What is Decentraland? MANA explained

In this guide you will learn about:

• History behind the Decentraland project.
• What is the MANA token?
• How does MANA token work?
• MANA as a governance token.
• MANA token circulating supply and market cap.
• How to buy MANA tokens.
• If MANA is a good investment.

Overview of Decentraland and Mana tokens

Those wishing to see a crypto Metaverse project might want to take a look at Decentraland. Currently, there are a few different Metaverses as immersive virtual worlds based on Web3 and blockchain technology. This particular platform provides many functions yet includes a specific niche - the purchase of land in the Metaverse.

MANA token is the native coin of Decentraland, an open-world Metaverse project that runs on the Ethereum blockchain. Within Decentraland you may find an economy based on token transactions to buy and sell land in the Metaverse.

The Decentraland's Mana token has attained a strong position on many global exchanges and provided opportunities for investors to seize with many trading opportunities regarding virtual real estate and other digital goods.

The metaverse platform provides several options to users. It is basically a virtual reality world where you can purchase land, build on it, and monetize it, along with the possibility to interact with other players and get included in their content and decentralised applications.  Further, you can create games, host virtual conferences, design art galleries, start businesses in virtual offices and do many more interesting things. In other words, you can use the virtual property to do whatever you like.

https://twitter.com/decentraland/status/1631548849285369858 

This metaverse project is a good option for gamers, artists, investors and online communities that want a metaverse 3D experience. It has been recognized as the next big thing in the world of digital assets trade.

If you are interested in Metaverse apps, take a look at one of our past articles where we mentioned Decentraland as well: 'What are the best Metaverse apps'.

History behind the Decentralised Land project

The metaverse project started in 2015 as a Proof-of-Concept used for allocating ownership of digital real estate to blockchain users through pixels on a 2D grid. The term Proof-of-Concept (POC) basically refers to evidence from a pilot project which is executed to demonstrate that a particular project idea, project, or business plan is feasible. A Proof-of-Concept project begins when an organisation implements a new program. A year later the team behind this digital world started to develop a 3D virtual world that is divided into parcels of land. 

 In 2017 the crypto project was officially launched following a $24 million initial coin offering (ICO). Initial coin offerings are crowdfunds that raise capital when a new crypto project starts. If you are interested in this concept, we suggest reading our ‘How to earn crypto: ICOs & early stage investment’.  

However, the platform opened for public users in 2020. When the beta was launched, pieces of virtual land were sold for only $20 but following the NFT boom in the area of digital art, the price of decentralised land prices was raised accordingly. For example, desirable pieces of digital real estate cost more than $100,000. 

What is the Mana token?

The Decentraland virtual platform is based on the use of three native tokens: LAND, Estate, and MANA. Mana token is an ERC-20 token that has to be burned to obtain non-fungible ERC-721 LAND tokens. The estate is an ERC-721 token as well. It represents parcels of digital land.

Both token standards are associated with the Ethereum network. The ERC-20 token standard refers to an implemented standard for fungible tokens created within the Ethereum blockchain.

In other words, it guides the creation of new tokens on the Ethereum blockchain so that they can be interchangeable with other tokens based on smart contract transactions. It differs from the ERC-721 standard as the latter describes how to build non-fungible tokens on the Ethereum blockchain. 

Mana tokens serve as the platform's native currency. That means that you need Mana tokens to buy property and other assets such as wearables for your avatar in the Metaverse's decentralised land.

How do Mana tokens work? Buying virtual real estate and wearables

With Mana tokens, you can buy virtual real estate and other necessities within the Metaverse in the form of non-fungible tokens. If you are a frequent reader, you probably remember that we examined NFTs in our knowledge base article: 'How to earn crypto: Unwrapping NFTs'. Real estate in the Metaverse is essentially a non-fungible token (NFT) that provides the holder with virtual proof of ownership over land in the digital environment.

If you would like to find out more about Metaverse real estate and buying virtual real estate, why not read this article: 'Metaverse and Real Estate: Should I Get into Virtual Real Estate?'.

The entire virtual space in Decentraland is composed of individual parcels of LAND that you can purchase with Mana tokens in the Decentraland marketplace. As mentioned above, you can also buy in the marketplace wearables for your avatar such as clothing, shoes and accessories.

