Currently a top-25 cryptocurrency by market capitalization, Decentraland (MANA 0.03%) has garnered a tremendous amount of attention from investors of late.
Built on the Ethereum network, Decentraland is powered by its native token MANA. As the official token of the Decentraland game, investors look to the value of MANA as representative of the value created on this network. Those looking for exposure to the growth in blockchain-powered games in the metaverse will like how this token is positioned.
Indeed, Decentraland remains one of the hottest games -- and tokens -- in the market. Over the past three months, Decentraland has been a five-bagger for investors. Zooming out over the longer term, Decentraland has been one of the best-performing tokens over the past year, providing investors with returns of more than 5,300% as of the end of November.
Let's dive into three reasons why this cryptocurrency is one that investors should consider.
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1. Decentraland is a metaverse game
It's an obvious catalyst to point out: Decentraland is a leading metaverse game. For those intrigued by what the future could hold for the metaverse, investing in a blockchain-based game could provide about as much aggressive exposure as investors could ask for. This is a nascent, fast-growing space, and the growth potential of the blockchain powering the future of virtual reality has many investors excited.
It should be noted that Decentraland is currently the largest metaverse-related cryptocurrency. Ranked 23rd in terms of market capitalization, Decentraland remains the go-to investment for many long-term believers in this sector.
One of the reasons for this is Decentraland's positioning as the "first-ever virtual world owned by its users," per its website. Investors appear to be putting a premium on Decentraland's first-mover status. That said, other high-flying metaverse games are popping up, providing competition for Decentraland -- and options for investors.
Decentraland has largely paved the way in creating a virtual world where users can go to work, shop, and engage with friends. Given the amount of investment set to flow into the metaverse from institutional investors and corporations such as Meta Platforms, this is a growth area investors rightly want exposure to.
2. A free-market economy based on its native token
Fundamentally, Decentraland is a game. It is a multiplayer online world where anyone can interact within the space Decentraland's users have created. While very interesting, this doesn't necessarily highlight the value for owners of Decentraland's token, MANA.
However, taking a broader view of the implications of virtual land ownership within the metaverse, one can see that there's a lot of potential value to be had in owning a piece of the metaverse. High-profile multimillion-dollar sales of land on Decentraland have highlighted the value investors see in getting in on the ground floor of what could be the next real estate rush.
Artists are creating galleries and selling their non-fungible tokens (NFTs) and artwork virtually. Brands are setting up virtual real estate shops on Decentraland. Those looking for a marketplace to "see" buyers and sellers of NFTs face to face (via avatars, of course) have a way to do so. And virtual conferences are taking place on Decentraland, as are concerts.
This new-age free-market economy is certainly something to see. Decentraland is among the leading metaverse spaces for users to engage, providing real utility and the exchange of real money. Accordingly, those bullish on the future of digital commerce will want to check out Decentraland.
3. Decentraland is attracting large institutional investors
Back in February, Grayscale launched its Decentraland Trust. This move was largely heralded as an "exotic" move, given that Grayscale has mainly focused on prominent large-cap cryptocurrencies with its funds.
That said, Decentraland has become a prominent large-cap cryptocurrency in its own right as a top-25 cryptocurrency.
When large institutional investors see value in a given token, retail investors take notice. As if Decentraland needed more catalysts, the potential for additional capital to flow into metaverse-themed cryptocurrencies furthers the argument that MANA is a token with strong fundamental support.
Simply put, Decentraland has gone mainstream. Large transactions are taking place on the platform, and big money is entering this space. For those looking for a metaverse cryptocurrency that's here to stay, Decentraland is certainly making a strong case as the leading platform in this regard.
Great risk-reward
There's a reason metaverse-themed cryptocurrencies such as Decentraland are taking off. Interest in what the future of the metaverse holds is currently sky-high. Indeed, there's no doubt Decentraland provides long-term investors with a myriad of reasons to invest.
Of course, given the sums of money now changing hands in these virtual worlds, regulatory risks remain high for metaverse cryptocurrencies like MANA. Regulators have stepped up their game in key global markets, with China and India recently taking hard-line stances on this nascent sector. These regulatory pressures appear unlikely to abate any time soon.
In particular, cryptocurrency gambling happens to be one of the key features users have been attracted to with Decentraland and other metaverse games. Accordingly, this gambling exposure amplifies the regulatory risk facing Decentraland right now.
However, it appears the macro tailwinds for metaverse assets outweigh the potential headwinds right now. Decentraland has seen impressive growth over the past year, and there's reason to believe this growth has only just begun. As part of a well-balanced crypto portfolio, there's a strong argument to be made for Decentraland.
