As you're mowing your lawn this spring (partially because it's your social duty to your neighbors, but partially because if you don't, your homeowner's association (HOA) will send nasty mail and fine you), take a moment to appreciate those things that the HOA is doing to help you protect your property value. It gives you a say in how your neighborhood is run, for example, and it allows you to voice your concerns if something feels like an overreach, or crime becomes a significant problem near your home.
Many are worried about the same kinds of issues with their metaverse real estate. Who decides the direction your metaverse platform is headed? What happens if bad elements move in and start causing trouble? In short: How do you protect your interest in the metaverse, and who is really in charge of these things?
For the main platforms offering metaverse real estate backed by non-fungible tokens (NFTs) that offer proof of ownership, the answer is easy. Your metaverse world has something kind of like an HOA that grants you voting rights and a huge voice in the future of your platform. It's called a decentralized autonomous organization (DAO), and it's the best way for an investor to ensure their metaverse real estate is protected for the long term.
What is a DAO?
A DAO is an organization that allows participants in various decentralized projects -- for example, a metaverse platform or a popular NFT offering -- and have full control over the future of that project. As a member of a DAO, you get to vote based on the fact that you have some recognized ownership in the project. This might mean you own an NFT like digital land, or that you hold a specific cryptocurrency.
In the case of the metaverse, platforms that are governed by DAOs, like Decentraland (MANA 0.31%), have regular town hall meetings where owners of both land and world currencies can meet to discuss issues they are concerned about, propose new projects, or vote on new regulations or amendments to current bylaws. In a lot of ways, it's very much like your HOA (minus the lawn mowing).
How DAOs protect metaverse real estate investors
Buying land in the metaverse already can be a very risky purchase. It's land you can't touch, stand upon, or visit in the real world, not to mention it's not how many people understand real estate investments, so it is naturally scary. Part of that is because of the newness of the investment type; it's simply not something that's been done before. Another factor is that often, investors are paying little attention to how these worlds are governed and the everyday nuts and bolts of something both so like and so unlike the real world.
DAOs aren't present in every metaverse platform, but those that do have DAOs offer a much richer ownership experience. Many would-be metaverse platforms are really just gaming platforms that happen to have goods available for sale. You might be able to buy things, but you don't always have the right to sell them, or even when you do, you may have no control over whether the platform owner decides they want to make a change to the graphics or rules associated with them.
With a DAO in place, however, you and the other property owners decide these things (and so many more). You have a solid claim in the world, and you elect the members of the board who make the most vital decisions that keep that world turning.
Choose metaverse worlds with DAOs for long-term success
Although Decentraland was the first to offer a DAO structure to landowners, it's not the only one that will. The Sandbox (SAND 0.10%) is also in the process of launching a DAO, details of which are not available at this time. However, it will probably follow something like Decentraland's structure as an example, considering that it's been a very successful model.
Other blockchain-based worlds may well follow this road, and honestly, they should. Because they're already built upon a blockchain protocol, they have the ability to implement tools like DAOs and other decentralized governing mechanisms. This would give landowners in worlds that are just emerging more control and more security in their property values.
For the best long-term bang for your investing buck, choose metaverse real estate in worlds that give you (and other owners) control over them using a DAO or similar governance tool. Otherwise, the land you own in virtual worlds is still at the whim of the platform developers, who could literally change everything overnight and without warning.