Executive Summary

• Decentraland seems entirely sincere in its mission to be open source and decentralized.
• Decentraland's tools are more sophisticated than The Sandbox's but harder to use.
• Decentraland is not as prone to speculation as other games but still suffers from core problems.
• How is Decentraland doing?
  • Demand for land is decreasing.
  • Demand for marketplace items is decreasing.
  • The playerbase is decreasing.
  • The few players left all seem to just be playing poker.

What is Decentraland?

We touched briefly on Decentraland — a massively multiplayer online game set in a large, interconnected plane of digital land — in a previous deconstruction on The Sandbox but have yet to give it its own dedicated treatment. This also gives us a chance to check in on the “virtual real estate” and “metaverse” sectors in general as there’s been many developments since our piece on The Sandbox this past January.

Decentraland also happens to be one of the earliest crypto games, with development starting as far back as 2015 and launching for the first time in 2017 (the same year that development for Axie Infinity first began). This means the game launched before the last crypto crash occurred all the way back in 2018.

Decentraland is an interesting case study, because not only was it one of the first crypto games, but unlike many other crypto games, its high-minded principles around decentralization and openness seem sincere, rather than just marketing fluff. Unfortunately, as far as we can tell, the game seems to have landed on hard times, giving the feeling of an abandoned ghost town with little sign of human life outside of a few packed gambling halls.

The world of Decentraland is subdivided into 90,000 “LAND” parcels that can be bought, sold, traded, and built upon by players. Notably, only the owner of a given parcel has the right to build on it, but they may grant access to other players to visit and experience whatever they’ve built there.

The game was founded on the principle of decentralized ownership of a shared virtual world, in stark contrast to centralized platforms like Facebook. The philosophy is laid out in the original whitepaper. A few things have changed since then, but the overall vision remains more or less the same — delegate as much authority as possible to smart contracts, and host and serve content through a series of decentralized services with a heavy emphasis on peer-to-peer connections. Overall governance of Decentraland is controlled by a DAO, or decentralized autonomous organization, which takes votes on various policy matters and collects money from transaction fees it uses to subsidize development in the form of grants to creators.

In this deconstruction, we will explore:

• How Decentraland’s complex array of technologies and assets work
• The role of the Decentraland DAO (its purpose and effectiveness)
• The issues with the project’s approach to digital land (and what would work better)
• How well the project is doing based on various engagement and financial metrics
• What’s next, as well as our final conclusions

Let’s dive in…

How Does Decentraland Work?

Decentraland’s overall architecture is complex:

To somewhat simplify, Decentraland relies on a group of semi-redundant servers that communicate with one another and help share the serving of content, rather than funneling everything through a single proprietary node. The Catalyst Monitor shows a list of currently running “Catalyst servers” (a server that provides most of the core services needed to run Decentraland). It’s also a handy way of noting how many players are currently online at any given time:

Decentraland is built on quite a complex stack of interlocking technologies, all of which seem to be open source and available on the game’s GitHub page.

The upshot is that no single entity controls Decentraland’s development, all of it seems to be done in the open, and content is served from a network of decentralized peer-to-peer nodes. People still need to make decisions, of course, and this function is delegated to the Decentraland DAO (more details below), which periodically takes votes on various things.

The Role of Crypto

In addition to being a virtual world that players can explore and help build, Decentraland is heavily integrated with on-chain assets. Let’s quickly cover how these work before digging into greater details.

MANA

Unlike some other games, Decentraland opts for only one currency token and no separate “governance” token. MANA is used to buy and sell everything in Decentraland’s marketplace, and along with various NFT tokens is used to calculate voting power in the Decentraland DAO — the more tokens you hold, the more voting power you have.

LAND

LAND exists on-chain as an NFT, with associated metadata governed by the LAND smart contract that links to decentrally-hosted, user-generated content. Every in-game land parcel is backed by one of these LAND NFTs, and the owner of that LAND controls what may be built on the given parcel. Notably, all LAND was sold at the start of the project — a clear differentiator compared to competitors like The Sandbox — which further reflects the platform’s intentionally weak central governance.

ESTATE

Not technically NFTs in and of themselves, “estates” are configurations of contiguous land parcels owned by the same landowner. There is a separate ESTATE smart contract that governs this.

