Decentraland (MANA)

What Is Decentraland?

In November 2021, a Canadian company paid about $2.43 million for a small patch of land that does not physically exist. The plot sat in Decentraland’s Fashion Street district, and the price was settled in MANA. That sale captured what made Decentraland unusual: ownership of virtual space was enforced by a blockchain rather than by the company running the world.

Argentine developers Ari Meilich and Esteban Ordano started the project and raised about $26 million in an August 2017 token sale. The world opened to the public on 20 February 2020. You enter through a web browser, walk around as an avatar, and visit galleries, casinos, concerts and brand pavilions that users have built on their own parcels. It is one of the earliest examples of a crypto metaverse.

Unlike a game run by a single studio, Decentraland was designed so that no company can seize your land or change the map on its own. That promise rests on three pieces of on-chain infrastructure, which the next section walks through.

How Does Decentraland Work?

The world is a grid called Genesis City, divided into 90,601 parcels of 16 by 16 metres. Each parcel is an ERC-721 token called LAND, with fixed x and y coordinates. The owner decides what appears on the parcel by publishing 3D scenes to it. Neighbouring parcels can be merged into an Estate, and themed clusters owned collectively by a community are called Districts.

MANA is the money. It pays for LAND, avatar wearables, unique usernames called NAMEs and items sold by creators. MANA started with a supply of 2.8 billion tokens. Buyers spent MANA to win parcels in the original LAND auctions, and the protocol burned the MANA they paid, which reduced the total supply to about 2.19 billion.

Here is how pricing in MANA affects a buyer. Say a parcel is listed for 5,000 MANA while MANA trades at $0.50, so the land costs $2,500. If MANA doubles to $1.00 and the seller does not change the listing, the same parcel now costs $5,000 in dollar terms. Buyers who hold dollars need twice as much to buy it, while buyers who already hold MANA pay the same number of tokens.

That link runs both ways: a rise in LAND demand forces buyers to acquire MANA first, and a fall in MANA’s price can make land look cheap in dollars even if nobody wants it.

How Does Decentraland Governance Work?

Since 2020, the Decentraland DAO has made decisions on content policy, grants, new Districts and marketplace fees. Voting power comes from three assets. Each MANA gives 1 vote, each NAME gives 100 votes, and each LAND parcel gives 2,000 votes. A holder with 50,000 MANA and three parcels therefore controls 56,000 votes, more than a thousand casual users with 50 MANA each.

The DAO also controls a treasury funded partly by a 2.5% fee on marketplace sales. Proposals that pass are executed by a council of signers, which keeps day-to-day operations practical but adds a layer of trust between the vote and the result.

Decentraland vs. The Sandbox

Why Is Decentraland Important for Traders?

MANA is a sector bet. Its price has moved with enthusiasm for virtual worlds as a whole, which is why it surged in late 2021 after Facebook renamed itself Meta and then fell sharply as that enthusiasm faded. Traders who hold MANA are effectively expressing a view on whether people will spend time and money in open virtual worlds.

The biggest risk is the gap between valuations and activity. Land sold for millions of dollars during the peak, yet on-chain data from DappRadar in October 2022 showed that as few as 38 users made currency transactions on a single day. When a virtual economy has few buyers, land and MANA can fall together, and parcels become hard to sell at any price because the NFT market for them is thin.

Holding MANA as a governance token adds a second limitation. Voting power scales with holdings, so whales and early LAND owners can steer grants and policy. Buyers of MANA get a vote, but in practice a small group of large holders sets the direction.

Key Takeaways

• Decentraland is a browser-based virtual world on Ethereum in which each land parcel is a unique NFT, so ownership is enforced by the blockchain rather than by a company.
• MANA is the world’s currency and governance token, and MANA paid in the original LAND auctions was burned, shrinking its supply.
• Because LAND is priced in MANA, changes in MANA’s price change what land costs in dollars, and demand for land requires buying MANA first.
• The Decentraland DAO sets the platform’s rules, with voting power weighted toward holders of MANA, LAND and NAMEs.
• The central risk is thin real usage: when few people visit or trade, both land values and MANA can fall at the same time.