Land Governance Token

Token holders can vote on proposals that shape the development and rules of their specific land parcel or the broader district. This includes decisions on:

• Content moderation and permitted asset types.
• Infrastructure upgrades and visual themes.
• Revenue allocation from land-based activities.
• Admission policies for other users or experiences.

Tokens often entitle holders to a share of the economic activity generated on their land. This creates a direct incentive for land development. Revenue streams can include:

• A percentage of transaction fees from NFT sales or rentals on the parcel.
• Royalties from user-generated content or games deployed there.
• Advertising revenue from billboards or sponsored events.

Tokens can be staked (locked) to access enhanced features or earn rewards. Common staking mechanisms include:

• Access Staking: Staking tokens to gain the right to deploy an experience or building on the land.
• Reward Staking: Earning a portion of the land's revenue share by staking tokens, similar to earning dividends.
• Security Staking: Staking to participate in network security or validation tasks specific to the land's ecosystem.

As standard tokens (often ERC-20 or SPL), they can be integrated into the broader DeFi and Web3 ecosystem. This enables:

• Liquidity Pools: Tokens can be paired in DEXs for trading.
• Collateralization: Used as collateral for loans in lending protocols.
• Composable Experiences: Programmable rights that interact with other smart contracts, allowing for complex, automated land management systems.

In Decentraland, MANA is the primary currency, but governance for individual LAND parcels is managed through a non-transferable, non-fungible voting right assigned to the NFT owner. For larger Estates (grouped parcels), a dedicated DAO can be created where governance is managed by a fungible token, illustrating a hybrid model. This shows the distinction between land ownership (NFT) and delegated governance (token).

The Sandbox uses a two-token model. LAND is the NFT representing the digital plot. The fungible SAND token is used for all transactions and governance. SAND holders can stake their tokens to earn rewards and gain voting power in the platform's DAO, which governs the entire metaverse's ecosystem fund, asset creation, and LAND sales, demonstrating a platform-wide governance token that interacts with land assets.

Land Governance Tokens typically enable several key on-chain mechanisms:

• Proposal Submission: Token holders can create formal proposals for platform changes.
• Weighted Voting: Voting power is often proportional to land holdings or token stake.
• Treasury Control: Governance over a communal treasury fund for grants and development.
• Parameter Adjustment: Voting on economic variables like fees, rewards, and minting schedules.
• Upgrade Governance: Deciding on smart contract upgrades and protocol improvements.

Token holders can vote on governance proposals that shape the virtual world. This includes decisions on:

• Economic parameters like transaction fees or token emission rates.
• Content and feature prioritization for the development roadmap.
• Land policy changes, such as rules for parcel adjacency or building heights.
• Treasury management for ecosystem grants and development funding.

Tokens can often be staked to earn rewards and amplify governance power. Mechanisms include:

• Fee sharing, where a portion of protocol revenue (e.g., marketplace fees) is distributed to stakers.
• Vote-escrow models, where locking tokens for longer periods grants greater voting weight.
• Resource generation, where staking may yield in-world resources or utility tokens used for activities.

Holding the token can unlock exclusive utility and access within the ecosystem. Examples include:

• Early or exclusive access to new land sales, features, or in-world events.
• Enhanced capabilities for land development tools or avatar customization.
• Participation rights in special Decentralized Autonomous Organization (DAO) committees or working groups focused on specific aspects of the world.

The token's value is tied to the health and usage of the underlying virtual world. Value accrual mechanisms include:

• Token burns from transaction fees, reducing supply.
• Treasury-backed buybacks using protocol revenue.
• Scarcity and demand driven by its utility for governance, staking, and access.
• Speculation on the future success of the ecosystem and its land assets.

Real-world implementations of land governance tokens:

• Decentraland (MANA): Used to vote on policy updates, land auctions, and treasury grants via the Decentraland DAO.
• The Sandbox (SAND): Staked for rewards and voting on ecosystem fund allocations and feature development.
• Otherverse (OTHER): Governs the Otherside metaverse, with staking granting Otherside Koda NFTs and voting power on world-building.