POIs

This is an on-chain list of “points of interest” that serves as official promotion by Decentraland. A point of interest calls out a certain parcel on the map and makes it more visible to users, presumably driving more traffic to them. The list is controlled by the Decentraland DAO.

NAMEs

Decentraland users can “mint” unique names. These are tradable ERC 721 NFT tokens that are fully integrated with the Ethereum Name Service, a decentralized on-chain system for websites, crypto wallets, and more. Decentraland seems to own the root ENS domain “dcl.eth” and is thus able to allocate subdomains in that name space, which in Decentraland are referred to as NAME NFTs. Effectively, these are ENS domains with the suffix “dcl.eth”. The DAO controls this smart contract as well as a list of banned NAMEs.

Collectibles

In addition to all of the above, various NFTs are available for sale in the Decentraland marketplace. These are grouped into wearables (clothing and equipment) and emotes (poses, dance moves, and other animations).

Anyone can create content and submit it to the marketplace, but it must be curated and approved first by Decentraland’s DAO-elected Curation Committee.

With all that established, let’s talk about the DAO, the governing body that rules Decentraland.

The Decentraland DAO

The Decentraland DAO is a mostly automated organization collectively controlled by owners of Decentraland tokens. There is no particular threshold required to have a say. Instead, an individual’s total portfolio of tokens grants proportional voting power (or “VP”), with some tokens yielding more influence than others:

• 1 MANA = 1 VP
• 1 NAME = 100 VP
• 1 LAND = 2000 VP
• 1 Estate = 2000 x (number of LAND parcels in the estate)

So, for example, someone with 4 LAND parcels joined in an estate, 5 NAMEs, and 1,000 MANA, would have 17,500 VP in total.

The DAO’s enumerated powers are to:

• Issue grants
• Change lists of banned names
• Change lists of “points of interest”
• Change lists of Catalyst nodes
• Control the LAND and Estate smart contracts
• Control various other smart contracts

This means that the Decentraland DAO can vote to send funds it controls to designated wallets (presumably to fund development to Decentraland’s benefit), as well as perform some basic moderation procedures. They can perform basic content moderation by approving marketplace items and banning obscene NAMEs, as well as engage in promotion by marking certain points on the map as points of interest.

Control over catalyst nodes is especially important, because this power determines which user-run peer servers count as “official” and whether they’re in good standing or not. Finally, the DAO holds the keys that allow them to modify the LAND and Estate smart contracts. Crucially, the MANA smart contract cannot be modified by anyone, not even the DAO, as control over that contract has been intentionally and irrevocably burned.

In this way the DAO serves as a sort of constitution for running Decentraland, one with very narrowly delineated powers. Additionally, there is a “Security Advisory Board” (SAB) which consists of a small number of trusted, elected individuals. Changes to critical contracts (such as LAND and Estate) can only be performed by an on-chain vote of both the DAO and the SAB.

The DAO is funded in several key ways. First, it has a 10-year vesting contract that will grant a total of 222M MANA, or about 42,253 MANA per year ($29,353 at current prices). Second, it takes a 2.5% transaction fee from the items sold on the Decentraland marketplace. It also receives a cut of transactions sold on OpenSea. According to the vesting schedule, the Decentraland DAO has received $159,233,052 and allocated 85% of that amount to grants. The DAO gives out grants ranging from $1,500 to $240,000, all subject to approval from the DAO. Approval depends on voting power, so a minimum tier-1-sized grant requires a minimum vote threshold of 1M VP for approval, whereas the highest tier of grant requires a minimum vote threshold of 8M VP. The documentation is not entirely clear, but a straightforward reading would imply that in order for a grant to be accepted, you must receive a majority vote of participating DAO members’ voting power, and that vote must have a quorum of voting power above the minimum threshold.

In short, Decentraland stands in stark contrast to both Axie Infinity and The Sandbox, which talk a big game about “progressive decentralization” but have yet to credibly deliver on this promise. By contrast, Decentraland has arguably long since set up decentralized governance, architecture, and code development. Time will tell if the system’s security lives up to its lofty principles, but the intention and effort towards this goal are clear.

