Could Decentraland Boost Ethereum’s Valuation? | The Motley Fool


This Jan. 12 edition of “The Crypto Show” on Backstage Pass highlighted an interesting discussion of whether Decentraland (CRYPTO:MANA) and other metaverse games could indirectly boost the value of Ethereum (CRYPTO:ETH). contributors Chris MacDonald and Jon Quast took on this topic.

Jon Quast: I don’t mean to put you on the spot here, but as far as the NFTs go, I know this can be built on various blockchains. Are these built on the Decentraland or is it built on something else like the Ethereum blockchain? I might be asking the wrong question here.

Chris MacDonald: Decentraland is built on the Ethereum blockchain. Each of these metaverse cryptocurrencies have different ways of transacting.

We’re going to talk about The Sandbox (CRYPTO:SAND) in a second. But for The Sandbox, they have their own cryptocurrency SAND. We have to use SAND tokens to trade NFTs and with Decentraland, I’m actually not 100% sure. I think the transactions are done in Ethereum but I might be wrong on that. Viewers can correct me if I’m wrong, but it is built on the Ethereum blockchain.

Quast: As Decentraland is adopted, is this also good for Ether?

MacDonald: Well, that’s one of the growth arguments for Ether and for the Ethereum network, in general, is that as these metaverse cryptocurrencies built on top of Ethereum, that the value of Ether should grow.

There’s a theoretical valuation model, that a token is worth all of the sum aggregate value of all the applications built on top of its network. For Ethereum, projects like Decentraland are really important and we’re seeing more interest in these projects. There’s an indirect valuation argument that can be made for Ethereum as well for sure.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Read More: Could Decentraland Boost Ethereum’s Valuation? | The Motley Fool

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