, buy and sell virtual items, run applications on different parcels of land, among other things.

How advanced is the project?

The team began working on Decentraland since 2015. Initially, the digital real estate was implemented as a pixel on a 2D grid, where each pixel contained metadata identifying the owner and describing the pixel’s color. This experiment was entitled Decentraland’s Stone Age.

In late 2016, the team started developing the Bronze Age, a 3D virtual world divided into land parcels. The web demo can be viewed here. Here is a screenshot of the web demo:

Screenshot of Decentraland

Scheduled to launch in Q4 2017, the next version of Decentraland, the Iron Age, will create a social experience with an economy driven by the existing layers of land ownership and content distribution. In the Iron Age, developers will be able to create applications on top of Decentraland, distribute them to other users, and monetize them.

The Iron Age will implement several features, including:

  • A P2P network that allows users to interact with each other and the world. This is needed for text messaging, audio conversations, position, avatars, items, and other features.
  • A micropayment system, as a core feature, creating an in-world economy. Most of the original team of Streamium, a pioneer on user-friendly cryptocurrency micropayments, is working on Decentraland.
  • A land management interface that artists can use to create experiences for visitors without leaving the browser. While in-game, users will be able to develop, buy, rent, and sell virtual estate.
  • A scripting language, designed with VR in mind, so landowners can program the experiences they want to offer other users.

In 2018, the next phase of development, called the Silicon Age, will allow the platform to become a full-fledged 3D world, with full VR support and customization of the laws of physics.

What are the tokens used for and how can token holders make money?

MANA will be used to purchase land, goods, and services in-world. 1,000 MANAs are burned in exchange for 1 LAND.

Developers and other content creators will demand LAND so that they can build on top of it and reach their target audience. Although every unclaimed LAND can be purchased at the same exchange rate, LAND parcels are distinguishable from each other, potentially trading at different prices on a secondary market due to differences in adjacencies and traffic.

The success of MANA hinges on the popularity of the platform. For LAND, luck also plays a factor: if your LAND happens to be adjacent to the popular spots, then you LAND can be much more valuable than others.

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Team

Decentraland has a team of 9, many of whom have worked together before.

Ari Meilich, Project Lead – previous co-founder at Benchrise, and market research analyst at CRV.

Esteban Ordano, Technical Lead – previous co-founder at Smart Contract Solutions.


Opportunities

  • The idea of creating a virtual world in VR and interacting in it is very interesting and should draw a lot of interest.
  • The project has been under development since 2015.
  • Since land is scarce, if Decentraland is popular, then MANA and LAND will become very valuable, just like land in the real world.
  • The team has partnerships with other promising projects such as district0x and Aragon.

Concerns

  • This seems like a very complex project, with different applications being able to run on the platform.
  • Unlike some other ICOs, this project does not actually solve a problem. It is just creating a game that people may potentially want, depending on how entertaining it is.
  • Decentraland is essentially a game but no one on the team has gaming experience. Developing a successful game is very difficult – 99.9% of mobile games are unprofitable. It took even Rovio 51 failures before their success in Angry Birds.
    • I believe the team has the technical expertise, but I am not sure if they have the relevant experience needed to create a successful game.
  • Decentraland needs an active community to stay alive (and for land to be valuable). Even if the project is a hit initially, all games will eventually go out-of-favor and players will leave – virtually no game can maintain its popularity for over 10 years. People will eventually get bored and leave the system.

Conclusion

Overall, I am neutral about this ICO from an investment perspective. It is a very interesting project – I am sure it will be a fun game to play in.

However, so many things need to be done right (both in terms of software development and on the entertainment side) for this project to be a success. I’m not sure if the team is able to do it given their lack of experience in the video game industry.

Our thoughts of the tokens for short term and long term are as follows:

For short-term holding

Not good. The execution of the ICO so far has been poor - 1) increasing the hard cap by $5 million, 2) canceling the whitelist because there is a scam going on? It doesn't make any sense to me.

For long-term holding

Neutral. For MANA to appreciate, there needs to be an active community using the platform and finding it entertaining. On one hand, this idea seems very interesting, but on the other hand, I am not sure about the team’s capability to build a successful game given no previous background in the video game industry.


For more information about the ICO, please visit the following links:

Website: https://decentraland.org/

Whitepaper: https://decentraland.org/whitepaper.pdf

Blog: https://blog.decentraland.org/

Subreddit: https://www.reddit.com/r/decentraland/

Bitcointalk thread: https://bitcointalk.org/index.php?topic=1968414

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