It's crucial to differentiate the governance token from the Land NFT itself:

• Land NFT: Represents ownership of a specific, non-fungible parcel of digital real estate.
• Governance Token: Represents fungible, proportional influence over the entire world's rules and direction.
• Analogy: Owning land (NFT) is like owning a house; holding governance tokens is like having shares in and a vote for the homeowners' association that governs the entire neighborhood.

The primary function of an LGT is to grant on-chain voting rights. Token holders can vote on proposals that shape the virtual world, such as:

• Content policies and moderation rules for their land.
• Economic parameters, like transaction fees or revenue sharing.
• Development priorities for platform upgrades and new features.
• Admission criteria for other users or applications (whitelisting). Voting weight is typically proportional to the amount of tokens staked or the size of the land parcel held.

LGTs are implemented as smart contracts (e.g., ERC-20, ERC-721), introducing specific technical risks:

• Smart contract vulnerabilities: Bugs or exploits in the token or governance contract can lead to theft or frozen assets.
• Private key management: Loss of the private key controlling the wallet holding the LGT results in irreversible loss of governance rights and any associated value.
• Upgradeability risks: If the contract is upgradeable, a malicious or faulty upgrade could alter token functionality without holder consent.

Decentralized governance is susceptible to several attack vectors that can undermine the system:

• Vote buying/selling: Tokens may be borrowed or purchased temporarily to swing a vote (flash loans).
• Sybil attacks: An entity creates many wallets to simulate widespread support.
• Plutocracy: Governance becomes dominated by a few large token holders (whales), centralizing control.
• Voter apathy: Low participation rates can allow a small, motivated group to control outcomes.

The legal status of LGTs is complex and varies by jurisdiction, impacting security and utility:

• Securities regulation: Regulators (e.g., SEC) may classify LGTs as securities if they represent an investment contract, imposing strict compliance requirements.
• Property rights: The legal enforceability of "ownership" of virtual land is largely untested in most courts.
• Tax implications: Acquiring, trading, or earning revenue from LGTs may trigger capital gains or income tax events.

The token's economic model dictates the long-term health of the governance system. Key considerations include:

• Token distribution: A fair and decentralized initial distribution prevents early centralization.
• Staking mechanisms: Requiring tokens to be locked or staked to vote reduces flash loan attacks and aligns long-term incentives.
• Treasury management: Governance often controls a community treasury funded by platform fees; proposals for its use must be carefully audited.
• Inflation/dilution: Issuing new tokens can dilute voting power and value for existing holders.

Decentraland uses a dual-token system illustrating core governance concepts:

• MANA (ERC-20): The fungible currency used to purchase LAND and vote on DAO-wide governance proposals (e.g., platform fees, grant funding).
• LAND (ERC-721): Non-fungible tokens representing parcels. Each parcel is a District with its own sub-DAO, allowing LAND holders to vote on local rules and content. This structure showcases layered governance, from global platform decisions to hyper-local land management.

A non-fungible token (NFT) representing a unique, ownable plot of digital space within a virtual world or metaverse. It is the underlying asset that a Land Governance Token grants rights over. Key characteristics include:

• Scarcity: Fixed supply of parcels within a world's map.
• Coordinates: Specific location within the digital environment.
• Interoperability: May support imported assets or specific applications.

An organizational structure governed by smart contracts and member voting, often using governance tokens. A Land DAO is a specific implementation where token holders (e.g., Land Governance Token holders) vote on matters affecting the virtual world, such as:

• Content Policy: Allowed asset types and conduct rules.
• Treasury Management: Use of funds from land sales or fees.
• Development Priorities: Voting on new features or region expansions.

A fungible cryptocurrency designed to provide access to a specific product or service within a protocol. It differs from a Land Governance Token, which is primarily for voting, though they can overlap. Examples of metaverse utility tokens include:

• In-World Currency: Used for transactions, purchases, and payments.
• Staking Asset: Locked to earn rewards or access premium features.
• Fuel for Operations: Spent to mint assets or initiate in-world actions.