The fly in the ointment is that the whole operation still runs on the concept of “coin governance,” an approach that has been strongly criticized by none other than Ethereum founder Vitalik Buterin himself. In short, more coins = more votes, which tends to centralize control and undermine the point of having a decentralized architecture in the first place. According to CoinMarketCap, the top 10 holders of Decentraland MANA collectively own 46.73% of the entire token supply, and the top 100 holders own 73.84% of it. That would give each of those top 10 holders 86.9M VP on average, and each of the top 100 holders 13.7M VP on average, allowing this small number of whales to hold enormous sway over how the community’s collective funds get spent.

Here’s a quick list of some of the top recipients of Decentraland DAO funds:

An Immersive In-World Marketplace Proposal ($240,000)

This project aims to reproduce each of the already existing DAO and marketplace features of Decentraland currently implemented through traditional websites and recreate them as “truly immersive experiences” directly within the Decentraland world.

Butterfly Prawn Farm ($120,000)

This project aims to support development of an existing free-to-play “play-to-earn” farming game within Decentraland.

Golfcraft game and more projects by Eibriel, Pablo & co. ($240,000)

This project aims to support development of an existing “free-to-earn” and “build-to-earn” game within Decentraland.

Features for Automating Community Rewards by the Decentraland Report ($120,000)

This project aims to support a team of historic preservationists who stream Decentraland daily in exchange for rewards.

Decentraland certainly has some cash to throw around and isn’t shy on doing it in order to foster development. The real test will be whether this development results in content that attracts large numbers of players, preferably the kind that like to spend money in the marketplace.

To that end, let’s talk a bit more about Decentraland itself.

Decentraland as a “Virtual Mall”

“Metaverse” is often a particularly unhelpful label, because it is used in so many different ways as to be nearly meaningless. Therefore, we’ll try to use more precise terminology. We prefer the term “Virtual Mall” to describe the general genre that Decentraland inhabits.

Virtual Malls bear some resemblance to user-generated content (UGC) platforms like Roblox, with the key difference being the added role of virtual real estate and persistent geography. With Roblox, each game or experience is just something that you load out of an online catalog, whereas with Decentraland, each game or experience is physically located in a particular place on the map that you can visit.

What Virtual Malls share in common with UGC platforms is their dependence on the creative energy of their users to provide suitable attractions. This is a business model with a very large, potential upside if scale is achieved and network effects kick in, but it’s also a particularly difficult one to get off the ground because the developers are never fully in control of content creation.

Furthermore, it shifts the development burden when it comes to tooling — internal tools only need to be sophisticated enough for internal use. It’s okay for them to be a little rough or poorly documented, because the developers are going to be familiar with tools they’ve written themselves and won’t be limited by them since they have direct access to the platform’s codebase. However, when you hand these tools over to users (and not just any users, but the very ones you expect to build tons of juicy content for your platform), the developers face a much heavier burden. Now the tools themselves are an end-user-facing product, with all the polish and support burden that entails. Furthermore, the creative energy of the platform’s players is limited by the power, sophistication, and usability of the creative tools. When a developer thinks up a cool, new idea that their tools don’t support yet, they just directly add the necessary features. But when a player finds themselves in the same situation, they can do literally nothing until the developers ship an upgrade to the tools.

To that end, let’s talk about Decentraland’s tools.

Decentraland’s Creative Tools

Decentraland has two core tools that creators rely on to generate content: the Decentraland SDK itself and DCL Edit.

The first major difference between Decentraland’s editing environment and that of The Sandbox is that Decentraland opts for a much more developer-first experience with a reliance on open source, community-built tools, full programming language support, and command line interfaces. The Sandbox, by contrast, relied heavily on a “no code/low code” drag-and-drop builder that eschewed direct programming entirely.

In short, the Sandbox focuses on UX and ease of use at the expense of power and features, whereas Decentraland focuses on the exact opposite, emphasizing power and features at the expense of UX and ease of use.

For instance, the very first thing the “Getting Started” guide for Decentraland tells you is to install dependencies via NPM from a command line interface:

On the other hand, The Sandbox has a slick and simple landing page strongly emphasizing that you don’t need any coding experience to get started:

In our deconstruction of The Sandbox, we talked about how that game’s lack of a full-fledged authoring environment was a potential deficiency, and this is one area where Decentraland has a possible leg up. Decentraland’s programming environment for content creation is TypeScript, which is a good way to tap into the existing base of web programmers.

