Bitcoin · decentraland · Games

Opportunity and Exit – What Decentraland can learn from Second Life.


Controversy and conflict on a platform is a sign that users have found something worth fighting for. Many users don’t fully know what they want from open virtual worlds yet. Only trial and error will allow them to accept certain tradeoffs. The best format should prioritise the freedom to:

  1. Experiment in different district models.
  2. Exit easily with any unique software.

For a longer analysis of the whole project I have written 4000 words here. For a balanced, introductory overview, try this 25 minute BBC radio program.

Second Life’s Mistakes

Second life user numbers peaked in 2006 at 1.1m. Surprisingly, in 2015 it still had ” 900,000 active users a month, who received payouts of $60 million in FIAT every year, and a virtual economy that had more than $500 million in GDP..”

Through years of trial and error, the platform managed to create something that people still value to this day, even if growth has tapered off. This is in spite of pixelated characters, ‘griefing’ attacks and wonky controls.

There is a wikipedia page called ‘Criticisms of Second Life’. It is non-exhaustive but gives you an idea of what the main complaints have been. If there is a common theme among them, it is either too much or too little intervention by Linden Labs. What can Decentraland learn from this list?

  1. Too many new features, not enough fixes of old problems.
  2. Failure to optimise graphics in the same area leading to overload.
  3. Unintuitive controls.
  4. Controversial content ( taboo sex, spam, illegality, bullying etc)
  5. International law violations – Taxation, illegal content, property rights disputes.
  6. DDos attacks –

-This includes Grey Goo which are objects which infinitely reproduce, eventually overwhelming the servers. On twitter we saw similar issues with ETH spam bots. In a decentralised system, the hope would be that affected community members create a bug bounty that incentivises developers to stop the Grey Goo equivalent from wrecking Decentraland.

New questions for Decentraland

Unlike Second Life, Decentraland is trying to resist central, jurisdictional control which brings up some interesting new questions:

  1. To what degree will copyright be enforced on an open platform? What will the adjudication process look like? Even if they do verify who created something first via ERC 721, a trusted third party will be needed to decide what the outcome is.
  2. Dependency on Ethereum. ( I have written seperately about why an ERC-721 standard on Bitcoin would be valuable) Interestingly, the value of LAND in Bitcoin is now being tracked and my guess will be the main unit of account along with USD.
  3. Voting mechanism corruption potential?
  4. Blockchain scaling issues.
  5. District leadership disputes. Limited opportunity for newcomers to invest and stake in districts.
  6. Rate of decentralisation, i.e. when and how the central team lets go of control.

Exit, Voice and Loyalty

Balaji Srinivasan discusses the idea of voice and exit in this short youtube video. The key message being that it is getting increasingly easy to exit legacy systems for young, mobile workers. Exiting virtual land is even easier. If Decentraland does build a metropolis worth defending, reform (voice) may eventually become more prevalent but for the moment, easy experimentation is probably the higher priority. In his talk he mentions the following examples:

Voice = Code patch, voting, mediation.

Exit = Fork a chain, sell digital land or leave a country.


In this interview with Trevor Waldorf, a product manager at Decentraland, there is an interesting discussion about creating common standards that will allow developers to create a world that can be navigated on lower end devices. The world itself is likely to be underwhelming initially compared to high end VR games or even World of Warcraft  for this reason, but no worse than Second Life. I think this is the right strategy. Instead of targeting the high end VR market the are going for a much larger potential user base who are there to trade and play simple games. I expect media articles expressing disappointment at this when they launch. Similar things were written about Second Life in 2003. 

How do you value Centralised vs Decentralised virtual land?

This Motherboard article paragraph summarises the value of land in Second Life quite well.

“Second Life is still a thing because despite its age and the easy jokes, it owns an entire market it invented itself. A competitor, perhaps one with better graphics and the slick public image of a modern tech company, would have to directly poach from Second Life. But because those users already have so much invested in the platform—entire businesses in some cases—they have little incentive to leave.”

While in theory Decentraland will allow users to exit much more easily, in practice if someone has spent a lot of time building a community they value, they will be slow to just give up on it. A combination of the utility for users, level of daily commerce and the time spent by developers building seem to be the most important things to watch.


Maybe the keys to a successful modern city are broadly similar in real and virtual worlds. Strong property rights, an open economy you can leave easily and low taxes as we have seen in small open cities like Dublin, Hong Kong and Singapore to name a but a few.

Ultimately, I think the more variation between virtual districts the better. If you want US copyright laws strictly policed by a trusted third party, go to the ‘Merica district. If you prefer more of a wild west where people constantly attack each other, buy in Mad Max Town (neither district exists ). It would be a mistake for the founders to stop users from gradually realising what they want prioritised in different areas.

My interview with Carl Fravel established that the team are indeed learning from the good and bad of Second Life. The platform won’t launch until later this year so at the moment its success is very speculative. But if you see conflicts arising in Decentraland, and the mainstream media announcing this as some sort of failure it might actually be a positive sign. Decentraland can get a lot wrong as long as they can create Opportunity and Exit for users.

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