TL;DR
Decentraland is one of the most interesting crypto projects for the following reasons:
- It has the potential to grow into a large and valuable social interaction layer for the internet.
- It is a great use case/experiment for blockchain and decentralization.
- The team is talented, technical, and has known each other and worked together for years.
- The team has been working on the underlying technology since December 2015 and have product demos.
Intro
When I tell people about Decentraland they either immediately get it or give me a funny “wtf, why would anyone want that?” look. The people who get it usually have read either Snow Crash or Ready Player One, and have since dreamed of a shared virtual reality world.
Decentraland’s vision is to be an open platform to enable anyone to create and monetize virtual reality content and applications in a shared virtual world. In the virtual world people will be able to socialize, create, share, and trade digital goods and services. All assets will be stored on the Ethereum blockchain. It’s truly a world created and owned by the users.
So is this like a video game? Sort of. Why would anyone want this? Well, people already want it, they just don’t realize it.
Decentraland’s Potential: A New Social Interaction Layer for the Web
The vision for Decentraland is to be a new form of social interaction layer on the internet.
For most of the history of the internet, text communication has been the dominant form of social interaction. Only more recently have rich images and video content started to take on larger roles.
The idea of people socializing or browsing the web three-dimensionally isn’t that crazy if you realize this is already occurring on the web through social media, instant messaging, video chat, YouTube, Reddit, etc.
What’s interesting is that a lot of our real life social experiences have become anti-social after we ported them to the internet. E-commerce, for example, is really quite a lonely experience. I search Google, browse Amazon, visit a Shopify-powered store, add things to my cart, and maybe I say hello to the delivery person.
In the future someone could integrate their OpenBazaar storefront with Decentraland, inviting friends (or strangers) to go shopping together. That storefront could be a completely new experience from anything we know of in the physical world. Someone who sells snowboards could create a mini-snow mountain village in Decentraland, showing off digital versions of their snowboards to prospective customers. Similarly, online gambling could turn into VR casinos, where people can share the experience with friends.
The power of social interaction in VR is precisely why Mark Zuckerberg purchased Oculus for $2 billion in 2014. According to Zuckerberg:
This is really a new communication platform. By feeling truly present, you can share unbounded spaces and experiences with >the people in your life. Imagine sharing not just moments with your friends online, but entire experiences and adventures.
Decentraland will provide the tools for people to build those experiences and adventures without the need for a centralized organization like Facebook.
I think that is important as we have started to see digital goods economies pop up in the blockchain world, we have started to see digital goods economies pop up in the blockchain world, like the Rare Pepe economy (see here and here) and Steem. At the time of writing, the total value of pepecash, the Rare Pepe economy currency, is around $10 million. Monetary rewards for content creation beget more content creation, building thriving communities.
The early adopters of Decentraland may come at the intersection of cryptocurrencies and gaming. VR gaming is becoming a huge business, with worldwide revenue for the industry projected to grow to more than $162 billion in 2020, from $5.2 billion in 2016, according to IDC. Meanwhile, the cryptocurrency markets recently hit a market cap of $100 billion.
Pre-Decentraland, there was already a lot of overlap between gamers and the crypto world. For example, Blockchain Capital’s Brock Pierce created a digital asset trading empire before making the leap into the crypto space.
While people will be able to access Decentraland through a web browser, the improving performance and declining cost of VR hardware will attract more users to a robust, creative world. As the Ethereum ecosystem grows, Decentraland could become a virtual meeting place for decentralized orgs.
Imagine having your Aragon/BoardRoom-powered org conduct a meeting in Decentraland. It would even be possible for dApps, such as Gnosis and Augur, to have prediction houses where people can meet up and debate their views on events.
A Solid Use Case for Decentralization/Blockchain
Facebook is interested in VR. If you think some of these tech companies collect and store too much data in large centralized servers today, wait until VR improves. It will be able to track your facial expressions, emotions, movement, and your eye movements.
Now imagine all the advertising that can be targeted at you if a company like Facebook owns all that data.
The creation of a Metaverse will develop a virtual economy—it will be in everyone’s best interest if that economy is not controlled by a large corporation or government. For one, a virtual world economy won’t exist within any one geographical jurisdiction. If it is owned by a corporation, that corporation will have to acknowledge the laws of the country where it is domiciled. Second Life, for example, has had to curtail some of its user activity because it potentially violated U.S. gambling laws.
Many of the people who have played games like World of Warcraft and EVE Online will understand the power of a decentralized world where the rules can’t be changed from underneath you. Vitalik Buterin even said that one of his motivations for creating Ethereum was due to the creator of a game he was playing changing the rules for what his favorite character could do.