But how about art assets? How does Decentraland’s art editor compare to The Sandbox’s VoxEdit? Decentraland has a simple drag-and-drop builder interface on its main website, which is now tellingly labeled the “Legacy editor” in the documentation. This editor is pretty simple and intuitive to use, allowing you to select from a palette of objects and place them within the scene. You are also able to create some basic drag-and-drop event logic, eschewing the need to interact directly with the Decentraland SDK.

In contrast, Decentraland’s power users seem to be opting more for DCL-Edit, which is an open source tool created by community members themselves.

Of course, as soon as you click “Get Started,” you are immediately taken to a page that explains how to download the source code and compile the editor from the command line:

DCL-Edit’s main advantages over the Legacy Builder are its increased power and flexibility, which come at the cost of more upfront complexity.

As for the art assets themselves, rather than relying on a proprietary standard, Decentraland leverages the existing glTF format (as opposed to The Sandbox’s voxel-based format). Creators are typically expected to create assets on external tools, which are then imported into either the Legacy Builder or DCL-Edit for placement and scripting.

Technically speaking, Decentraland’s tools are more capable and powerful than The Sandbox’s, but the presentation and onboarding aren’t nearly as smooth. I was initially confused about whether I should be using the Legacy Builder, DCL-Edit, or just start scripting directly in the SDK. All of this is consistent with an open-source project that has no clear, central hand guiding the entire operation. On the one hand, the permissionless structure allows for users to just go out and create the necessary tools that everybody needs, but on the other hand, an environment shaped by and for tech-savvy power users tends to leave newcomers intimidated and confused.

But even possessing perfect tools, Virtual Malls still face another challenge — how to keep their seamless, interconnected world from coming across as empty and barren.

The Virtual Land Problem

Virtual Malls face the ever-present specter of digital land speculation and virtual housing crises. We’ve written about this before in our Land Value Tax in Online Games and Virtual Worlds: A How-To Guide, as well as in our piece on The Sandbox. The key issue is that over the 30+ year history of MMOs and virtual worlds, whenever we see “land-like assets” in games, we also tend to see speculation and economic depressions that follow in their wake. This is due to the fact that the land gets allocated not to the most creative and industrious players, but instead to a class of idle asset speculators who hold parcels not because they necessarily have a great idea but because they want to profit. This effect can happen regardless of whether the game is gaining or losing popularity, but in both cases it causes growth and creative output to stagnate.

Although virtual real estate speculation has been shown to over-inflate land prices when the player population grows, speculation can also create problems for virtual worlds with declining populations. Much like in the real world, if land prices are declining, speculators are tempted to snatch them up at bargain prices on the off chance that the market will rebound later. These speculators are less likely to actually do anything with the parcels compared to creative and productive users, exacerbating the decline and delaying any potential revival.

But what is a “land-like asset?” As a quick refresher, it is any asset that is 1) scarce in supply, 2) necessary for production, and 3) obtains value based on its location. Here’s a chart from our how-to guide:

As we mentioned in the paper, a “land-like asset” doesn’t necessarily need to be themed as “land” in-game; all that’s necessary is that it behaves the way land does in the real world, in economic terms. Likewise, it’s possible for an in-game asset to be called “land” yet lack the economic properties of real-world land.

Decentraland is arguably such a case. Decentraland’s “LAND” is not a full land-like asset by our standard. With respect to the three necessary qualities, LAND does not have a strong locational value component. The first and most important reason for this is that the game allows free and instantaneous point-to-point teleportation at any time. This completely negates the role of travel time, which strongly influences land values in the real world. This is also in sharp contrast to other crypto games; in our deconstruction of The Sandbox, for instance, we noted that the developers were particularly wary about implementing anything more than limited teleportation abilities precisely because they wanted to prop up the value of land parcels. Axie Infinity’s “land gameplay” module had similar suggestions in its design notes.

The second reason Decentraland’s LAND does not have a strong locational component to it is the game’s extremely limited draw distance, making exploration difficult as there’s no way to catch sight of a beautiful landmark in the near distance. Most 3D games limit how far away structures can be from the player before they are hidden entirely, and this becomes a particularly difficult challenge in games where the content is either procedural, user-generated, or otherwise arbitrary in nature. In other words, it is easier to maintain the illusion of a seamless world in a deliberately authored experience like Elden Ring than it is in Minecraft.

