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NFT meets Gaming: Decentraland

How Decentraland combines NFTs and Gaming

NFTs hit the mainstream this year, and our childhood celebrities like Paris Hilton or Lindsay Lohan are all-in on them, even selling their tweets or pictures as non-fungible tokens.

The trend might have been aided by the fact that most people in the developed world were forcibly spending a lot more time at home and online than usual. It gave rise to a new profession: Tik-Toker, as citizens were seeking distraction from their lives. The enforced quarantines also lead to massive growth in the already expanding gaming industry. Deloitte estimates that according to the findings of their study, over a third of adults tried a new video gaming activity during the lockdown. Under millennials, the percentage stands even higher at 43%. The consultancy believes that at least a third of those will keep up their new habit, which would further fuel gaming.

However, despite gaming booming, some issues remain — especially for gamers heavily invested in games, the question of ownership of digital assets is essential.

Hackers continue earning millions with stolen credentials as gamers can’t always secure their identity in-game. Additionally, even when buying in-game items, there is no guarantee that these items will maintain their value or be tradeable in the future. Even as a gamer looking to purchase items on secondary markets, you can’t be sure that these are legit.

In traditional gaming, gamers still rely on a centralized gaming studio providing them access. This gives them the power also to revoke access or any other benefits as they like.

Fortunately, NFTs can solve precisely that problem.

Arguably the hype was real, and like so often, the hype has cooled off. But if you think NFTs are a bit overrated, have you heard of the Italian artist who sold an invisible statue for thousands of dollars? Sometimes reality trumps our wildest dreams. 😉

At least even if you bought a questionable piece of art by Beeple as an NFT, you still have something to show off with. (I think enough time has passed to say his art isn’t my taste).

That being said, NFTs have unique features making them perfect for digital items such as in-game items. But before diving into those, a quick differentiation between fungible vs. non-fungible.

  • Fungible means that one item can substitute another item in the same category. You can easily substitute 100$ bills for one another without anyone noticing, nor any change in the value they represent. Nothing is unique about those bills. They are fungible.
  • Non-Fungible means that one item can’t substitute another one. Pieces of art are non-fungible. While you might be able to buy a print of the Mona Lisa, you won’t easily be able to replace it with a similarly valuable artwork by Monet.

NFTs give gamers full control over digital items of value. Benefits provided include:

  • Actual ownership and provenance. NFTs come with a unique ID that’s tagged to the owner of the item. Thanks to the transparent nature of blockchain, anyone can easily check which wallet address an NFT belongs to.
  • Transparency since all information is stored on the blockchain
  • Interoperability — unlike when buying in-game assets on a centralized server, NFTs follow a token standard that can be transacted across games and even stored in your own wallet
  • Security and Immutability: NFT’s can’t be tampered with nor duplicated. Players also won’t lose access to them just because a game shuts down.

Overall, NFTs can’t just be used for in-game items and any other assets that one wants to represent on-chain, digital or not. Some that have seen popularity rise recently include branded NFTs, such as NFTs issued by Dr. Who or by Terra Virtua in collaboration with The Godfather, or Memorabilia like the recordings of sports legends scoring a goal.

So, how do NFTs work in gaming? Today I’ll introduce Decentraland to illustrate how NFTs work perfectly in blockchain gaming environments.

Decentraland

decentraland blog

The above image represents a scene from the Decentraland VR platform. The decentraland blockchain platform is revolutionizing the way developers, and creators monetize content and apps. It provides users and devs with a 3D-based, immersive game experience.

It’s also one of the older blockchain projects built on Ethereum. Its founders Esteban Ordano and project lead, Ari Meilich, started working on the platform in 2015, long before the big ICO boom.

“With Decentraland, we’re creating an ecosystem that combines many of the solutions being implemented on cryptocurrencies with the impending mass adoption of VR systems. The result is a metaverse, a social 3D world with a native economic network.” — Esteban Ordano

Both bring together vast expertise in the blockchain sphere, with Ordano being credited with co-creating the leading bitcoin infrastructure library Bitcore.

On Decentraland, players can buy and sell digital real estate, explore the virtual world, interact with each other and play games. Since its inception, Decentraland has implemented interactive apps, enabled in-world payments and peer-to-peer communication.

The virtual world is fuelled by 2 different types of tokens:

  • LAND tokens are all NFTs and define ownership of land parcels on decentraland. They are limited in supply and each parcel has a size of 33 x 33 feet, however, height isn’t limited so developers can build towers as high as they want on their parcel of land. The token standard LAND follows is ERC-721, the most common Ethereum standard for defining non-fungible tokens
  • MANA is a cryptocurrency, an ERC20 token that’s used to facilitate payments inside of Decentraland to buy and sell LAND and other goods or services. Whenever players buy LAND with their MANA, the MANA is burned. Mana holders also have a say in governance, but more on that later under Decentraland DAO.

Decentraland relies on a three-tiered infrastructure made up of the consensus layer, the land layer, and the real-time layer.

  • Consensus Layer: As you’d expect this layer tracks ownership of land parcels. Each LAND parcel is defined by unique coordination in the virtual world. On the ledger, LAND is stored with a reference to the description file that ultimately represents how the land.
  • Land Layer: This layer is managing storage in a decentralized way. It allows users to download assets and provides all the necessary information for them to render a parcel of land (render = create the image/virtual reality representation of the content)
  • Real-time Layer: Lastly, this layer manages communication between players. Like in most games, players can build their own avatars to represent them in-game and use voice-chat or messaging to communicate with their fellows.
Decentraland Blog

The main city of Decentraland is called Genesis city and covers a similar surface as Washington. In genesis city, players can create their own places and interact with apps and services. The city includes zones that are commercial, industrial, and residential.

Through the genesis content program, developers can submit proposals to add new blockchain games and interactive experiences to the city.

Decentraland DAO

A lot of blockchain projects preach decentralization but continue to keep control focused in the core team. Not so Decentraland. Both founders have since stepped down from their roles, ceasing control to the DAO. They’re now part of the Decentraland association that’s overseeing and implementing changes as defined by the community.

The DAO is made up of MANA holders. It controls a MANA fund to subsidize initiatives on Decentraland as well as manage all smart contracts and important assets including LAND contract, estates contracts, wearables, content servers, and the marketplace.

To vote, users have to use the DAO powered by Aragon (a blockchain ecosystem enabling decentralized governance). They can then vote on various changes including updates to policies, auctions, and whitelisting; upgrades to LAND and estate: primary sales fees, addition and replacement of content servers, the allocation of MANA grants.

Decentraland continues expanding and working on its platform. You will hardly meet any blockchain enthusiast who hasn’t heard of this platform and while the price performance might not be as impressive as other newer DeFi tokens, Decentraland keeps delivering.

Just recently, they partnered with Polygon, a layer 2 scaling solution to let users transact for less when transferring their NFTs. With the gaming industry set to grow and interest in virtual reality worlds increasing, Decentraland is a blockchain platform to look out for.

Disclosure: I currently don’t hold any MANA, but after all the research done on it, I’m tempted to get some. As someone not really yet into gaming, it might be still some time to go until I actually embrace VR digital items, but hey, better late than never. 💃

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Naomi Oba

Naomi Oba

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Writer in Crypto — passionate about financial education, blockchain, books, and food.