FOR THE MODEST price of 10,000 mana tokens (about $7,000) per day, back in January anyone could have rented parcel 27,87 in Decentraland, a 3D virtual world that runs on the Ethereum blockchain. Renting the land would have given the tenant the right to build anything on it-a shop, an event space, an art installation, whatever. But the real winner would be the landlord, who goes by Beatrix#7239, their virtual pockets lined with crypto-cash.
Not every property is as pricey as parcel 27,87, which is centrally located, near where people first spawn into Decentraland. However, a market for leasing virtual real estate is beginning to take shape, creating a new source of income for meta-version landowners.
Brands like Mastercard and Heineken have long been able to rent Decentraland plots via third parties for one-off events or product showcases, but in December the platform released tools to allow anyone to rent virtual land. The objective is to democratize access to the virtual world, says Nico Rajco, who led development of the feature for Decentraland. Everybody benefits, he says, because renting gives new users an ideal "jumping-off point" and landowners can earn a passive income. But the new system is also changing the social fabric, dividing people into haves and have-nots.
When Decentraland launched in 2017, users were given the chance to purchase ownership rights to any of 90,601 parcels, each represented on the Ethereum blockchain by a non-fungible token. At the time, plots sold for roughly $20 apiece, but by late 2021-the height of the NFT boom-land routinely changed hands for tens of thousands of dollars. One company, Metaverse Group, purchased a single parcel for $2.4 million.
As the crypto market slumped in mid-2022, demand for virtual real estate sagged along with it, leaving landowners looking for other ways to profit from their investments. Enter the new Decentraland rental system. The earliest adopters have mostly been brands and artists that want to host events or put on shows. The appetite for rentals is relatively small; at the time of writing, there are around 450 listings on the marketplace, with only 40 occupied by tenants.
Decentraland isn't the only blockchain-based virtual world: Somnium Space, SuperWorld, and the Sandbox are all variations on the same theme. Some have offered rental functionality for a while now.
Chris Bell put his experience renting out condos in the physical world to work in the metaverse, creating something of a virtual real estate empire of 100 plots in Somnium Space. In 2021, Bell says, he earned $18,000 in rent. The same rules-buy in a desirable location, invest in improving the property, and set the right rental price apply in the virtual and physical domains, he says.
Although renting out virtual property is extremely niche, an entire industry of property managers, real estate agents, and investment firms has evolved to capitalize on the concept. A startup called LandVault combines virtual land rental with "end-to-end" services for tenants, like property design and development. According to CEO Sam Huber, the company can recoup a plot's purchase cost in as few as two months.
The idea that people are willing to pay to temporarily occupy virtual land is curious in itself, but even more interesting is what it says about the trajectory of these blockchain-powered domains and the social dynamics inside them. Implicit in this arrangement is the formation of a new "winner-takes-all" class system, says Philip Rosedale, creator of the 3D online world Second Life, which pioneered the concept of virtual real estate in the early 2000s. The landed gentry sit atop the social pyramid, and below them ...
Not every property is as pricey as parcel 27,87, which is centrally located, near where people first spawn into Decentraland. However, a market for leasing virtual real estate is beginning to take shape, creating a new source of income for meta-version landowners.
Brands like Mastercard and Heineken have long been able to rent Decentraland plots via third parties for one-off events or product showcases, but in December the platform released tools to allow anyone to rent virtual land. The objective is to democratize access to the virtual world, says Nico Rajco, who led development of the feature for Decentraland. Everybody benefits, he says, because renting gives new users an ideal "jumping-off point" and landowners can earn a passive income. But the new system is also changing the social fabric, dividing people into haves and have-nots.
When Decentraland launched in 2017, users were given the chance to purchase ownership rights to any of 90,601 parcels, each represented on the Ethereum blockchain by a non-fungible token. At the time, plots sold for roughly $20 apiece, but by late 2021-the height of the NFT boom-land routinely changed hands for tens of thousands of dollars. One company, Metaverse Group, purchased a single parcel for $2.4 million.
As the crypto market slumped in mid-2022, demand for virtual real estate sagged along with it, leaving landowners looking for other ways to profit from their investments. Enter the new Decentraland rental system. The earliest adopters have mostly been brands and artists that want to host events or put on shows. The appetite for rentals is relatively small; at the time of writing, there are around 450 listings on the marketplace, with only 40 occupied by tenants.
Decentraland isn't the only blockchain-based virtual world: Somnium Space, SuperWorld, and the Sandbox are all variations on the same theme. Some have offered rental functionality for a while now.
Chris Bell put his experience renting out condos in the physical world to work in the metaverse, creating something of a virtual real estate empire of 100 plots in Somnium Space. In 2021, Bell says, he earned $18,000 in rent. The same rules-buy in a desirable location, invest in improving the property, and set the right rental price apply in the virtual and physical domains, he says.
Although renting out virtual property is extremely niche, an entire industry of property managers, real estate agents, and investment firms has evolved to capitalize on the concept. A startup called LandVault combines virtual land rental with "end-to-end" services for tenants, like property design and development. According to CEO Sam Huber, the company can recoup a plot's purchase cost in as few as two months.
The idea that people are willing to pay to temporarily occupy virtual land is curious in itself, but even more interesting is what it says about the trajectory of these blockchain-powered domains and the social dynamics inside them. Implicit in this arrangement is the formation of a new "winner-takes-all" class system, says Philip Rosedale, creator of the 3D online world Second Life, which pioneered the concept of virtual real estate in the early 2000s. The landed gentry sit atop the social pyramid, and below them ...
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WIRED (Digital) - 1 Issue, April 2023