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Growth slump in Decentraland sparks concern

Despite billions of dollars in valuations, companies betting on a metaverse future haven’t made much progress with Decentraland, a sandbox that allows users to buy and sell virtual properties.

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The Ethereum-based world of Decentraland, according to data aggregator DappRadar, had only 38 “active users” over 24 hours – an unexpectedly  low number, considering the company has a market capitalization of USD 1.2 billion.

However, Decentraland pushed back, saying that “active users” are defined as unique blockchain wallet addresses that interact with the system. This means users who simply log on to chat with others are not counted.

“DappRadar doesn’t track our users, only people interacting with our contracts,” Sam Hamilton, Decentraland’s creative director, told CoinDesk. He added that the platform averages around 8,000 users per day.

The situation illustrates the massive gap between market value and actual users that has plagued Web3 for years, and may also signal a serious slowdown in demand for virtual real estate and other blockchain-related assets, such as cryptocurrencies and NFTs.

On its Twitter account, Decentraland attempted to do some damage control, writing that in September, “1,074 users interacted with smart contracts”.

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Although these numbers are impressive, they aren’t of much value given the massive amount of money flowing into platforms like Decentraland.

“Anyone telling you that there’s a metaverse today that has worked is lying through their teeth,” said Sasha Fleyshman, portfolio manager at Arca.