---
title: 6.2 Digital Real Estate Economies 
description: Understanding Real Estate as a component of active Metaverse projects
---

# 6.2 Decentraland, Sandbox, and Digital Real Estate Economies

This second lecture on the Metaverse, is a deep dive into one of the most popular, and misunderstood components of active Metaverse projects: _Digital Real Estate _and _Property_. Both a Metaverse and a Virtual World, center on the capacity to have ‘land’, ‘space’ or ‘planets’ from which users can move, interact, purchase, and transact. Decentraland (MANA), and Sandbox (SAND) dominate this domain, and provide a nice case-study for understanding the early versions of how people started to think about value in the Metaverse. 

## Property Rights and The Geopolitical Theory of Crypto

Loosely, our geopolitical analogy from the very beginning finds us once more. But this time in the concentrated domain of property rights: Countries around the world all hold certain laws pertaining to how land can be owned - what can be built on that land, and how it can be passed down from generation to generation. Digital property is translated into the world of smart contracts, and centers on the blockchain that the digital land is built upon, and then the smart-contract functionality, and permissioning, that allows different users of different qualification levels, to purchase, create, modify, and monetize that land. 

The underlying logic of property in the physical world is mirrored in the digital world: Property in close proximity to certain social locales, possesses higher value. Scarcity of property, finite attributes of land (water, mountains, etc.) may also equally increase value of the land. Land can also be bought, constructed for some purpose, monetized, and then re-sold, similar to how homes are renovated and flipped in the physical world. We have seen small tastes of these opportunities, but none at scale. 

## Decentraland (MANA)

Decentraland was one of the first Metaverse plays on Ethereum, which garnered serious attention and market share. Importantly, Decentraland describes itself as a ‘Virtual Reality’ from which ‘users can create, experience, and monetize their content and applications’ ([Decentraland](https://docs.decentraland.org/player/general/introduction/)). 

From a high level, Decentraland allows users to customize and design their own character, purchase parcels of land in the virtual world currency $MANA, and then monetize other items or applications they might have built, inside of their virtual world. 

The optionality offered to users vis a vis parcels of land, is limited to the following: 


![](@site/static/img/bootcamp/mod-em-6.2.1.png)


Users can then also create custom items and structures on their land, that can be monetized separate from the parcels of land themselves. All such items are paid for in $MANA, which operates as a de facto currency of the virtual world. 


![](@site/static/img/bootcamp/mod-em-6.2.2.png)


The world of Decentraland is visible from a high-level view, such that property purchase, pricing of different areas, and visibility into what others have built, is also possible. 

## Sandbox ($SAND)

Slightly different - and in some ways more sophisticated and complex - is Sandbox. While branded as a game, Sandbox describes itself as a virtual world living on Ethereum from which users can create, monetize, and interact with one another, through uniquely designed avatars. 

The pillars of Sandbox include a token for the in-world economy - $SAND (which is staked to create assets), a token for real-estate specifically - $LAND, and in world NFT’s capable of being used to customize avatars. 


![](@site/static/img/bootcamp/mod-em-6.2.3.png)


Uniquely, Sandbox has created a tiered system of value for a finite amount of different parcels of their virtual world. 

_“The Sandbox Metaverse is made up of LANDS, that are parts of the world, owned by players to create and monetize experiences. There will only ever be 166,464 LANDS available, which can be used to host games, build multiplayer experiences, create housing, or offer social experiences to the community”_

Each of these parcels, in turn, contains a number of GEMS and Catalysts, which add value to the parcel. 


![](@site/static/img/bootcamp/mod-em-6.2.4.png)


Beyond the tokens, users are free to monetize assets and experiences inside of the virtual world, and can do so either by owning and constructing their own experience, or staking SAND in order to create assets that they can then resell. 

The three primary ‘activities’ for users in the Sandbox provide an early window into the future of Metaverse based engagement and monetization strategies: 


* **[Gamemaker](https://www.sandbox.game/en/create/game-maker/)**: Allows users to design, edit, and launch games within the Sandbox for other users to participate with. 
* **[VoxEdit](https://www.sandbox.game/en/create/vox-edit/)**: Allows users to uniquely create, and customize non-fungible assets in the Sandbox metaverse. 
* **[Marketplace](https://www.sandbox.game/en/shop/)**: Allows users to buy and sell collections, equipment and assets. 

## Why are these virtual worlds valuable?

Interestingly, both virtual worlds discussed above contain their own notion of property rights, their own economies, and their own governance systems and mechanics, for users to interact within the virtual world being created. But at the end of the day, _why_ does the capacity to create and interact in a virtual world hold value? 

If we think about the importance of land in the real world - there are two driving factors: (1) Social purposes, like living in downtown Manhattan, or (2) Natural resources and geography - for oil rigs, conservation, or farming. 

Digitally, the thesis is more powerful, if one realizes that (1) More people can accrue more easily to a digital parcel of land, as opposed to a physical one, and (2) Within certain limits, it is possible to allow the users of the metaverse, the freedom to create for themselves resources and valuable properties to their property - once the world has been jump started. 

Altogether, these two theses are speculative, insofar as we are only in the emergent phase of Metaverses in crypto. The main value propositions to date include the following: 

  * **Visibility and Awareness:** Of services, assets, and products inside of the Metaverse. 
  * **Engagement:** Between users, brands, and within games. 
  * **Users:** To market to, gain exposure to an asset, and launch new products or collections. 
  * **VR / AR future:** To create an environment and world, capable of being connected with the physical world. 

The real value underlying digital real estate, lies in being able to create a world, and an underlying mechanism design for that world, that is able to capture value as more users begin to live digitally, and the ‘digital-physical’ divide becomes more intermingled. The creators of a successful metaverse hold the initial power to decide what kind of world, potentially millions of people in the future, will inhabit. 

These rules apply to:


* How more of a reality can be created. 
* What the cost of engaging is. 
* What items or objects can enter this world from another dApp. 
* Who is allowed to create certain objects inside of the metaverse. 
* What prior requirements or reputational elements, certain objects require in order to be wielded or created.
* The scarcity of the digital property. 
* The public infrastructure built into the privately monetizable map.  
* The commodities or elements inside of the world. 
* The spectrum of possibilities for creating an item, to be used inside of the metaverse. 

_From a high level, creating a virtual world, with digitally scarce property, is about creating a framework for a game, that appreciates in value with the amount of people interested in inhabiting that world and playing by the rules of the set game. The underlying bet of these projects, is that it is more convenient, intuitive, and enjoyable for users to work, socialize, and collaborate in a virtual world, than from the website screens of their desktop._

## Decentraland and Sandbox Are The Tip Of The Iceberg

The most important takeaways from this lecture, center on the balance between individual freedom and creativity to explore, monetize, purchase, and dress up their identity, with a communally governed virtual world equipped with scarce parcels, activities for users to partake in, and composable integrations of non-fungible assets. 

With that being said, however, it is very clear that the metaverse in its current state remains in its infancy largely because of the complexity required to build a metaverse, coupled with the need for an existing community, and or market of users interested in participating in the services offered by the Metaverse.