MANA Booms, MANA Burns – The Decentraland MANA Burn Rate

On the day where the total amount of Decentraland currency burned (MANA token) exceeds the total amount raised from the ICO funding round, we take a look at the Decentraland MANA burn rate.

First of all, please be aware that burning Decentraland currency in NO way affects the initial $25m ICO investment, which is still healthy and in tact. Essentially, this means that if the ‘burning currency strategy’ didn’t exist, Decentraland would have now received over $50 million in funding.

All Decentraland currency holders should be aware of the rate at which MANA is burned (when a coin/token is burned, it essentially means it is destroyed and permanently taken out of circulation). In it’s current form, the set of rules under which it operates have been designed to organically increase it’s value, by constantly removing more and more from a total fixed supply.

If you are going to use, HODL or trade MANA, then an important price determining factor is the burn rate.

One Time, Big Smelts

All MANA spent on buying land in the first and second Decentraland land auctions was burned.

Total MANA Burned in auctions

1st Land Auction = 161,483,050 MANA
2nd Land Auction = 109,500,000 MANA

MANA spent on the creation of the DAO was also burned: 333,000,000 MANA

Forever Decreasing Supply

In November 2018, the Decentraland community voted overwhelmingly in favour of removing the proposed 8% rate of inflation of the Decentraland currency, MANA. From the same vote, a 1% burn rate was introduced on all land sales through the official marketplace was introduced. You can read more about that here.

Since then, avatars and wearables have been introduced into the eco-system. Each time they are purchased, a varying portion of MANA is also burned.

As a Result…

All this burning currency must make you wonder, how much MANA has been burned in total?

Total MANA burned to date: 608,325,374
Total value in USD: $25,427,498*
*rate as at 26th May 2020 (1 MANA = $0.041)

1,370,172,956 is the current circulating supply of MANA, from a total supply of 2,197,561,018.

Ongoing Burn Rates

Land sold on the Decentraland Marketplace – 2.5% of total sale price is burned

Land sold on Opensea Marketplace – 2.5% of total sale price is burned

Avatar / Registered Initial Name Sale – Cost 100 MANA – 100% of total sale price is burned

Avatar / Registered Name Resale – 2.5% of total sale price is burned

Newly Minted Wearables Sale – Halloween collection 100% burned. No other newly minted items have been sold. Instead, they have been handed out as prizes.

Wearables Resale on the Decentraland Marketplace – 2.5% of total resale price is burned

Wearables Resale on Opensea Marketplace – 5% of total resale price is burned

* Burn rates vary from the official Decentraland marketplace and secondary marketplaces, such as Opensea.

Tracking Tool

As can be expected, all this data is being tracked by Decentraland, with a little known (and still in development) tool discovered recently, named the MANA Board.

> Click to view the MANA board.

Courageous or Crazy?

It was always very well documented that the initial land auctions were going to burn all MANA used at auction. A bold and controversial move, considering Decentraland was literally burning millions of USD $ of potential funding which could otherwise have been invested in districts, more developers, on-boarding, marketing and maintenance of the platform, to name a few possibilities.

At today’s rate of exchange (1 MANA = $0.041) that’s a cool $11,135,000 that has vanished from the kitty, from land auctions alone. The total amount of burned MANA now exceeds $25,000,000 USD.

The first ongoing burning processto be introduced was for a 1% MANA fee from all subsequent land sales, as initially voted for by the community. Only 90 wallet addresses voted in that vote, still, a community vote is a community vote, and the result must always stand. Several months later, for some unknown reason, the community was then asked to vote on this for a second time, at which point it was increased to 2.5%. This remains the only topic to have ever been put to the vote twice, which seems to suggest that maybe Decentraland didn’t get the answer they were looking for first time round.

The burning of MANA for avatars and wearables was a decision made by Decentraland, without consulting the community. Furthermore, it is now evident that a % of MANA is also burnt from sales on secondary marketplaces, such as Opensea. The rates were created by Decentraland. but exactly what they are is still unclear. Notably, this was never put to community vote either, and was sneakily implemented, without any official announcement.

The race to burn as much MANA as possible, is seemingly in full swing by Decentraland.

Why?

It is important to understand that the official team building Decentraland all have a financial motivation in seeing the currency increase in value, as each is incentivised by a large, vested payoff in MANA token for their building efforts. This is in place to act as an incentive to build something great for the end user.

The way it works is simple…

The better product they produce >> the more users it will attract >> the more use cases MANA will have, as the economy develops >> the demand for MANA increases from inflated user numbers.

If you then couple this increasing demand, with a forever decreasing supply, well, this is the perfect recipe which has been created to ensure that MANA will be worth much more when the Decentraland team come to receive their final vested payment in a lump sum (scheduled for sometime in 2025).

There is nothing wrong with this, in fact, it makes total sense from a development point of view, and ultimately benefits everyone. The official team get a larger payout (in terms of MANA to $ rates), the end user gets the best product that the Decentraland developers could possibly create.

Effects

In recent days we have seen a big increase in MANA prices on the exchanges, could the burn rate be starting to influence the price? At the moment, it’s too early to say, but with the way the whole currency is designed, that is certainly the intention.

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8 Comments

  • jeff zerr
    Posted May 28, 2020 1:11 am 0Likes

    what if they sell for ethurum? Is mana still being burnt?

    • DCLPlazas
      Posted May 28, 2020 10:41 am 0Likes

      Good question! No, if bought for Ethereum on e.g. Opensea, there is no burn.

  • jeff zerr
    Posted June 7, 2020 5:01 pm 0Likes

    Is all mana from an item sold in a pre-sale 100% burnt example the bee suit or the spy suits ?

    • DCLPlazas
      Posted June 8, 2020 7:51 am 0Likes

      Yes, however, only the Halloween collection and the Covid-19 masks were ever sold. The Covid-19 proceeds were donated to charity. The Halloween proceeds were burned. All other wearables have been given away for free as prizes.

  • khalid daloub
    Posted June 10, 2020 4:07 pm 0Likes

    What happens if all coins get burnt

    • DCLPlazas
      Posted June 11, 2020 9:25 am 0Likes

      That’s a lot of burning. In this extremely unlikely scenario, any MANA remaining would become a collectors item, and everybody just uses other coins e.g. ETH.

  • jeff zerr
    Posted June 25, 2020 11:37 pm 0Likes

    Thats not true i bought the bee suit in the pre sale …there s still lots remaining… how can u say it was “given” away when its currently in a state of pre sale? I could buy one tonight if i wanted !

    • DCLPlazas
      Posted June 26, 2020 2:08 pm 0Likes

      You must have bought on the secondary marketplace. You won’t have bought that Bee Suit directly from Decentraland.

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