Non-fungible tokens (NFT’s) have exploded in the first half of 2021. Therefore, I’m analyzing a number of projects in this sector of the crypto market at the moment. In today’s article, I’ll be contrasting Decentraland vs Enjin to explain their similarities and differences and to argue which has the brighter future.
Let’s get into what the projects are all about, and try to differentiate between them to figure out which is the best cryptocurrency of the two:
What are Decentraland and Enjin?
Decentraland is an online virtual world in which a community of users interacts and participates in social activities. Virtual land, collectibles, and other objects are represented by NFTs on the Ethereum blockchain. These are highly customizable and can be bought and sold either on the native platform or third-party marketplaces such as Opensea.
Enjin is a platform that allows users to mint, store and trade NFTs. Gaming-related NFT projects are the primary focus. However, any developer can utilize the platform, meaning it has a wider scope than just gaming should novel use cases for NFTs emerge.
How Are Decentraland And Enjin Similar?
The two projects have many similarities, which I set out below:
- NFT focused. Both projects have NFTs at their heart, which is advantageous given the NFT sector’s bullish outlook.
- Marketplaces. You can search, list and trade NFTs on either platform. I believe this to be a key feature as it allows easy monetization of digital assets and attracts users to the platform.
- Native token backed. Both projects utlize native tokens which are used to back or purchase NFTs. Decentraland’s token is MANA while Enjin’s is ENJ. Both of these tokens are tradable for fiat or other crypto assets, linking the value of on platform NFTs to real world currencies.
- Established brands. Both projects have long histories. This has enabled them to develop mature products and attract significant user bases. Additinally, both projects have very similar market caps, which I will explore in more detail later.
- Brand name partnerships. Both projects have established strategic partnerships with leading brands. In Enjin’s case, this includesMicrosoft’s Azure Heroes collectibles and BMW’s Vantage Program. Decentraland have similarly formed a relationship with Atari, who plan to own digital real estate in the Decentraland world.
How Are Decentraland And Enjin Different?
The two projects have many differences, which I set out below:
- Enjin offers a more ‘end to end’ set of NFT offerings. Unlimited NFTs can be minted with a very high degree of flexibility, stored on the platform’s custom Ethereum wallet or ‘‘beamed’ to a projects’ followers via the use of QR codes.
- Decentraland has a harder limit on NFTs, with their land tokens being capped at around 90,000 units. This drives scarcity and price appreciation.
- Decentraland offers more options for on-platform monetisation, including product sales, land flipping, design services or even entries fees to your digital real estate.
- Digital real estate is at the heart of Decentraland’s offering. Industry experts expect this sector to experience very significant growth in future.
- Decentraland’s user experience is based on an immersive online world. Enjin focuses more on NFT services. I believe this gives Decentraland a better chance of sustaining their community and resisting inevitable competition from new projects.
Suggested reading: Decentraland vs The Sandbox
Tokenomics And Price History
Enjin’s circulating supply is 834m ENJ tokens, with a market cap of $1.11 billion ($1.32 fully diluted market cap). Decentraland’s circulating supply is $1.69m MANA tokens, with a market cap of $1.16 billion ($1.50 fully diluted market cap).
See below for the projects’ market positioning:
There has been a strong correlation in the project’s price performance. This reflects the fact that both are top 10 NFT projects. Recent trading history for both projects has seen very significant price increases in Q1 2021 before a pullback in Q2 2021.
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Decentraland vs Enjin Price Outlook
In the short term, I expect the correlation of both projects to continue. The NFT space is nascent and trading patterns remain relatively immature.
Lack of project differentiation combined with algorithmic trading and ‘herd mentality’ ensures that the sector tends to trade as a collective (with occasional outliers).
However, if we extend our time horizons, I anticipate differentiation to emerge.
NFT projects will face greater scrutiny on their fundamentals and those which outperform in this area should see greater price appreciation.
Due to its more targeted use-case (creating an NFT focused online world), its exposure to digital real estate and greater flexibility of online experience, I expect Decentraland to slightly outperform Enjin.
As a hypothetical example, should the NFT sector as a whole grow 10% per annum, Enjin may grow at 10% annually while Decentraland grows closer to 13% or 14%.
This would increase the ‘edge’ of Decentraland exponentially over time.
If we assume that Decentraland grows 14% per annum, while Enjin grows 10%, this is how your ROI will evolve over the next 15 years:
As you can see, the difference increases exponentially in Decentraland’s favour. Over time, the difference in ROI becomes huge.
Please, keep in mind that the image above is not a prediction. It is nothing but an illustration of what would happen if Decentraland grew by 14% yearly, while Enjin dragged behind at 10%.
Conclusion: Decentraland Is Sligthly Better
To conclude, both projects are very strong, though given its more targeted approach I believe Decentraland has the slight edge in terms of future growth prospects.
Below are the key factors in Decentraland’s favor:
- A focus on the high growth digital real estate niche
- A platform which naturally builds userbase by focusing on fun, engagement and an immersive experience
- A wide spectrum of options for monetising your time and assets on their platform
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