One of the hottest topics on Wall Street has become the metaverse, which merges the mixed reality (MR) technology with elements of entertainment, gaming, and e-commerce. The metaverse trend has also put the focus on altcoins, such as the Decentraland (MANA-USD), the largest metaverse cryptocurrency with a market capitalization (cap) of $3.94 billion.
Decentraland started life in 2017. Thus, it is one of the more mature metaverse projects alongside The Sandbox (SAND-USD) and Axie Infinity (AXS-USD).
Meanwhile, MANA-USD, the cryptocurrency that powers this virtual platform, has seen tremendous gains over the past year. For instance, the proverbial $1,000 investment in the metaverse token in January 2021 would be worth roughly $39,000 at the end of last year. Even with the significant pullback since last December, the altcoin is up more than 920% is the past 12 months.
MANA-USD currently hovers around $2.8. The ongoing sell-off in the crypto space has pulled Decentraland down 14% year-to-date (YTD). However, it has fared better than its peers, given that SAND-USD and AXS-USD are currently both down over 40% YTD. Crypto fans now wonder what is next for Decentraland as well as its metaverse peers.
In a research titled “Opportunities in the Metaverse,” J.P. Morgan (NYSE:JPM) cited that the metaverse “will likely infiltrate every sector in some way in the coming years, with the market opportunity estimated at over $1 trillion in yearly revenues.”
Therefore, opportunities in metaverse cryptos are likely to grow in the coming years. Given its first-mover advantage, MANA-USD ranks among the cream of the crop of metaverse tokens. Risk-tolerant investors may consider allocating a small portion of their portfolio to MANA-USD. Here’s why.
Decentraland’s Steady Growth
Crypto bulls regard Decentraland as a forerunner to what the metaverse could become in the near future. The decentralized application runs on the Ethereum (ETH-USD) blockchain.
Its platform offers a browser-based 3D virtual world where users can buy parcels of land in the form of non-fungible tokens (NFTs). They also interact with other users via avatars.
Ownership of any item is represented as an NFT, which plays a key role in proving the authenticity of assets in the metaverse economy. Decentraland ranks as the third-most-popular NFT collection in terms of transaction volumes on OpenSea, the most prominent NFT marketplace.
The Decentralized Autonomous Organization (DAO) owns the LAND contracts that allow users to buy and sell virtual land. LAND is a non-fungible digital asset divided into 16m x 16m parcels. These parcels are owned by members of the community. Some parcels are further divided into themed districts, enabling users to create shared spaces with common interests.
Players develop and monetize their digital land with 3D content, games, and other applications. Property owners can decorate, change, or renovate their property. They can also make money by leasing and advertising. MANA-USD is used to purchase LAND, avatars, names, wearables, as well as other items in the Decentraland marketplace.
Just like property in the real world, the price of LAND primarily depends on location, with an average price of $3,000 to $60,000 on Opensea. Areas where people come together are far more valuable for advertisers and retailers. Digital real estate prices have increased 400% to 500% over the last few months. A plot of land inside the Decentraland metaverse recently sold for $2.43 million.
Metaverse Is the Future of Marketing
There is a community of people with real interests actively shaping Decentraland’s future. Artists open galleries and sell their art via NFTs, while musicians organize concerts and sell tickets within the virtual world.
For instance, in June 2021, the widely-followed auction house Sotheby’s opened a virtual gallery. Similarly, Vogue Magazine is actively involved in the Metaverse fashion week, showcasing the latest trends in fashion to audiences around the globe.
Earlier this year, asset manager Grayscale launched the Decentraland Trust. Given that Grayscale mainly focuses on prominent large-cap cryptocurrencies, the new trust suggests institutional investors see significant value in the MANA-USD altcoin as a long-term investment.
Major companies and advertisers want their piece of the metaverse pie as well. Decentraland has collaborated with brands as diverse as Samsung (OTCMKTS:SSNLF), Coca-Cola (NYSE:KO), and J.P. Morgan. We are likely to see more companies join the trend in future months.
The Bottom Line
Cryptos, including MANA-USD, are volatile. Therefore, they are high-risk, high-reward investments. The price of Decentraland has skyrocketed over the last year, in part due to investor hype and speculation.
Yet, the future of Decentraland looks bright and inviting. Large transactions are taking place on the virtual platform, and corporate money is flowing into the network.
Decentraland makes a strong investment case as the leading metaverse platform, leading to increased demand for MANA-USD. Meanwhile, the fixed supply of 2.6 billion tokens should help support the price. Therefore, for patient investors, MANA-USD could be a robust long-term investment, particularly now that it has plunged around 50% from its November 2021 high.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
