Above: Decentraland's dynamic world map. The red dots represent the few actual users in-world
Decentraland is a very interesting experiment in blockchain-based virtual world creation that I've been following for four years. And while there's a lot that's noteworthy about it, there's one thing it still sorely lacks: A mass market of actual users. According to co-founder Ari Meilich, who I chatted with last week, Decentraland currently has:
- About 300,000 monthly active users
- 18,000 daily active users
- A maximum concurrency of 2,500.
By virtual world standards, these numbers suggest a very niche virtual world. (By contrast, for instance, Second Life currently has about 500,000 MAU and a max CCU of about 40,000.) Despite that relative paucity, Decentraland is actually much larger than other blockchain-based virtual worlds like The Sandbox, which currently has only 30,000 monthly active users.
None of this, however, would be apparent to readers of breathless hype pieces about a supposed virtual real estate boom in blockchain-based virtual worlds -- like this recent story in the New York Times:
Investors Snap Up Metaverse Real Estate in a Virtual Land Boom
Transactions for properties in digital realms are jumping, guided by the same principle in the physical world: location, location, location.
... Last week, Tokens.com closed an even larger land deal in Decentraland’s fashion district for roughly $2.5 million. The company, which says the real estate transaction was the largest in metaverse history, plans to develop the area into a virtual commerce hub for luxury fashion brands, à la Rodeo Drive or Fifth Avenue. Mr. Kiguel estimates his portfolio in the metaverse is valued at up to 10 times more than its purchase price, and much of the reasoning will sound similar to anyone who has ever bought or sold real estate.
“It’s location, location, location,” he said. “A parcel of land in the downtown core, which has a lot of visitor traffic, is worth more than a parcel of land in the suburbs. There’s a scarcity value.”
Unlike the real world, however, virtual land isn't actually scarce unless it's artificially architected to be that way. But like the real world, the value of a virtual "location" is roughly meaningless if it attracts little or no users, and if there's little appreciable growth of users. And if, in contrast, virtual worlds like VRChat, Rec Room, and ROBLOX, which don't depend on artificial scarcity, attract millions or even hundreds of millions of active users every month.
Again, none of that was made clear in the Times report, or in that earlier breathless report about a $650K virtual real estate deal in The Sandbox.
I thought we put this all to rest 10 years ago when hype over Second Life finally ebbed for similar misapprehensions, but apparently a decade is long enough for collective amnesia to settle over the media ecosystem. And perhaps the whole fanciful virtual world context has occluded clear thinking on the topic.
So consider it this way, via a real world analogy:
Imagine if one day, thousands of people from all over the world suddenly started showing up in the Mojave Desert, excitedly purchasing plots of barren land for exorbitant prices. And when you ask them why, they all insist that the desert is soon going to become a teeming metropolis. OK, that's an interesting if quirky human interest story.
But if you check in a few months or a year later, and the place is still basically a barren wasteland, inhabited only by the original land buyers, and they're still insisting it's going to become a boomtown (any day now! really!)... do you keep reporting their claims with a straight face? Or do you start to wonder if there's another story going on? And not the "land boom" you originally thought it might be?
Spot on. And I still get more value renting in SL than I ever would owning in Decentraland.
Posted by: Joey1058 | Friday, December 03, 2021 at 01:17 PM