In 2018, I learned about the Decentraland project and the notion of creating a virtual reality Metaverse on the Ethereum blockchain. If you are unaware of what Decentraland is, check out their whitepaper and this article.

Safe to say, I am amazed by Decentraland and, in particular, the LAND market. Decentraland LANDs are non-fungible, ERC-721 tokens that can be purchased, sold and traded on the Decentraland Marketplace. As a ‘numbers guy’, I am fascinated by the Marketplace that the Decentraland team has created.

How to Value LANDs

Just like real estate, the key to valuing Decentraland LAND is based on 3 words you’ve probably heard before: location, location, location! People are scrambling to figure out how to place a price on their land. Here are the trends I am noticing:

1. Proximity to road

Is the LAND connected to a road or not? There are tons of questions that need to be answered here. Will there be access to parcels that are not attached to roads? Realistically, 90% of parcels would be inaccessible if you could only access roadside parcels.

2. Distance from the center

The closer you are to parcel coordinates 0,0 the more valuable your land is! As of now, the Central Plaza will be the only spawning location.

3. Proximity to districts

People are banking on districts generating foot traffic. The more popular the district is, the more people will go to your land!

4. Detached LANDs

If your land is not attached to a road, it probably isn’t valued as much as roadside!

This list is not exhaustive. As the platform continues to grow, we will see new value indicators emerge and will add them to this list.

Introduction of Marketplace & Variable Prices

What is Value? How does a person value a parcel of land that you cannot build on yet? These are questions that the Decentraland community members are asking themselves since the introduction of the Land Marketplace on March 23rd, 2018. The Land Marketplace has given the community the first chance for people to offer their parcels of land that they “won” in the Terraform Auction which started on December 15th.

Since the Land Marketplace was introduced to the community, there have been a wide variety of asking prices that people are demanding. The asking prices have ranged from 950 MANA to 10+ million MANA (convert MANA to any currency here). There is no rhyme or reason why people are valuing parcels at the prices that they’re going for. The only possible economic answer as to why prices are what they are is one that people who invest in cryptocurrencies understand very well:

“The value of any asset is only defined by the value buyers are willing to give to it.”

As long as people continue to buy Decentraland LANDs, we will start to gauge what the true value is of the land. At the end of the day, the value of LAND will be determined by the buyers. As long as people continue to purchase LANDs, the community will get more data on what the value is of Decentraland LANDs.

Let’s Talk Numbers

Using data from Nonfungible.com, we calculated the actual LAND value of different areas of Decentraland’s Genesis City map. Nonfungible.com has the entire history of the 35,000+ LAND transactions that have occurred since Decentraland’s inception.

In order to make a practical and usable map that makes sense from a macro value prospective, we subdivided the Genesis City map into 18 “value zones.” For our map, we focused on the following value indicators.

Average purchase price Maximum purchase price Minimum purchase price Number of sales in the area

The following map contains our findings: