Why Did Someone just Buy a Virtual Land for $215,000? Explaining Decentraland Land Valuations!
Posted On November 7, 2018
A couple of days ago we had Decentraland Largest Virtual Land Sale.
This big 126 piece block sold for a whopping 2,772,000 (MANA)! ($215,204 or 1,000 Ethereum at the time of sale).
Whether you’re a new investor or someone that has been with Decentraland for a while, I’m going to try explain why someone would pay this much and where the value comes from for Decentraland Land Ownership.
To answer this question we need to look at two important aspects.
Why are Virtual Lands in Decentraland even worth real $
Current Decentraland Land Market Valuations
Why are Virtual Lands in Decentraland Worth Real Money?
First off, what the heck is Decentraland?
Decentraland is a World being built in Virtual Reality where you can own small parcels/lands that have 10x10m area dimensions and build/monetize anything you want.
The below map is a small part of the overall Decentraland world map and gives a birds eye view of the world. Each small pixel is 10x10m in Virtual Reality, (20m Minimum Build Height)
Light grey areas are roads.
Medium Grey pixels are parcels owned by someone.
Dark Grey/Black pixels are unowned. The second land auction to sell these is rumoured to be occurring soon.
Big Green Boxes are ‘Genesis Plaza’s’ and will be where community events/games are held.
light blue are land for sale
Red are my lands
Purple areas are districts. Community projects with a dedicated project lead/team. Theres about 50 of these all around Decentraland. Some names include Festival Land, Virtual Reality Shopping Centre, Hacker City, Engineering Park, DCL University, etc.
Needless to say there’s a LOT going on.
From the outside or atlas view, the world may look confusing but here are some virtual reality experiences being built!
And these are just a drop in the large Decentraland Ocean of what is currently being built in the world. From Roller Coasters to mini games, Decentraland is attracting a lot of developers to come, build and explore Virtual Reality experiences on their own private land!
Decentraland are currently ranked 74 on Coinmarketcap with their Token MANA. Currently being used to trade land, fund Decentraland ICO’s and will be used as the main in game currency.
Explore my blog to learn more about Decentraland or continue reading below.
Current Decentraland Virtual Land Market Valuations
Since Decentraland held it’s first land auction, people have been buying and selling their lands to make money or get the parcel they wish to set up their projects on.
The last 30 days alone has seen almost $2Million in Land trade volume!
EST stands for estates, (these are lands that are made up of 2 or more individual parcels)
LAND is individual parcels of lands
The sum of these gives us the total Decentraland volume for that given period.
It’s been a crazy 8-10 months watching this land market evolve from people just messaging and trading with each other in Discord and Telegram to a full blown out marketplace with people all around the world wanting a piece of these limited 45,000 or so land parcels.
These Virtual lands are 10m x 10m in length x width. Their height value increases with the more individual parcels you have connected together. These are called estates.
The formula for height limit is, log2(n+1) x 20
So 1 parcel will give you 20m build height
2 connected parcels = 31.6m
5 connected parcels = 51.7m
20 connected parcels = 86.4m
Needless to say, the more lands you have connected, the more valuable your overall land is.
Now Let’s Talk About the Record Sale
This big block of land constitutes of 126 individual parcels. This gives it a huge build height of around 140m!
At $215,000 or 2,772,000 (MANA) the average price paid per parcel of land was,
$1,706 or 22,000 MANA
Considering the cheapest price for an individual parcel is about $800 or 10,000 MANA, the buyer paid more than double this for his unique 126 behemoth.
But if you look at it from the perspective of estates then you find that the price he paid per parcel for a 100+ land estate is quite cheap.
Let’s compare his purchase with the only other 2 estates that are over 100 parcels in size and are currently for sale.
20,000,000 | $1,560,000 Listed Price
82,600 MANA pp, (per parcel) | $6,446 pp
15,000,000 | $1,170,000 Listed Price
96,154 MANA pp, (per parcel) | $7,500 pp
Now his purchase of 22,000 MANA pp doesn’t seem that bad anymore does it?
Yes, these estates are in better locations, next to districts and Genesis Plaza’s but is that worth 4-5x the price? I don’t think so.
Large estates like these will be one of a kind and considering Decentraland values have continued to grow since many lands were first sold for only 1,000 MANA back in December 2017, it makes sense for large investors to secure good locations within the Decentraverse.
Decentraland is aiming to be a platform for developers and blockchain game enthusiasts to come set up gaming experiences like never before seen. Hopefully it will attract millions of people to come visit and experience these places.
There are another 10-15 game developers Decentraland have partnered up with, (some with popular game brand licenses), that are building Decentraland exclusive game titles.
There is plenty of activity going on and when the world opens up in late this year or early next year we should find ourselves immersed in a beautiful world with a ton of things to do!
For me, as an investor in Decentraland, it will be interesting to see how the land market will evolve and the economy of Decentraland unfolds.