Setting up a DAO to decentralize policy, assets, and infrastructure; and a foundation to further Decentraland’s mission.

Decentraland is the first-ever decentralized virtual world. Being decentralized is not a side detail, but core to the platform’s value proposition. In this context, decentralization equals the world being in the hands of its users. At present, there are thousands of people, and at least 30 independent studios actively creating content for the world; several creating ancillary services (e.g. Metalith, Decentral.io), media (DCL Plazas, DCL Blogger) and the DAO itself was created by a third-party organization (Aragon). The sidechain infrastructure was developed by Matic Network and there is even an independent VC arm dedicated 100% to Decentraland.

Decentralization of the network is clearly alive and flourishing, hence the need to consolidate this throughout various aspects of the platform:

Policy Making

From the very beginning, the spirit has been that decisions be made in a decentralized fashion. In this context and to coordinate protocol upgrades to LAND and Estates, we have just launched the Decentraland DAO, a decentralized autonomous organization that will be in charge of all the important policy updates. Until now we have been using Agora, largely as a way to gauge the mood and aspirations of the community. From now on the DAO will be the actual decision-maker.

And while it will be up to the DAO, we believe its actionables will include LAND auctions, whitelisting of NFT contracts, modifying the marketplace fees, and many more things we cannot foresee at this point in time. These votes can be conducted through the Aragon interface, available at: https://mainnet.aragon.org/#/dcl.eth

Single Points of Failure

In order for a decentralized world to be independent and not reliant on one key ingredient, no single point of failure should stop the world if this component fails. As of last week – unlike every other virtual world – Decentraland’s infrastructure no longer runs on a single company’s servers or its contracted cloud providers.

To illustrate this point with a popular culture reference, shutting down the central server of any other virtual world equates to pressing Ready Player One’s ‘Big Red Button’; a kill switch which could shut down the Metaverse at any time. In contrast, all Decentraland content is now hosted and replicated across a network of independent nodes called ‘Catalysts’.

Also at Decentraland, users chat with each other, see each other move, and are able to interact with each other, thanks to WebRTC, a peer-to-peer protocol for real-time communications. In order to establish these connections, these nodes help users discover and bootstrap connections to each other.

Furthermore, while the initial set of nodes has been picked from among reputable members of the Decentraland community, the DAO will be able to revoke their entry from the list of servers at any time through a vote on the DAO. This way, the DAO is now the enforcer of the distributed infrastructure on which Decentraland runs.

Decentraland, in effect, no longer has a Big Red Button.

Big Red Button. Not included.

Source Code

On February 20, the source code of the Decentraland Explorer will be made public under the Apache 2.0 License. This will allow for any company or individual to tweak the client, making https://play.decentraland.org the reference client among a plethora of alternative clients that the community will create.

Ownership of Smart Contracts

In keeping with the structure of a decentralized world, it is paramount that all the virtual items used within Decentraland are secure and no one party controls them. Back in November of 2018, the keys that had custody of the MANA smart contract were sent to a self-destructed address, the recommended method to “throw away the keys” in Ethereum. This effectively made the MANA smart contract forever immutable, with no ability to mint more tokens or pause it.

Also, the ownership of the LAND, Estates, and other important smart contracts, have recently been migrated into the DAO, including the two contracts that own the Decentraland Marketplace. The Wearables smart contract will be transferred at the conclusion of the Treasure Hunt.

Why is this important? To avoid a single owner for the contracts, since that would introduce counterparty risk for all the asset holders.

The transactions enacting these transfers can be found here:

Ownership of LAND and other NFTs

The public LANDs that comprise Genesis City, such as the nine plazas and public road, equal to a total of 13,026 parcels, are now under the custody of the DAO. Now all the MANA and LAND holders, through the DAO, will be the protectors of these smart contracts and will ensure that any changes that may occur in the future are solely due to their collective decision-making.

Voting Power

All Decentraland policies, infrastructure, content moderation and assets are kept secure and neutral by virtue of decentralization, and the DAO is the organ through which MANA and LAND holders have their say over the platform. However, in order for this participation to occur in a distributed manner, MANA and LAND concentration must be avoided, to the fullest extent possible. While the LAND has been sold through a couple of public auctions, the vast majority of MANA has, up until now, remained in the coffers of the development company.

At the inception of the MANA token, the total supply was 2,805,886,393. Due to its utilization and burn in the Districts Terraform, LAND auctions, claiming unique Avatar names and marketplace fees, that figure has been reduced to 2,532,841,78 as at the time of writing. Out of this total, 1.3 billion (51.3%) is in the hands of private holders, while the development company and its affiliates control 1.232b (48.7%).

In order for decentralization to be properly consolidated, the constituents that comprise the DAO need to be a lot less concentrated. The changes below are aimed at facilitating this:

1. DAO Allocation

The DAO itself will possess a significant amount of MANA, granting the community the financial muscle to actively influence the Decentraland ecosystem and bring about growth through the incentivization of new nodes, content creators, running independent campaigns, among other endeavors that the community may consider appropriate. Hence, the development company is hereby transferring 222M MANA to an irrevocable vesting contract that has the DAO’s multisig as a beneficiary. These tokens will vest over a 10-year period, guaranteeing a decade-long tenure for what is now one of the largest DAOs in the world.

See this vesting contract on Etherscan.

2. Establishment of the Decentraland Foundation

The Decentraland Foundation will be a non-profit independent organ, which will make its own decisions free from the control of its founders, and which will foster the decentralization of the network. This will ensure the neutrality of the network through the holding of the property rights over Decentraland’s intellectual property, trademarks, web domains, open source repositories and social media accounts, among other assets. The DAO, lacking formal legal status, cannot fulfill this role. The Foundation will have its own treasury, with which it will take over operational functions. A transition plan will be implemented to ensure that the quality and pace of development is as smooth as possible. As with the DAO, an irrevocable vesting contract of 222M MANA will be transferred to the Foundation.

As soon as progress is made, we will provide the community with updates as to the formation and other relevant information pertaining to the Foundation.

See this vesting contract on Etherscan.

3. Reducing Concentration

In an effort to be consistent with the goal of achieving a community that self-regulates via smart contract governance, the development company is hereby burning 333M MANA as a means to reduce concentration. However, empowering the DAO and Foundation does not mean our team will stop contributing to the development of Decentraland. Our involvement will persist not as a central point of reference, but rather as another member of the ecosystem that is committed to Decentraland in a manner that is consistent with a decentralized platform.

See this transaction on Etherscan.

Conclusion

In summary, the coming week marks a number of key milestones in the development of Decentraland.

Policy-making, decentralized ownership of Smart Contracts, LANDs and other NFTs, along with public access to the source code are the first major steps in transitioning to a fully decentralized model of governance. Ensuring and consolidating this decentralization are crucial processes such as eliminating a single point of failure; reconfiguring voting power and distribution of MANA; DAO allocation and the establishment of an independent Decentraland Foundation.

These are all goals that we have been working towards for the best part of three years. But this is really just the beginning of the journey. We have updated the public roadmap with our next set of goals, which you can view here.

Thank you for all your support through this process and we’ll see you in the Metaverse!