Decentraland’s draw distance is particularly tiny, and the pop-in is dramatic. Here’s an example. My character is standing on a particular parcel and facing what appears to be an empty, featureless horizon:

But take just one more step, and an enormous castle suddenly appears!

Because there’s no way to see these structures until you’re almost right next to them, one of the key advantages of having a large, interconnected map is lost. If you imagine yourself visiting Disney World, but on that day the entire park is choked by a thick fog, you would likely find yourself traveling directly from point to point using a map, going only to the biggest landmark attractions you already knew about, and missing all sorts of opportunities for accidentally discovering other delights along the way. In Decentraland’s case, every day is foggy.

The locational value of a parcel is muted because teleportation negates travel time costs, and limited draw distance prevents structures from capturing the player’s attention from afar. However, the location’s value hasn’t been entirely eliminated because two potential sources remain: spillover traffic and parcel contiguity.

Spillover traffic is one of the primary benefits of a location in real life. After all, it’s more valuable to park a hot dog stand right next to Time’s Square in New York City than in the middle of the desert. It stands to reason that buying a parcel right next to another parcel that is already very popular in Decentraland would confer a similar benefit. The catch is that for the two reasons given above (teleportation and short draw distance) the strength and distance of this spillover effect is likely to be quite small. Being just a few parcels away from a popular spot makes you literally invisible to any of its visitors, and if you happen to be standing between them and the next place they want to go, chances are they’ll just teleport. Only if you’re right next to an important parcel would you be able to catch a decent bit of extra traffic.

Parcel contiguity, however, is likely a much bigger deal. Contiguous parcels are worth more because they let you build bigger and more interesting things. Therefore, having all 100 of the individual parcels that make up a 10x10 grid is going to be worth much more to you than owning 100 random parcels spread all over the map, none of which are connected to each other. This further implies that if you already own 99 parcels, and you just need one more to fill out your 10x10 grid so you can build your cool new castle, you’re going to be much more interested in purchasing that particular parcel.

Add it all up, and Decentraland’s LAND is a weak land-like asset. Going down the scale from more land-like to less land-like, we find an asset called a “permit” — something that is scarce in supply and necessary for production but doesn’t obtain value from location. In the real world, this would be something like a Taxi Medallion — the right to operate a taxi, or any other exclusive right to participate in a highly regulated business (and unlike a personal credential like a Medical Degree, it is fully fungible and can be transferred or sold to someone else). Thus, the asset classification of Decentraland LAND sits somewhere between a “permit” — a fungible “right to build” — and a true land-like asset with all the economic powers and strong locational benefits we recognize from real-world real estate.

Our framework predicts that Decentraland LAND would still suffer a large degree of speculation but less so than in games committed to a stronger locational benefit, such as The Sandbox and Axie Infinity. One of our consistent predictions for those other games has been that when confronted by the contradictions of virtual real estate speculation, their developers would pursue a policy of “land dilution.” This way, they maintain the nominal scarcity of land but attempt to dilute either the necessity of the land for production (such as weakening its gatekeeping over resources and features) or its locational benefits (by introducing teleportation, for example). In Decentraland’s case, it’s as if they preemptively pursued a policy of strong land dilution right from the get-go.

In short, the land problem is a concern for Decentraland but perhaps not as critical to its fate as it has been for other virtual real estate games. A greater concern is simply whether the platform has what it takes to attract and retain a regular audience of players and creators.

How Is Decentraland Doing?

Let’s try to gauge Decentraland’s health by looking at some top-level metrics. We’ll start by looking at the (non-fully-diluted) market cap of the game’s in-game token, MANA:

MANA’s trajectory has largely followed that of the broader crypto market. The token was worth pennies until March 2021 when it enjoyed its first spike, then took off in late October as the NFT gaming market exploded. It peaked in November and has declined ever since, settling back down to about the same prices we last saw in October 2021.

