Most recent update: [March 10, 2022]
No securities regulatory authority has expressed an opinion about the Crypto Contracts or MANA, made available on the VirgoCX Platform, including an opinion that MANA is not itself a security and/or derivative.
What Is MANA?
The MANA token is an ERC-20 token on the Ethereum blockchain and is one of the native cryptocurrency tokens in a metaverse called Decentraland. Decentraland is essentially an immersive virtual gaming universe where users can setup avatars, buy land, build, and interact with each other. It functions as a Decentralized Autonomous Organization or DAO where the community decides on governance within the metaverse. You can learn more about the Decentraland DAO here.
The MANA token is the primary token used in Decentraland to purchase real estate and pay for in-game goods, artwork, and customizable assets. Mana is not only a digital currency in Decentraland, but it also gives token holders voting power in the Decentraland DAO governance model.
How Does It Work?
To understand how the MANA token works, one needs to understand how Decentraland works first.
The Decentraland protocol has 3 primary layers:
1. Consensus Layer: This layer uses smart contracts on the Ethereum blockchain to track land and asset ownership.
2. Land content Layer: This layer uses a decentralized distribution system to download assets.
3. Real-time layer: This layer enables peer-to-peer real time interaction to allow socializing and community building via avatars to create virtual connections.
In the consensus layer, parcels of virtual real estate are purchased using Ethereum smart contracts to track ownership. These virtual lands are forms of NFTs. The Land is bought by burning MANA tokens, which are primary token of the Decentraland universe and only have utility within the Decentraland virtual universe.
When land is purchased, the land contract has a burn function that will destroy MANA tokens and create a new entry in the land registry. Therefore, MANA is deflationary by nature due to the burn function and has a finite total supply.
What Is the History of MANA and Who Are the Founders?
As MANA tokens are a part of the Decentraland universe, it is important to understand the origin of Decentraland. This project was initially created back in 2015 by two Argentinian entrepreneurs named Ari Meilich and Esteban Ordano.
Ari Meilich holds a Bachelor Science in Neuroscience from Hunter College in New York. Prior to being CEO of Decentraland, he spent almost 2 years working on neuroscience research at NYU in New York. He later went on to become the cofounder of a CRM platform called Benchrise. From there, Ari became a co-founder, project lead, and eventual CEO of Decentraland. As of April 2020, Ari moved into an advisory role with the project and went on to found Big Time Studios, which is a new NFT based gaming company.
Estaban Ordano has spent his entire career in the technology space. He graduated with a degree in Software Engineering from the Instituto Tecnológico de Buenos Aires. He has held positions at numerous firms including Google, Monits, and ITBA, before becoming a software engineer at Bitpay working on crypto wallets. In May of 2017, Ordano co-founded Decentraland. He is now in an advisory role with the project.
When Decentraland was first created it was simply a pixelated grid that used a proof-of-work algorithm to allocate these pixels to early adopters. The beta of the platform was launched back in 2017, where developers initially sold pixelated virtual land parcels starting at USD $20. As of 2021, some of the most lucrative digital real estate is selling for six figures or more.
Over the past few years since the beta launch, this metaverse has evolved into a 3D immersive virtual world where even the likes of London-auction house Sotheby’s has created a virtual gallery to display exclusive digital art in the form of non-fungible tokens or NFTs.
What Makes MANA Unique and What Gives the MANA Token Value?
The MANA token is unique in that it only derives utility within the Decentraland virtual universe. The primary utility of the MANA token is that is used to purchase LAND within Decentraland, it can be used to purchase virtual goods and services, and it allows voting rights for governance of the Decentraland DAO.
The value of the token is driven by the demand and popularity of Decentraland. With a finite supply, greater adoption of Decentraland will lead to greater demand for MANA tokens to facilitate transactions with the virtual universe.
What Is the MANA Token Supply?
The total original supply of MANA tokens is capped at around 2.8 billion. The current total supply is around 2.2 billion tokens according to official sources. The current circulating supply is around 1.8 billion tokens.
What Are Some Risks or Drawback of the MANA Token?
There are a few key risks or drawback to consider when looking to purchase MANA tokens. Given that the token is the native form of digital currency within Decentraland, the price appreciation or success of the MANA token is dependent on the adoption and growth of Decentraland. If users abandon the metaverse project, then the token ultimately may not have any value.
Another key risk to consider is that token only has value within a single virtual world. Unlike other crypto assets like BTC or ETH, MANA doesn’t derive or have any value outside of a single platform. This could be a key risk as the token could significantly drop in price if there is hack in Decentraland or something else significant negatively affects the Decentraland metaverse.
Prior to listing MANA on the VirgoCX Platform, VirgoCX performed due diligence on MANA and determined that MANA is unlikely to be a security or derivative under Canadian securities legislation. VirgoCX’s analysis including reviewing publicly available information on the following:
- The creation, governance, and location of MANA and/or its primary development team;
- The supply, demand, maturity and liquidity of MANA; and
- Legal and regulatory risks associated with MANA.
Statutory Rights under Securities Legislation
VirgoCX is offering Crypto Contracts on crypto assets in reliance on a prospectus exemption contained in the exemptive relief decision Re VirgoCX Inc. dated May 30, 2022 (the Decision). Please be aware that the statutory rights in section 130.1 of the Securities Act (Ontario), and, if applicable, similar statutory rights under the securities legislation of each other province and territory in Canada, do not apply in respect of the Crypto Fact Sheet to the extent a Crypto Contract is distributed under the prospectus relief in the Decision.