A persistent, interconnected network of 3D virtual worlds focused on social connection, often utilizing blockchain for verifiable ownership of assets like land, avatars, and items. It is the overarching environment where Land Governance Tokens are used. Core concepts include:

• Interoperability: The ability for assets to move between compatible worlds.
• User-Generated Content: Worlds are often built and populated by their users.
• Digital Economy: Native currencies and marketplaces for trading assets.

A unique, indivisible cryptographic token on a blockchain that certifies ownership and authenticity of a specific asset. It is the foundational technology for Virtual Land parcels. Key attributes for land NFTs:

• Provable Scarcity: The total number of parcels is verifiable on-chain.
• Immutable Record: Ownership history is permanently recorded.
• Metadata: Contains data about the land's location, size, and traits.

The economic design and properties of a cryptocurrency or token, encompassing its supply, distribution, and utility. For a Land Governance Token, tokenomics define:

• Distribution Model: How tokens are allocated (e.g., sale, airdrop to landowners).
• Voting Power: How voting weight is calculated (e.g., one-token-one-vote, quadratic voting).
• Incentive Alignment: Mechanisms to ensure token holders act in the network's best interest.

Holders use these tokens to vote on critical platform parameters, shaping the virtual world's evolution. Key governance powers include:

• Proposal Voting: Approving or rejecting changes to the platform's core rules, economics, or features.
• Treasury Management: Deciding on the allocation of the project's community treasury for development grants or ecosystem incentives.
• Content & Policy: Influencing land use policies, acceptable content standards, and interoperability frameworks.

Beyond voting, these tokens often have embedded economic functions that secure and incentivize the network.

• Staking for Rewards: Tokens can be staked to earn yields, often paid in the platform's native currency or from fee revenues.
• Access & Prioritization: Staking may grant priority access to new land sales, exclusive events, or enhanced platform features.
• Fee Reduction: Holding or staking tokens can reduce transaction fees associated with in-world asset creation or trading.

It is crucial to distinguish governance tokens from the Land Parcel NFTs that represent ownership of specific digital coordinates.

• Governance Token (Fungible): Represents a share of overall decision-making power. It is divisible and traded based on governance influence.
• Land NFT (Non-Fungible): Represents title to a unique, specific plot of virtual land. It is indivisible and its value is tied to location, attributes, and developments on that parcel.
• Synergy: Landowners are often the most active governance participants, but any token holder can vote.

Leading metaverse projects use distinct models for land governance.

• Decentraland (MANA): MANA is the fungible ERC-20 governance token used to vote on District proposals, policy updates, and treasury allocations, separate from LAND NFTs.
• The Sandbox (SAND): SAND token holders govern the platform's foundation, voting on features and the curation of asset packs in the marketplace.
• Otherside (APE): The ApeCoin (APE) DAO governs the broader ecosystem, including the Otherside metaverse, with land plots represented as Otherdeed NFTs.

These tokens are the lifeblood of the Decentralized Autonomous Organization (DAO) that manages the metaverse platform.

• Token-Weighted Voting: The most common model, where voting power is proportional to the number of tokens staked or held.
• Delegation: Holders can delegate their voting power to experts or representatives without transferring token custody.
• Proposal Thresholds: Systems require a minimum token stake to submit a governance proposal, preventing spam.
• Timelocks & Execution: Approved proposals are often executed automatically after a delay (timelock) for security.

The token's value is derived from its utility and the success of the underlying platform.

• Value Drivers: Demand for governance influence, staking yield, platform adoption, and treasury assets.
• Key Risks: Voter apathy can lead to low participation. Whale dominance may centralize control. The token's value is highly speculative and tied to the success of a nascent virtual economy.
• Regulatory Scrutiny: May be examined by regulators as a potential security, depending on its structure and marketing.