The War On Shitcoins Episode 6: Decentraland (MANA). The war on shitcoins is a Crypto.IQ series that targets and shoots down cryptocurrencies that are not worth investing in either due to their being scams, having serious design flaws, being centralized, or in general just being worthless copies of other cryptocurrencies. There are thousands of shitcoins that are ruining the markets, and Crypto.IQ intends to expose all of them. The crypto space needs an exorcism, and we are happy to provide it.
Decentraland is a gaming platform that brands itself as a virtual reality experience that is entirely integrated with the Ethereum blockchain, facilitating the development of virtual economies where players can earn money. Decentraland did an ICO in August 2017 and raised $24 million from the sale of its native MANA token, a cryptocurrency which will presumably be used in-game.
Since then MANA’s market cap has risen as high as $267 million during the broad crypto space rally that peaked in January 2018. It currently sits at $50 million. This places MANA at number 68 out of nearly 2,100 cryptocurrencies on CoinMarketCap and also makes MANA one of the only ICOs that is still profitable overall. However, Crypto.IQ tried to play Decentraland, and there was nowhere to actually launch the game. Crypto.IQ proceeded to ask in the official Decentraland Discord channel where to locate the game, and it was confirmed that Decentraland is not playable, and a public beta will launch in Q2 2019.
It is shocking that Decentraland launched in August 2017 and raised $24 million at that point, but there is still no playable game. For 18 months investors, traders, and users have seen videos that show what gameplay in Decentraland would be like, but not a single person outside of the company has played it. The official Decentraland Bitcointalk announcement thread reveals that the game was supposed to be fully functional in 2018, with public gameplay in Q4 2017. Now, according to the Discord channel, the beta test of public gameplay will not begin until Q4 2019, which is not even guaranteed, since the Decentraland website lists no date for the launch of a playable game.
Even worse, Decentraland is conducting a secondary ICO for its non-fungible LAND tokens, which represent a piece of virtual real-estate inside Decentraland. 161 million MANA worth $30 million was collected by Decentraland during the first auction, and now a 2nd LAND auction is underway as of this writing.
Perhaps the nail in the shitcoin coffin is that there are 1.05 billion MANA in circulation, but Decentraland itself controls 1.6 billion MANA and says it will print another 8 percent of the supply per year. This makes the MANA market centralized since Decentraland can suck money out of the market at will and crash MANA’s price to enrich its own bank account.
There does not appear to be any agreement in place to prevent Decentraland from dumping as many tokens as it wants, making this an extremely risky situation for MANA holders. It is nonsensical that people would invest in a token with such a centralized supply, especially since it is a token for a game that has never been playable.
Since Decentraland has raised a total of $54 million with more to come, it seems likely that the game will eventually launch, and there is always the possibility it will be the cryptocurrency and blockchain version of Second Life as promised. However, investors who were promised a virtual blockchain world in Q4 2017 must be upset at this point. Further, major Ethereum dApps have shockingly low user counts, with only hundreds of users per day despite big promises. Even if Decentraland ends up being amazing, it could go par for the course and net only hundreds of active users on a daily basis, which would lead to a massive loss for investors.
Decentraland’s continued fundraising efforts, lack of a playable game, market centralization, and no imminent game launch certainly makes MANA and LAND seem like shitcoins. Time will tell.