Why people are spending $1,000’s and even $100’s of thousands on their Decentraland land Parcel.
Posted On September 30, 2018
Time for another blog post!
I thought I’d make something for the influx of new investors Decentraland seems to be getting. It’s important specifically for new investors to know a bit about Decentraland history and understand the market economics before committing thousands of dollars towards virtual land.
Decentraland ICO ran some time last year where you could buy and invest in the Decentraland MANA token. Back then there were no lands to buy just the token.
later on last year sometime in December there was a land auction for the first City in Decentraland, Genesis City. You could bid on any parcel that you wanted. Many lands sold for 1,000 MANA which was the minimum price you could commit to any parcel. If you bought MANA during ICO at 2 cents than this one thousand MANA would have cost you only 20 US dollars for single parcel of land! Cheap huh?
Once the first auction finished, a good 25,000 land parcels had sold. in the world of 35,000 virtual lands this meant that there was still another 10,000 lands that weren’t even bid on which could have been picked up for 1,000 MANA each.
It’s been almost a year since this auction and obviously Decentraland has become much more popular since. Those same lands are being resold for almost 10x the initial investment!
The land market place that you see now where you can easily list and buy any land that you want was not available back then and the only way to buy land after the auction was to private message people that had the lands and organise a private deal where you send the agreed upon MANA and they would send the LAND token. This was often risky but of the 50 or so trades that I did to purchase and sell land, not once was I scammed.
Sometime in the early second quarter of this year the Land Marketplace was released and you could easily buy and sell any parcel of land you wanted.
This was also the time people got a good indication of which lands were worth what as people eventually came to a market equilibrium between listed and sold parcels.
Decentraland has come a long way since then and the marketplace has reached a stable Point where people that have followed the project for this year have now developed a strong intuition of which lands are worth what.
A good website for new investors to keep an eye on his nonfungible.com. This website tracks historical land sales and it’s important to build your land valuation intuition so that you know when there is a good deal.
So Why Are Lands Selling for $1,000’s?
The topic of this post is to explore why parcels are selling for thousands of dollars or in some cases hundreds of thousands of dollars.
First off markets are developed over time through transactional data. Products or items within markets are valued based somewhere between what people are willing to buy them at and what people are willing to sell them at.
The market only cares about what people are willing to buy and what people are willing to sell it for. there are people in the world that are looking at Decentraland with a very deep crypto pocket and are happy to pay a couple thousand dollars for a virtual land you could build anything on. Crypto tokens and Decentraland specifically is available to anyone in the world to invest in which means you’re competing with a lot of people. Where 1,000 USD could be a lot of money for someone, for another person it could be very cheap.
People seem to invest for all sorts of reasons whether it’s the tech whether it’s because it’s an industry they very strongly understand in this case virtual reality gaming and developing or whether it’s just because someone else in their social circles has invested. Decentraland aims to be a place where people can build whatever they want in virtual reality.
There are 55 Districts which are these purple blocks scattered around Decentraland that resemble communities dedicated to build out these Districts into something of value. There are Districts focused around virtual shopping, gambling, education, A Haunted Mansion, and many other things that Decentraland investors are excited to explore at the end of the year once the world opens up.
There are also many game DApps that came out before Decentraland and are now partnering with Decentraland to build features of their games like tournaments and battling experiences on the virtual reality platform.
Read this post for a deeper look into the games moving to Decentraland.
An Example of Etheremon building their battle arena!
Decentraland are specifically making a large effort to partner with experienced blockchain developers and gamers who can build interesting experiences in the world.
Different parcels are valued differently and it will take a lot of writing to explain market valuation so it’s a better idea to explore my blog and my market analysis posts to understand why parcels are worth their amount but generally speaking it is expected that the centre Genesis Plaza will have the most traffic as this is expected to be a spawn point.
Roads that are connected to the double Road surrounding this Genesis Plaza or are very close to the centre often have the highest valuations.
Corporations, indie developers and small teams are expected to gather the necessary funds to own parcels close to the centre and build a show of products and services they can market to the traffic in these areas.
Parcels connected to Single Roads are a bit more valuable than parcels that are not connected to roads.
Also parcels that are closer to districts or in some cases even connected to Districts are expected to sell for a lot more.
It’s a good idea for new investors to sort the marketplace by the cheapest lands and go through these lines to see why they are worth the least.
Decentraland is an exciting space for people that see the potential in it. Many people are hoping for it to be the early version of a decentralised platform that will hopefully one day run and be governed by the community and will be a world full of experiences to explore. Something like Ready player one.
For new investors, spend some time following content creators on Twitter such as acl_crypto, who is a Decentraland pioneer with some of his exciting builds!
Follow this blog and nonfungibles.com to track historical sales and get a sense of what lands are selling for.
Stick to the cheaper parcels because if you change your mind these are easier to sell and thus are the lowest risk parcels in Decentraland. Don’t be afraid to join the Discord and post your questions even those about buying any particular land so people can give you an input on whether they think this is a good buy or not.
I will continue to release content about flipping land for profit what developers are building partnerships of Decentraland and general updates of the platform so keep connected to my Twitter and blog!