Decentraland eschews centralized control and replaces it with a non-profit foundation, which will later be turned into a DAO. And like all open source software, anyone who doesn’t like what’s going on in Decentraland can fork the software. People will also be able to create special clients that have different features than the main Decentraland client, but keep the same underlying blockchain.
The Tech
The tech behind Decentraland can be broken into two major aspects: controlling land and connecting players. The technical details of these aspects are tuned to help Decentraland achieve massive scale while also allowing the community to maintain collective control of the world.
Since the world is rendered separately by each client, all clients need fast access to the assets (3D models, visuals, and other code) for the area they’re currently exploring. All clients also need to agree on what those assets are at any given time. To do this, Decentraland relies on IPFS, a massive P2P file storage system. Using a well designed P2P file storage system like IPFS helps Decentraland scale by ensuring that clients actively downloading assets for a particular area help share those assets with other clients. This means that assets any given location will be quick to download even as that location becomes more popular.
Decentraland uses Ethereum smart contracts to define who can control which assets files to download for each location. Selling a piece of land means selling the right to control which assets appear at that location from now on. This is a perfect application of Ethereum’s smart contracts. Smart contracts ensure that no single party controls these transactions helps make land ownership mean something. Only the person that owns the land can control its assets. And only the person that owns the land can sell that land to someone else. Just like the real world! (Better actually.)
A client can query the state of the smart contract, running on Ethereum, that stores the ownership ledger of MANA and land. From there, the landowner where you start from will give you an IPFS address. You then fetch that IPFS address and get a manifest with the land contents, and a P2P coordination service that you can ping, ask for nearby users, and connect directly with them. Each of these underlying technologies are being developed by their own world class teams that are dedicated to the success of projects like Decentraland. This means that the underlying technologies will continue to scale and mature without direct investment by the Decentraland team. This frees the Decentraland team to focus on design and implementation of the client and refining the user experience defined by its unique combination of these underlying technologies.
Decentraland will host content to kickstart the network and subsidize it in the short-term from token sale proceeds.
They will also be partnering with a company that makes PCs to create a Decentraland computer, an out-of-the-box machine that you can put in your home and have that cache content so you can explore faster.
To view the VR world, the team is building a web application running with aframe/webvr. Decentrland will have it’s own client with a low poly, short download size for land content. However, people will be able to hack together their own clients so they are not constrained.
The team is working on mobile web VR support. If they can’t get enough performance out of that they will build native viewers for iOS and Android.
Economics and Monetary Policy
Another differentiating feature of Decentraland is that it is one of the few crypto projects that has a clear monetary policy laid out from the beginning. There will be an inflation rate that starts at about 8% of the initial token supply and will decline gradually over time. The new tokens will be released through a smart contract and the proceeds from the ongoing token sales will flow to the Decentraland Foundation.
The inflation rate was chosen to encourage new user growth in the early stages and ensure that the Foundation has a revenue stream to fund community development until governance is ready to be transferred to the DAO.
Land inside will develop value based on its content and proximity to other valuable. It is up to the owners of land to make it unique:
“The adjacency of land makes Decentraland parcels uniquely different from web domains. This adjacency allows for spatial discovery of new content and the creation of districts involving shared interest groups. For content creators, this equals access to targeted traffic; for end users, discoverability of themed experiences. Users can travel through neighborhoods and interact with applications that they stumble upon.”
Over time the value of the MANA token will reflect the demand for land, the strength of the Decentraland economy, and new user growth. However, users will be able to transact in any digital currency they desire.
Decentraland Has an Experienced Team and a Product Demo
Decentraland is a rarity in the crypto world as it has an experience team and a product demo.
I discovered Decentraland at a conference and was lucky enough to meet a few of the team members and learn about their story. We followed up with some messages in their Slack and then had several Skype calls.
As I learned about their history and reasons for starting Decentraland (hint: it involves reading Snow Crash, an interest in tech, and lots of dreaming), I got more comfortable making a bet on the team that they were fully committed to the project and not in it to make a quick buck.
Several of the team members have known each other for 6+ years, have lived together as roommates, and have been business partners. They have worked together on several businesses and blockchain projects. Some of their past projects include Proof of Existence, Streamium, Bitcore, and OpenZeppelin.
Further Reading
Anyone who has tried VR can attest that a web demo does not do it justice. VR is a truly immersive experience. When you can interact with objects you’ve created and people you know in an immersive 3D world, surfing the web will never be the same.
If you’d like to learn more about Decentraland, check out their website, demo, and white paper.
You can also join their Slack channel and Telegram channel and start contributing to the project.
Disclaimer: This piece is merely an opinion and does not constitute investment advice. The author is an investor in Decentraland. Always do your own research when parting ways with your hard earned capital.
VERY interesting! great post
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