Crypto Asset Statement: MANA (Decentraland)
Last updated: March 29, 2023
About this Statement
CatalX CTS (“Catalyx” or “we”) strives to provide our users with information to assist in understanding crypto assets that are offered for trading on the Catalyx platform (the “Platform”). One of the crypto assets we offer on the Platform is MANA (Decentraland). This summary sets out certain key information about Decentraland and MANA as well as some of the risks involved in trading MANA. While we tried to describe the key features of MANA here, this summary doesn’t provide all relevant information on MANA. We encourage users to perform their own research in order to understand any crypto asset that they intend to trade on the Platform.
Decentraland is a virtual reality gaming platform founded Esteban Ordano and Ariel Meilich which opened to the public in 2020 and is powered by the Ethereum blockchain. Users can purchase parcels of land in the Decentraland metaverse on which they can build a variety of virtual structures. Decentraland has three native tokens: LAND, an ERC-721 token (NFT) that represents parcels of digital land in the Decentraland metaverse, Estate an ERC-721 token that represents merged parcels of digital land and MANA, an ERC-20 token that serves as Decentraland's currency.
Users claim ownership of virtual land on a blockchain-based ledger of parcels. Landowners control what content is published to their portion of land, which is identified by a set of cartesian coordinates (x,y). Contents can range from static 3D scenes to interactive systems such as games.
Decentraland consists of a decentralized ledger for land ownership, a protocol for describing the content of each land parcel, and a peer-to-peer network for user interactions. Decentraland aims to establish a network that allows its content creators to own and capture the full value of their contributions.
One of the features of Decentraland is the concept of decentralization, which in this case means that no person or group of persons can control the Decentraland metaverse, rather each individual LAND owner has the right to use and develop their LAND as they see fit including by monetizing their LAND in various ways. The concept of decentralization is bring implemented through the creation of a decentralized autonomous organization (DAO). The DAO allows ecosystem participants to vote on proposed changes to the protocol. Holders of MANA, LAND and Estate tokens are entitled to vote. In order to vote MANA holders must ‘wrap’ their MANA tokens by locking in the DAO, while MANA is locked it cannot be used or transferred. Holders of LAND and Estate tokens must register them in order to vote, but once registered they are still able to use these tokens.
Like many other blockchain projects, Decentraland has a foundation responsible for development of the project, the Decentraland Foundation (“Foundation”). The Foundation retained 20% of the initial token supply, holds the intellectual property rights for Decentraland and maintains the Decentraland website. The Foundation also operates a number of applications and services that are critical to the ecosystem including: the Builder, the Blog, Events, Agora, Forum, the Land Manager, the Company Line Interface, DAO, the Developers’ Hub and the Rewards tool among others.
What is MANA?
MANA is the native crypto currency used in Decentraland. When setting up Decentraland MANA was required in order to participate in the auctions that were run to purchase LAND from the developers initially. When LAND was sold at auction the MANA received by the developers was permanently burnt, removing it from supply and reducing the total MANA in circulation. MANA can also be used on the Decentraland Marketplace to make in-world purchases of digital goods and services. MANA can also be used to vote in the Decentraland DAO.
This overview provides a summary of certain risks associated with MANA. We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading MANA, and in addition, does not take into account an individual’s particular situation or risk tolerance. Purchasers are encouraged to conduct their own research prior to trading any crypto asset on the Platform. Catalyx users should read the Risk Disclosure Statement for additional discussion of general risks associated with crypto assets made available through the Catalyx platform.
Dependence on Decentraland Foundation. The future success of the Decentraland is likely somewhat dependent on the ongoing participation in network development by the founders and the Decentraland Foundation. If these entities cease their support for the network such actions may be detrimental to the project going forward.
Dependence on acceptance of Metaverse technology. Decentraland was one of the first decentralized virtual reality games to be created. However, despite its ground-breaking concept it has been criticized for having low in game user engagement compared to centralized virtual online video games. Failure of Decentraland to attract and retain users in the future could negatively impact the value of MANA.
Please note that these risks and the associated summaries or overviews provided for each in the Risk Disclosure Statement are not intended to be an exhaustive discussion pertaining to all such risks and, in addition, there may be other risks that come with exposure to MANA. We encourage all Catalyx users to perform their own due diligence to assess the risks associated with MANA and to determine whether this level of risk is acceptable to them.
How Catalyx determines which Crypto Assets to List
Catalyx has established robust policies and procedures to review each crypto asset offered for trading on the Platform. Among other information, we review available public information relating to the crypto asset on the following topics prior to making a determination on whether a crypto asset will be listed:
The history and characteristics of the crypto asset including whether the crypto asset was launched by ICO;
Analysis of the founders or inventors of the crypto asset/related network and a review of their ongoing involvement with crypto asset/network;
How the crypto asset functions including a review of its utility or purpose;
The market liquidity for the crypto asset;
The current and proposed governance of the ecosystem on which crypto asset operates with a focus on the level of decentralization of such ecosystem; and
The position taken by any regulator with respect to the crypto asset including any enforcement action taken against the crypto asset, the related network, or the founders.
In addition to the above we also conduct an analysis of factors weighing in favor or against the crypto asset being deemed to be a security based on Canadian securities laws.
No securities regulatory authority in Canada has expressed an opinion about MANA or any of the other crypto contracts or crypto assets made available through the Platform, including an opinion that MANA itself is not a security and/or derivative. Changes to applicable law may adversely affect the use, transfer, exchange, or value of any crypto contracts or crypto assets you hold on the Platform.
Certain statutory rights under securities legislation in Canada do not apply in respect of this Crypto Asset Statement.