This by itself isn’t conclusive. The token price and market cap are still well above historical trend. The real question we want to ask is if Decentraland is well positioned for long-term stability. In concrete terms, now that we’ve weathered an initial speculative rush, should we expect this virtual mall to attract a regular stream of shops and customers?

To answer that question, we’ll want to probe a bit further. Here’s some sub-questions we can answer to understand the broader picture:

• Has Decentraland fared better or worse than the crypto market in general?
• Is there continued demand for Decentraland LAND?
• Are lots of people playing Decentraland?
• What are people actually doing in Decentraland?

Has Decentraland fared better or worse than the crypto game market?

Let’s start by comparing Decentraland against the other major virtual land crypto games. Here’s a graph comparing the primary tokens of Decentraland (MANA), The Sandbox (SAND), and Axie Infinity (AXS):

Interestingly, these three games have very similar (non-fully-diluted) market caps. Each had a different trajectory when they first got big, but the trip down was largely the same for all three. As of this writing, Decentraland has the highest market cap among them.

Now let’s normalize each of those graphs against their respective peaks to see how sharp the relative declines have been. And for good measure, we’ll throw Ethereum in as well, to gauge relative movement in the overall market:

As of the time of writing, ETH currently sits at about 30% of its peak value, SAND has fallen to 17%, MANA to 14%, and AXS has been literally decimated, falling to 10%. The three games have struggled to hold on to their token prices relative to the value of Ethereum itself, but MANA hasn’t fallen disproportionately to its peers, and in absolute terms is faring better than the other two.

In short, Decentraland has fared significantly worse than the crypto market in general, but not by a worse margin than the other notable virtual real estate crypto games.

Is there continued demand for Decentraland LAND?

Given an asset of fixed and unchanging supply, changes in price necessarily reflect changes in demand. Given that there have only ever been 90K plots of land in Decentraland, demand is directly reflected in the rising and falling prices for LAND parcels. So, what do we see?

The average selling price of any given LAND parcel has steadily dropped from a high of nearly $9,845 two years ago to a low of $2,418 today — a drop in value of 75%. Land has still held its value better than the MANA token at its peak, but the downward trajectory has been pretty steady — month-to-month growth has been negative or flat for 18 out of the past 24 months, a time period that spans all the massive booms in token price.

Now, how does the picture look if we compare Decentraland land to the other two major purveyors of virtual real estate? In the following chart we add in the prices for land from the Sandbox as well as Axie Infinity (for the latter, we have done a weighted average of the price for the four types of Axie land in MaxBrand99’s charts).

To really drive the comparison home, let’s normalize those figures and look at relative price movements compared to each line’s peak value.

From the looks of it, Axie Infinity and The Sandbox experienced huge swings in land values during the great crypto game boom of late 2021, which just as quickly deflated afterwards. Decentraland enjoyed a few brief and modest bumps in value, but in general has just been gradually sloping downwards over time. Compared to the volatility of the other two assets, Decentraland’s land prices have been downright stable.

This answers our question pretty definitively: demand for Decentraland land is decreasing over time. The same has been true for the other major virtual real estate games, which are now converging on roughly the same average price per parcel. Decentraland, however, never saw the sudden and sharp swings in land values. This might serve as supporting evidence to our hypothesis that weak land-like assets with diminished locational value will attract relatively less attention from speculators than strong land-like assets.

In short, demand for Decentraland’s land has declined and continues down that path but with less volatility than the other games’ land.

Are people actually playing Decentraland?

Regardless of what the token prices are, if nobody’s actually playing the game, we’re in trouble. So, let’s run the numbers.

Wagner James Au’s blog New World Notes posted the results of an interview with Decentraland co-founder Ari Meilich last December, where he gave the following stats:

• 300,000 monthly active users
• 18,000 daily active users
• 2,500 peak concurrent users

How are they doing now? The DCL Metrics site gives us the following figures for the last 90 days:

Over the last 90 days, daily active users have declined from 12,304 to 7,800, a decline of 37%. If we compare that to last December, a bit after the game’s peak token prices, that would constitute a decline of over 56%.

We can’t meaningfully compare Decentraland’s daily active user count to The Sandbox’s because The Sandbox is still compressing gameplay into limited duration “alpha” windows, after which it temporarily takes the game offline. And we can’t compare it to user counts for Axie Infinity’s land gameplay because that game mode has yet to launch, and therefore, there literally aren’t any users to measure.

