What is Decentraland?
The first fully decentralized virtual world, Decentraland allows users to create avatars, buy land, goods, and services, create events and experiences, and interact with other users—all through a blockchain-powered world. The virtual space itself is called LAND, and the space is further subdivided into unique non-fungible tokens (NFTs) called parcels that users can buy and sell. LAND parcels aren’t the only aspect of Decentraland that can be monetized — almost any good or service, e.g. a specific name for your avatar or virtual art, can be exchanged, bought, and sold on the Decentraland marketplace.
This virtual community was created in 2015 by Ari Meilich and Esteban Ordano and it gradually evolved into the complex, NFT-powered world that it is today. In 2017, the team completed a token sale, raising $25M, which led to the creation and distribution of MANA tokens. Most tokens were distributed to participants in the token sale, investors, and held for future participants, but 20% were held in reserve for the Decentraland Foundation, the non-profit organization that manages Decentraland development and operations.
While the Decentraland Foundation serves as the development team, it acts for the benefit of the Decentraland community and is governed by the Decentraland DAO, or decentralized autonomous organization. The DAO entity owns the core smart contracts of the virtual world and coordinates community votes on proposals to make changes to Decentraland. Voting by community members is managed via the MANA token which conveys voting power to its holders.
Decentraland has some notable investors, such as the Digital Currency Group, and partnerships, such as the recently launched virtual art gallery by Sotheby’s, the international auction house.
What is the MANA token?
MANA is an ERC-20 token created by the Decentraland protocol to establish distributed and participatory governance. Anyone who holds MANA tokens can create and vote on proposals via Decentraland’s governance platform.
MANA can also be used to buy goods and services in the Decentraland world, as well as buy LAND parcels, which are ERC-721 non-fungible tokens (NFTs). MANA tokens are actually burned in exchange for LAND tokens, which helps control the supply of MANA tokens. LAND holders can also create and vote on proposals as DAO members.
Before trading any crypto assets it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.
No securities regulatory authority or regulator in Canada has evaluated or endorsed the Crypto Contracts or any of the crypto assets made available through the platform.
Wealthsimple has performed an assessment of whether MANA can be supported by Wealthsimple’s platform, including whether MANA is a security and/or a derivative and is being offered in compliance with securities and derivatives laws.
We evaluated MANA based on publicly available information, including (but not limited to):
- The creation, governance, usage and design of MANA, including the source code, security and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that first created MANA;
- The supply, demand, maturity, utility and liquidity of MANA;
- Material technical risks associated with MANA, including any code defects, security breaches and other threats concerning MANA and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them;
- Legal and regulatory risks associated with MANA, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of MANA; and
- Statements made by regulators or securities regulatory authorities in Canada and other jurisdictions regarding whether MANA, or generally about whether the type of crypto asset, is a security and/or a derivative.
Wealthsimple monitors ongoing developments related to crypto assets available on its platform for significant changes that may affect Wealthsimple’s original assessment of those assets, including Wealthsimple’s assessment of the application of securities and derivatives laws. Any significant changes relating to MANA may result in changes to this Crypto Asset Statement and/or Wealthsimple’s ability to support MANA.
Like all other crypto assets, there are some general risks to investing in MANA. These include short history risk, volatility risk, liquidity risk, demand risk, forking risk, cryptography risk, regulatory risk, concentration risk, electronic trading risk and cyber security risk. Please review the Wealthsimple Crypto Product Risk Disclosure for additional discussion of general risks associated with the crypto assets made available through the platform.
Additional Risks / Information
MANA has elevated regulatory risk. The United States Securities and Exchange Commission (SEC) has alleged that MANA is a security under U.S. federal securities laws in one or more enforcement proceedings pending before U.S. courts against crypto trading platforms. None of the Decetraland team or Decentraland Foundation are parties to this proceeding, and the U.S. courts have not determined that MANA is a security. In the event that a U.S. court determines that MANA is a security or there are other material developments affecting the treatment of MANA under securities laws, Wealthsimple may cease to support MANA and/or the market for MANA may be adversely affected.
We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading MANA. Investors should perform their own assessment to determine the appropriate level of risk for their personal circumstances.
Wealthsimple is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Wealthsimple Investments Inc. dated December 18, 2023 (the Decision).
The statutory rights of action for damages and rescission in section 130.1 of the Securities Act (Ontario), and, if applicable, similar statutory rights under securities legislation of other jurisdictions of Canada, do not apply in respect of this Crypto Asset Statement to the extent a Crypto Contract is distributed under the prospectus relief in the Decision.
Last updated: January 1, 2024