Decentraland's Economy & Protocol

Decentraland Protocol?

Decentraland consists of three main layers; the Consensus layer, the land content layer and the real-time layer. In the diagram below you can see a visual summary of the protocols:

Consensus Layer

The ownership of lands will be established on this layer. The content of the land will be available in a hash of the file’s content and it be downloaded from IPFS or BitTorrent.

All the details of the scene such as textures, objects' behaviours and sounds will be included in the file. The information of the peer to peer interactions between the users who are in the same virtual place will be there as well.?

Content Distribution Layer

The content which is needed to render the world will be distributed using a decentralized storage system. The smart contract will create a reference to a file which holds the details of each parcel. As mentioned before, Decentraland doesn’t need any infrastructure which is related to a centralized server. The costs will be taken over by the ones who benefit from the platform. Many people are seeding content without getting compensated; just because they love Decentraland and they believe in it. The costs can be covered by protocols like Filecoin in the future.?

Real-time Layer

Users can interact via peer to peer communication hosted by third parties or land owners. they can present themselves with avatars and communicate via voice chat or texting.?

Decentraland’s Identity System

An identity system which makes it easy to establish ownership of creations will be vital for the development of the Decentraland economy.?One way to state your identity in Decentraland is to own land. The credentials of the parcel will refer to the owner. Another way to verify identities would be linking public keys with signatures and names. ENS or Ethereum Name Services can be used to distinguish people as well.?

Foundations of Decentraland Economy

Decentraland is aiming to create a virtual world in which users and the developers can monetize all kinds of interactions between humans and applications. In order to achieve this goal and to trade virtual goods and receive online services, the financial infrastructure must be prepared. A core system will be needed for conducting international transactions. Cryptocurrencies, Cross-chain bridges and CeDeFi protocols can create trustless channels between parties.?

Decentraland has a scripting system, using which the interactions between applications and users can be programmed. Blockchain smart contracts will enable beneficial cryptographic functions such as decentralized storage and micropayments for developers.

As mentioned before, Decentraland will continue to exist as long as the users and developers engage with the system and keep it alive. This is why incentivizing the virtual actions must be taken into account. The more creations happen and the more avatars and items get distributed, the more guaranteed the survival of Decentraland will be.

The foundation will try to find ways to keep the users interested. Art creation contests, interesting applications and games which come with prizes will be implemented to develop the economy of the ecosystem. Allowances will be assigned to newcomers so that they engage with the economy immediately.?

LAND

LAND was introduced in the Iron Age. No third party has the power to control the LANDs. The community is the only owner of the parcels; every user has full authority over the content they create on their own LANDs and they can control what other content can be published on their land. Each land is identified by cartesian coordinates (x,y). Ownership of the lands will be claimed on a ledger of parcels which is based on the blockchain. Lands get divided into parcels.

Each land on Decentraland is considered an NFT and it has all the characteristics of a non-fungible token such as being transferable and a scarce asset which runs on an Ethereum smart contract.

The adjacency of the parcel makes Decentraland’s interface different from web domains. We can have limited hyperlinks on a website; on the other hand, when you are exploring the lands on Decentraland, you will be exposed to the upcoming content and you can see the adjacent parcels from a distance. It will increase the chances of being seen by creators on Decentraland. Some parcels might be organized as themed communities. Shared spaces with common interests are called districts. In 2017 Esteban Ordano, one of the founders of Decentraland, published a repository on Github website, using which people could propose themes for the districts.

Having specific topics makes the parcels easier to be found by interested visitors. Every new parcel should be adjacent to a former parcel which is not empty.? The utility and the price of each parcel will be different. It depends on its exact location, how crowded it gets and its capability to host applications. Developers and creators need to buy or rent LANDs to build whatever they want on top of it. We can get lands by spending MANA, the native token of Decentraland.?

MANA

MANA which was introduced in Iron Age, is an ERC-20 token which will be used for buying lands on Decentraland as well as buying and selling other digital assets such as virtual outfits and NFT or to use virtual services such as renting advertising billboards on high-traffic hubs.? LAND can be bought by burning this Token. MANA is a proxy for the new parcel claiming costs.?

Payment systems in Decentraland

One of the aims of Decentraland is to change the E-commerce by providing direct payments between users and the creators without charging them high fees.?

Hosting contents, running peer to peer protocols and processing the audio for the users come with costs. That’s why payment channels in Decentraland are very important. Using the payment channels the clients can do direct purchases without facing risks of fraud. selling MANA tokens can subsidize the services and make it easier for new developers to enter the platform.?

About Crypto Diva

I’m already in the Future… Meet me there! Blockchain Technology is my passion and I have dedicated my career and research path to DeFi. My ultimate goal is to encourage more female professionals in the DeFi industry.

As the Marketing Manager of?Paycer Protocol , I’ve got the privilege of being in close contact with CeDeFi experts who are creating the foundations the future financial world. I love to make the impossible possible and i’m willing to go the extra mile for that. Be my companion in my DeFi journey and I’ll show you everything.

Peace & Love,

Your Crypto Diva

Stay in Touch with Me:

Instagram ?|?Twitter ?|?LinkedIn ?|?English Medium ?|?English YouTube ?|?Farsi YouTube ?|?Farsi Medium

Sources:?Ordano, Esteban, and Ariel Meilich. “Decentraland Whitepaper.” 2015,?https://decentraland.org/whitepaper.pdf. ?Accessed 19 06 2022.