But one way we can put a figure like 7,800 daily active users in context is to compare it to other virtual world games. Roblox is king among the user-generated content platforms and has 55.1M daily active users. That’s hardly a fair comparison, however, so let’s pick something a bit smaller. Second Life is an early virtual world game which has long since faded into memory for most of the gaming press, but nevertheless it still has 200K daily active users, over 25 times the audience size of Decentraland.

The best games to compare against would be VR Chat and Rec Room, but it’s difficult to get accurate stats on those. VR Chat Status implies that there were 60K concurrent users in the past 24 hours on a random Wednesday, more than 24 times Decentraland’s peak concurrency. The best side-by-side comparison we can get is probably in monthly active users. We don’t have that figure for VR Chat, but we do have it for Rec Room (3M) and for Second Life (500K). The dates of sampling for these three points don’t line up perfectly, but it’s the best comparison we can make. Based on all our other metrics, we have good reason to believe that Decentraland’s figure from last December is below its all-time peak. Here’s how it all shakes out:

Putting things in this context, Decentraland’s overall population is indeed small. Second Life (a 19-year-old game) beats it easily, and non-crypto-based virtual worlds like Rec Room and VR Chat positively dwarf it by any measure, without even considering the juggernaut that is Roblox.

Another thing we can measure is monthly marketplace volume:

At its peak in December, Decentraland posted $22M worth of marketplace transactions. That has now swiftly fallen to ~$879K as of August, a more than 96% drop after an unbroken 8-month streak of decline. So not only are there fewer players, but everybody’s spending less money, too.

In short, a small and steadily declining number of people are playing or spending in Decentraland.

What are people actually doing in Decentraland?

It appears that the few people who still regularly play Decentraland are all playing poker. The first piece of evidence for this appears in the in-game “trending” column that shows how many players are in any given experience. At the moment I logged in, 72% of the 349 people in any of the 4 listed trending experiences were playing “ICE Poker.”

The one place you can consistently find all these Decentraland players is in the ICE Poker building known as “The Stronghold,” located at coordinates -101,128:

When you first teleport in, you find yourself in a large empty casino hall populated by nothing but a bunch of Pepe the Frog NPCs in Casino Dealer attire.

After about 30 seconds, the players, poker tables, interface, and background music all finally load in:

All around the casino hall, clickable advertisements are posted. You’ll also occasionally see a live video feed from a livestreamer; the one I saw was talking about crypto and eastern spirituality.

Next door is an additional poker hall, which was currently empty when I visited:

Next door to that is a giant golden palace housing a third poker hall. However, access seems to be restricted to paying customers only.

It really does seem like the main thing that people do in Decentraland these days is play poker. The numbers point to this as well. Dcl-metrics.com shows us the top 5 parcels for various engagement metrics. We can see that over the last 30 days, 57% of players logged in directly to a poker site, with only 35% of players choosing to spawn at the lobby.

But that’s just logins. If we look at hours spent, we get the following picture:

A whopping 80% of the hours spent in the top 5 Decentraland parcels were all spent playing poker. But this doesn’t necessarily mean that players are spending a ton of time in the game on average, even on poker. Let’s see if we can construct a time spent per player metric.

DCL Metrics indicates that players on the top 5 parcels racked up a collective 662 hours playing poker over the last 30 days. During that same time period, there were 8,393 “visits” to the top poker parcels in the game. Because these are spread between several individual parcels, it’s hard to tell if these are actually the same players racking up redundant visits for adjacent parcels. But if we divide 662 hours of playtime by daily visits to poker parcels (8,393), we get a lower bound of ~5 minutes of activity per daily visit. If we instead divide 662 hours by the number of daily logins to poker parcels (2,249), we get an upper bound of ~18 minutes per daily login. Neither is a particularly large figure.

But that’s just average playtime — we know that the majority of the playtime can be attributed to a small number of highly engaged whales. According to DCL Metrics, all of the top 10 “marathon users” by time spent in-game over the last day had in excess of 23 hours of playtime. These engagement stats are kind of suspicious anyways; there might be bot accounts involved here (especially given that the primary activity is gambling), or else the players are spending a lot of that time AFK just idling around. The point, however, is that the presence of these “high playtime” players suggests the true median playtime figure for everybody else would be significantly lower than our already small 5–18-minute estimate.

