Decentraland is a virtual reality platform on the Ethereum network. Players can purchase virtual land and build on it to create and monetize applications and content. But why are people buying virtual land for millions on the NFT marketplace? And what makes virtual land so valuable?
How does Decentraland work?
Let’s first take a look at how Decentraland works. Its economy is built on the Ethereum blockchain. Non-fungible tokens, called MANA, act as the game’s currency. There are 43,000 equally-sized pieces of land that are owned and traded by players around the world. All of which have already been purchased. (Good luck trying to get one!) However, players can now only buy land on the secondary market.
The land is permanently owned by users, giving them complete control over their creations. Users’ ownership of their virtual land is recorded on a blockchain ledger of parcels. Every block of land is represented by an NFT token that acts like a key to a real house and enables the seamless and instant transfer of virtual land between users worldwide.
There are even websites like Rentable that act as leasing agents for virtual real estate on Decentraland. All you have to do is browse the site and select a rental within your monthly budget. There’s a security deposit like in the real world, and once you’ve paid your rent, the land is yours to do whatever you want with it.
How can users generate passive income in Decentraland?
Like in the real world, investing and growing your property portfolio allows you to make actual money in the metaverse. Some are investing millions of dollars in virtual parcels of land. Crazy, right?
Landowners control what content and applications exist on their land, ranging from 3D scenes, games, and other applications. They can use their land to generate passive income in a host of creative ways. And, as the user owns the land, they get to keep 100% of the profits.
Users can generate revenue by:
- Selling space or billboards for advertising and making passive income every time someone buys ad space
- Charging rent for their land
- Building a virtual museum and charging admission
- Hosting a virtual event like a club night, digital art festival, casino night, or a party
- Deploying a public game or application
- Creating an NFT gallery and keeping a percentage of the sales profits
- Selling merchandise in a virtual store
You can do whatever you like- there’s really no end to the possibilities in Decentraland.
Why is virtual land so valuable?
How can users be sure that the video game creators won’t just create more land or reduce the value of land? Well, Decentraland is the first platform of its kind. There is no central entity that controls the fate of the game. This means that users have complete control over how the game changes and grows in the future. The game developers don’t have the power.
So, any changes within the platform can only happen through a community vote. Voting power is determined based on how much land or MANA you own. No more land will ever be created unless the majority of the community votes. But this is highly unlikely considering that users are likely to act in their own interest, and creating more land would reduce the value of their own land.