Mana is an entirely decentralised token. No single entity or individual can control its design. Each transaction is recorded on the Ethereum blockchain making the process fully transparent and secure. It serves as a registry for all of the digital property acquired in the Decentraland metaverse.  

If you are new to the crypto scene, you probably wonder how smart contracts work. You can read all about it in one of our previous articles: ‘How to use crypto: What are Smart Contracts?’. 

There is not an infinite supply of these tokens. Each time someone buys LAND with MANA, a percentage of Mana tokens is burned. MANA includes a deflationary aspect as it maintains the value of all in-game digital assets. As more users mint NFTs on the platform, the MANA value appreciation increases. 

MANA is created to facilitate liquidity of in-game items on Decentraland. On a larger scale, Mana tokens are used as governance tokens and to incentivize content creation and wider user adoption. 

MANA as a governance token: Regulating the virtual world

The term governance token refers to a method that allows crypto projects to decentralise governance. As you are already aware, decentralisation is a core principle of all crypto projects. The term itself refers to cutting out intermediaries such as central authority and financial institutions to provide a trustless and transparent system. We examined the importance of decentralisation a while ago in our ‘What is decentralisation & why is it important’ article. 

Back to governance tokens, they are commonly used in decentralised autonomous organisations (DAOs), decentralised applications (Dapps), blockchain gaming and decentralised finance (DeFi). A governance token represents an individual’s stake in a certain decentralised organisation or project.  They are mainly used to incentivize early adopters.

This could be best illustrated by the example of DAOs. Decentralised autonomous organisations are new forms of organisations based on a flat structure instead of hierarchy. Translated to simple terms, it means making decisions in a particular project without putting one person in charge. Governance can be expressed mathematically to provide a fairer and more transparent framework. To sum it up, all token holders within a DAO get a vote. The new system democratised organisation governance and backed it up by blockchain technology and financial stakes. 

DAOs may be hard to understand the first time around. If you want to know more, consider reading this article: ‘What’s a DAO?’. 

As said above, MANA is a governance token. Therefore, MANA token gives its holder the right to vote in Decentralad DAO. Users can purchase MANA tokens on a cryptocurrency exchange or by selling collectibles on Decentraland’s marketplace. The token owner can then convert them to wrapped MANA (wMANA) and commit them to the decentralised autonomous organisation. One wrapped MANA equals one vote. 

MANA circulating supply & market cap

 During the 2017 Initial Coin Offering (ICO), around 40% of MANA’s 2.8 billion supply was sold. When it comes to the remaining amount, 20% was reserved to incentivize the community, 20% was reserved for the development team and early contributors, and the remaining 20% is held by Decentraland. 

At the time of writing in March 2023, MANA’s market cap amounts to $1,036,092,465, making it the 45th largest crypto on the market. The current circulating supply refers to approximately 1,855,084,192 MANA coins. 

How to buy Mana tokens?

If you want to buy MANA, you just have to follow a few simple steps: 

a. Open an online account

Before investing in decentralised land, you have to open an online account on a crypto exchange platform that offers it such as Coinbase, Voyager, and Binance. Once your identity has been verified, you can fund your account with money.

b. Get a crypto wallet

This step is optional. Many users, mostly those new to the market, store their crypto assets on the exchange platform. Even though the security of exchange platforms has increased, the most secure option is to store your digital assets in crypto wallets, either hardware or software.

c. Purchase tokens

Once your funds are deposited, look for a trading pair with MANA, such as MANA/US dollar. Then you can set the price you would like to buy MANA at and go through with the transaction.

Is MANA a good investment?

 Investing in real estate is a traditional and safe method of investing. With the emergence of the digital economy, tables have turned. The digital reality closely mirrors the physical world, but for some time now, many investment activities have been associated with the internet. You may wonder what is so special about virtual properties since at first, it sounds like they don't have any value.

In terms of market capitalization, it is a good-ranking currency. Its growing popularity attracted a number of celebrities and luxury brands that wanted to enter the Metaverse via NFTs.

However, taking into account that the crypto market has been fluctuating and experienced a few downfalls, it is significant to add that before investing you should always do your own research and consider all risks and possible benefits.