When most investors think about earning passive income with cryptocurrencies, they immediately think of the staking. But there are many other ways to generate passive income, especially if you are active in metaverse virtual worlds like Decentraland (quotation MANA). In early December, Decentraland formally introduced a new passive income option that could be of interest to metaverse users: virtual property rentals for digital land owners.
In other words, if you already own digital land in the virtual world of Decentraland, you can now rent it to others who want to create a short-term presence in the metaverse, perhaps for festivals, product launches or community events. It's an interesting concept because it works similar to real-world property rentals, which has always been a popular source of passive income. But is this metaverse-inspired passive income opportunity right for you?
High risk
Purchasing virtual land in the metaverse sounds attractive, but it also comes with a high entry threshold. If you've never explored a metaverse like Decentraland before, you'll want to educate yourself about how these worlds work and how they differ from traditional RPGs. You'll also want to familiarize yourself with metaverse land prices, which can range from a few thousand dollars to over $1 million, and then familiarize yourself with the Decentraland map, which has over 90.000 parcels of land.
Since all transactions in Decentraland occur using MANA, the game's governance token, the rental income will be in the form of Decentraland tokens. This involves a certain risk and a certain volatility, given the possible price swings in the cryptocurrencies of the metaverse. Therefore, you will have to worry about two things: falling land prices and potential currency devaluation.
By late 2021, the metaverse was all the rage, and Facebook had even renamed itself Meta Platforms. Celebrities and major brands were announcing their involvement in the metaverse, and the future seemed limitless. Paris Hilton christened the first ever Metaverse Festival, which featured over 80 artists from Decentraland. But then 2022 rolled around and things got a lot riskier for the Decentraland token, the price of which is down 88% this year.
High earning
However, this high risk comes with a potentially high reward. For example, experts like consulting giant McKinsey continue to predict that the metaverse will be a nearly $1.000 trillion market opportunity within a few years. And there's certainly a lot of interest in what the metaverse is and how to get into it. According to the latest study by Capgemini, a multinational IT services and consultancy based in Paris, more than 90% of consumers are curious about the metaverse.
In my view, Decentraland's passive income opportunity boils down to this: Getting in early, while people are still discovering the metaverse, buying land while it's relatively cheap, and then turning your parcel of land into something that brands and creative influencers will want to use for one-off events. If you're lucky enough, you might find brands, artists, musicians, or small businesses eager to lease the Decentraland grounds for brand launches, festivals, or conferences.