Ironically, this isn’t a phenomenon unique to Decentraland, but it’s apparently a known phenomenon across crypto communities in decline. While I was writing this deconstruction, a colleague pointed out that many failed NFT communities often wind up with a tiny core of their members hanging out in the now-mostly-empty Discord channel to coordinate poker games.

A Virtual Ghost Town

Wandering around Decentraland is a pretty haunting and bleak experience, and it paints a picture of what urban decay looks like in a virtual world. This virtual world doesn’t crumble, rust, and accumulate garbage and graffiti the way the real world does, but the spirits of abandonment and stagnation make themselves felt in other ways.

First and foremost is the pervasive emptiness. The moment you leave the lobby or stray outside the boundaries of the most popular locations, you will rarely encounter another player.

The second thing you notice is all the unfinished, clunky projects. It’s very common to come across rides and attractions that seem interesting at first but are poorly documented or simply don’t work as described. This sometimes manifests as large signs desperately trying to work around broken UX issues:

Interactive experiences are pretty hit and miss, too. Anyone familiar with game design will know that nailing the user experience of something as simple as doors can be somewhat fraught, and I encountered multiple inconsistent implementations of that. For instance, this particular door swings open nicely when you interact with it:

Whereas this building just gives up and tells you to walk straight through its doors:

Slow-loading or missing assets seem to be everywhere:

Plus, clunky UX and a general lack of polish is pervasive:

Some of the promoted experiences seem promising at first:

But are often marred by confusing rules and cryptic error messages:

What’s Next for Decentraland?

Decentraland’s age has given it a level of maturity that goes well beyond other titles, particularly the overhyped ones that have little actual shipped content. On the other hand, this means Decentraland has less room to hide behind a list of ambitious future features. Its roadmap is somewhat anemic but does include a few key items of interest:

The four items listed as coming soon consist of:

• A way to access the world builder from within Decentraland itself
• Improved debugging tools
• A new desktop client (this seems to already have shipped)
• Wearable costumes linked to specific NFTs

Future items on the roadmap look mostly like small “quality of life” upgrades such as DSK improvements and an overhaul of the inventory system, rather than any expansive new game modes or anything revolutionary.

A LAND rental system has also been recently implemented, much like we’ve seen in other virtual real estate games. This feature is often touted as a way to make an overpriced asset more accessible, but what we’ve seen so far is that these mechanics can actually spur further speculation because they create a new avenue for monetizing asset ownership other than buying and holding.

In short, we don’t see anything particularly big and exciting coming to Decentraland imminently in terms of features.

Conclusion

Decentraland is a strange and somber experience. On the one hand, it is one of the most authentic and sincere crypto game projects we’ve reviewed thus far. Where other games boast about being “truly player-owned and governed” while smuggling in cynical centralized control throughout, this game actually means it and tries its best to make that a reality.

On the other hand, the experience itself is lacking. As an investment vehicle, the game’s ecosystem has lost most of its value, and the “virtual mall” platform is built on a fraught metaphor with well-known problems. The game itself is marred by severe lag, lackluster graphics, and poor UX overall, not to mention severe quality control in the experiences. Discovery through exploration is undermined by technical limitations, and the bottom line is that there just isn’t much of anything interesting to do or see in Decentraland.

In essence, if you want to socialize and have fun in an expansive virtual world where anything is possible, you’re probably going to prefer doing it in Minecraft, Roblox, VR Chat, or Rec Room. The only thing that seems to attract anyone to Decentraland these days is poker, and you can get a more compelling experience of that in countless other places.

Decentraland does have one potential shining ray of hope — this entire stack is open source, and there’s no company that can just shut it down. It’s pretty unlikely that we’ll see a resurgence, but who knows? Maybe Decentraland can be thought of as an experiment where even failure can actually mean success, because we learned something. Nothing stops a dedicated person from taking Decentraland’s open-source foundation, learning from it, and building something new with its codebase and toolset that takes it in an interesting and successful new direction.

Big thanks to Lars Doucet for writing this deconstruction! If Naavik can be of help as you build or fund games, please reach out.