Building a LAND Economy with the MANA Token
Using the Ethereum network to establish ownership of a virtual world.
Decentraland will use the Ethereum network to establish land ownership in the virtual world. The world will be divided into 100m² (about 1078 ft²) parcels, with a non-fungible digital asset for each plot of land. These assets recognize the designated owner of the parcel, and describe what its contents are. We call this digital asset, LAND.
We are also introducing an ERC20 token named MANA. MANA can be burned to claim LAND. Holding MANA allows users to claim a big area of LAND before deciding where to settle.
Why We Use Ethereum
Our previous iterations of Decentraland used their own blockchain. By piggybacking on Ethereum’s virtual machine, we reap the benefits of a decentralized ownership ledger, while avoiding the costs of maintaining a P2P network, mining relationships, software, etc.
When users buy MANA through a smart contract, they will directly contribute to the development and growth of not only the economy, but the ecosystem. Proceeds received from token sales will eventually be managed by a DAO. This approach will improve the chances of success of the project, by capturing the value that would otherwise be spent on mining equipment and electricity.
The sale of the MANA token will take place in two stages: the Crowdsale Event and the Continuous Token Sale.
The Crowdsale Event
At the Crowdsale Event, tokens will be sold at an increasing price per block. The sale will be held over a maximum of eight days, beginning on August 17th.
Earlier blocks include a discount on the final sale price. Discounts start at 40 percent and decrease by 5 percent with each subsequent block.
Note: The conversion of all figures from USD to ETH will take place as we approach August 17th.
This is a standard auction model, similar to the one ran by the FunFair team. One key difference is that our price step-ups are based on time, not funding threshold.
The Crowdsale Event will end as soon as one of the following conditions is met:
- Total amount in sales exceeds the $25 million USD cap.
- The sale reaches day number 9.
When the sale ends, all participants will receive tokens for the total amount they contributed, at the price they secured. Please reference our Token Sale Terms for more details.
Tokens bought at the crowdsale will represent 40% of the initial token supply. As outlined in the chart above, additional tokens will be issued and allocated to the team, early contributors and advisors, as well as the team and partners.
We will also distribute tokens to the community through a system of grants: it is of utmost importance that developers and other content creators become part of the ecosystem. If you are interested in more details about the Crowdsale event, feel free to contact us.
The Continuous Token Sale Model
The Decentraland world is continually expanding, therefore requiring further creation of MANA to accommodate new users. Based on ideas by Simon de la Rouviere, we explored the advantages and disadvantages of creating a continuous token model, where price and supply would be driven by demand. Defining the price function and sale mechanism proved to be a huge challenge.
Working together with Jake Brukhman from CoinFund, we chose to go for a simple continuous issuance model, at a price that can be modified by the DAO. This meets our requirement of allowing the world to expand.
This continuous issuance will allow users to buy MANA from the smart contract, with a cap on the amount issued per Ethereum block. This way, the annual increase in the MANA supply will be 8% of the tokens generated after the Crowdsale Event.
The price at which MANA is sold can only be changed with the consensus of multiple signatories from the Decentraland Board. The selling price will be tracked and updated regularly, to coincide with market price. It is important to note that the token quota per Ethereum block has a low cap, therefore a sudden change in price will have limited effects on secondary markets.
LAND is one of the first non-fungible digital assets in Ethereum, next to ENS domains. We are thankful to the authors, thinkers, and developers on whose shoulders we stand; to all those that have helped us iterate this model; and especially Simon de la Rouviere and Jake Brukhman, who gave us great insights.
Learn more by reading the Decentraland White Paper.
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Note: This article has been amended. After exhaustive consultation with our advisors and the core team, we have adopted a standard auction model, as opposed to a reverse dutch auction. This better protects the integrity of the token sale and preserves the longevity of the network. We’ve also transitioned the token sale start date to August 17th to ensure complete compliance with recent regulatory announcements. Learn more in our announcement.