The new way to earn passive income in crypto? Lease land in the metaverse.

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When most investors think of earning passive income with crypto, they immediately think of staking. But there are a variety of other ways to generate passive income, especially if you’re active in virtual metaverse worlds such as Decentraland (1.48% MANA). In early December, Decentraland officially introduced a new passive income option that might appeal to Metaverse users: virtual property rentals for digital land owners.

In other words, if you already own digital land in the virtual world of Decentraland, you can now rent it out to others who might want to establish a short-term presence in the metaverse, perhaps for festivals, product launches or community events. It’s an interesting concept because it works similarly to real-world real estate rental, which has always been a popular source of passive income. So, is this metaverse-inspired passive income opportunity right for you?

High risk

While buying virtual land in the Metaverse sounds great, it also comes with a high bar on entry. If you’ve never explored a metaverse world like Decentraland before, you’ll need to familiarize yourself with how these worlds work and how they differ from traditional role-playing video games. You’ll also need to familiarize yourself with metaverse land prices, which can range from a few thousand dollars to over a million dollars, and then familiarize yourself with a map of Decentraland, which has over 90,000 parcels of land.

Since all transactions in Decentraland take place using MANA, the game’s governance token, your rental income will be in the form of Decentraland tokens. This comes with some risk and volatility, given the possible price fluctuations in metaverse cryptos. Thus, you will have two things to worry about: falling land prices and potential currency devaluation.

At the end of 2021, the metaverse was all the rage, and Facebook even renamed itself Meta Platforms (META 0.49%). Celebrities and big brands were announcing their involvement in the Metaverse, and the future seemed boundless. Paris Hilton headlined the first-ever Metaverse festival, which brought together more than 80 artists within Decentraland. But then came 2022, and things look a lot riskier for the Decentraland token, the price of which has fallen 88% this year.

High reward

However, with this high risk comes a potentially high reward. For example, experts such as consulting giant McKinsey continue to predict that the metaverse will represent a nearly $1 trillion market opportunity within a few years. And there’s certainly a lot of interest in what the Metaverse is and how to get involved in it. According to the latest study by Capgemini, a multinational information technology services and consulting company headquartered in Paris, more than 90% of consumers are curious about the metaverse.

Image source: Getty Images.

In my opinion, the decentralized passive income opportunity comes down to this: get in early while people are still figuring out the metaverse, buy land when it’s relatively cheap, then turn your plot of land into something something brands and creative influencers want to use for one-off events. If you’re lucky enough, you might find brands, artists, musicians, or small businesses willing to rent you Decentraland plots for brand launches, festivals, or conferences.

Is Renting Virtual Goods Worth It?

For now, this new “passive” income opportunity seems far too “active” to catch the eye of casual investors. And it certainly requires too much upfront investment to be viable for most people getting involved in crypto for the first time. The average cost of a plot of land in Decentraland today is $2,380.

Unless you are already an active user within Decentraland and have a social network in place, I don’t see how this can be a recurring source of passive income. Virtual property rentals are not like real-world rentals, where you can lock in rent for 12 months at a time. Even as DJs, fashion designers, and streetwear brands kick down the digital door to rent you to Decentraland, it looks like you’re going to have to scramble a bit to make recurring rental income a reality.

Why not just stake MANA?

It might be easier instead to simply stake your Decentraland tokens in order to earn passive income. For example, right now you can earn 3% staking rewards on your Decentraland tokens through some popular cryptocurrency platforms. It may not seem like much, but it’s easy and passive.

So, from now on, I’m on renting virtual properties as a source of passive income. While Decentraland is certainly an interesting crypto to consider as a possible rebound candidate in 2023, I need to see more activity within the metaverse before I can recommend the Decentraland token as a buy, or consider renting properties. virtual as a viable source of liabilities. Income.

Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a board member of The Motley Fool. Dominic Basulto has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Meta Platforms. The Motley Fool has a disclosure policy.

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