Differentiation of NFT Token Economy in the Virtual World


As early as Vitalik Buterin’s original Ethereum paper, decentralized games were touted as one of the most potential use cases for smart contract technology. In the past week, tokens such as AXS and SAND have seen meaningful price movements, supported by impressive fundamental growth. In this article, we will look at the building block of the decentralized gaming space: the virtual world.

As the decentralized game ecosystem begins to take shape, the virtual world has become the center of action. Broadly speaking, these are ecosystems that have nothing to do with games. Developers and users can buy real estate, create games and other attractions in the virtual world. Users and developers can create and exchange virtual assets permanently on the chain. This is a lucrative market, because one or two of these universes may eventually be adopted on a large scale, and their ecosystem will eventually bring hundreds of millions or even billions of dollars in value. Therefore, it is understandable that people are eager to capture real estate that may be the future. On some platforms, monthly sales soar to around US$10 million.

There are currently four key players in the meta-world/virtual world field:

  1. Decentraland
  2. Sandbox
  3. CryptoVoxels
  4. Dream
Differentiation of NFT Token Economy in the Virtual World

Given their relative prominence in active wallets and relative value capture, we focus on Decentraland and Sandbox in this article.

Differentiation of NFT Token Economy in the Virtual World

1. Decentraland

Differentiation of NFT Token Economy in the Virtual World

Decentraland has a fixed supply of 90,000 LAND plots, and users/developers can purchase these LANDs to develop games and other attractions. LAND was purchased by burning Decentraland’s native token MANA, which makes it deflationary (and indirectly redistributes value to token holders). MANA has a maximum supply of 2.2T and a circulating supply of 1.3T. In the case of MCAP of about 800 million US dollars, MANA tokens have two use cases:

  1. Exchange medium: can be used to buy LAND and other game props
  2. Governance: With Decentraland and migration to the DAO structure, MANA holders may participate in the governance decisions of the platform

Finally, when buying LAND, token holders will also benefit from the burning of MANA tokens, as this will reduce supply and increase prices.

As one of the earliest decentralized virtual worlds, Decentraland has been widely adopted, and most of its 90,000 LAND is now only traded on the secondary market. MANA is also one of the few tokens that Grayscale has a dedicated trust, indicating strong institutional demand. Since 50% of the largest supply is already in circulation, MANA seems to be a relatively mature project that has experienced the growth troubles faced by early projects. MANA’s deflationary token economics further magnifies this value.

2. Sandbox

Sandbox started as a Web 2.0 platform in 2012, accumulated more than 40 million downloads, and released the Web 3.0 version in 2018. This previous success provided the Sandbox team with an operational advantage in the form of an existing user base, which other virtual world competitors did not.

Just like Decentraland, the Sandbox ecosystem runs on its native utility token SAND. Like Decentraland, Sandbox also has a limited number of LAND plots, players can use SAND to buy these plots. However, unlike Decentraland, users do not need to destroy SAND tokens to purchase it. Instead, the SAND used to purchase it is distributed between the seller and the Sandbox vault. In general, there are three key use cases for the SAND token:

  1. Exchange medium: SAND can be used to exchange LAND and other game items
  2. Governance: SAND holders can participate in the governance decisions of the platform
  3. Staking: Users can pledge SAND tokens and get a share of the platform’s advertising and transaction fee income

The following is a complete list of revenue sources for the platform:

Differentiation of NFT Token Economy in the Virtual World

According to our rough estimate, the transaction price of SAND is relatively low, 1.7 times the value of its national debt (from the sale of primary LAND + estimated transaction costs).

Differentiation of NFT Token Economy in the Virtual World

LAND sales

By 2020, most of the 123k land available for purchase will be purchased in the main sale through approximately 1k independent sales. Since then, about 900 secondary market sales have also occurred. If the sale of LAND is a sign of acceptance, then Sandbox has already been achieved.

Differentiation of NFT Token Economy in the Virtual World

SAND token economics

The maximum supply of SAND is 3 billion tokens, and the circulating supply is 700 million (23%). Another 1.2 billion B tokens (40%) are stored in the company’s vault, and 280 million (9%) are stored in foundation accounts. This means that only about 28% are still owned by the team/consultant. Below is the vesting schedule of SAND tokens. Although only about 23% of the largest supply is currently in circulation, most of the remaining supply is in foundation and company reserves, so potential token dumping is unlikely.

Differentiation of NFT Token Economy in the Virtual World

In general, Sandbox has gained widespread adoption and benefits so far. The SAND token also has a powerful set of token economics. The combination of governance, currency, and income share pledges is particularly strong.

in conclusion

The virtual world is at the forefront of the decentralized gaming revolution and will continue to develop as the gaming field matures. In view of the basic structure of social consensus on real estate valuation, we expect that this field will be dominated by 1-2 players in the next 5-10 years (this is similar to Minecraft and Roblox in the Web 2.0 virtual world). We have already begun to see Decentraland and Sandbox become leaders in market dominance. In these two areas, data shows that Sandbox is beginning to surpass Decentraland in terms of user stickiness and value acquisition. Given its relatively low market capitalization and strong revenue + token value transfer model, we expect the SAND token to have a meaningful growth runway.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/differentiation-of-nft-token-economy-in-the-virtual-world/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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