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On January 29, TerraZero Technologies issued one of the first mortgages in the Metaverse – a network of virtual worlds where users can interact with others, experience entertainment, attend events, and much more.

The CEO of TerraZero said that the firm had issued a two-year mortgage for a $45,000 parcel of land in ‘Decentraland’, a Metaverse with approximately 92,000 parcels, for an undisclosed down payment and interest rate.

The Company used a traditional real estate mortgage vetting process, self-financed the purchase, and now owns the non-fungible token (NFT) that was used to securitize the mortgaged land.

TerraZero provided the majority of the funding (lending) for the client’s virtual real estate purchase. It is now offering this newly designed Metaverse mortgage service to its clients who want to use the Company’s ‘Metaverse Mortgage’ loans to finance the acquisition and purchase of virtual real estate (represented as a non-fungible token) by using the underlying NFTs as digital assets as collateral.

TerraZero’s CEO stated that the “Our Company’s vision is to create and distribute tools that connect the real world with the Metaverse. A whole new economy is forming, and they want to provide entrepreneurs and general public with Metaverse-specific products and services that are available in the real world. Mortgages and other forms of financing will hasten the Metaverse’s development and adoption, and TerraZero is thrilled to be among the first players of this new and exciting economy”.

With each passing day, we continue to move towards a world where virtual reality seems to be getting more and more realistic with the help of new technology.

One such advancement is the conception and formation of the Metaverse. It is essential to know what Metaverse is and how it works.

What is the Metaverse?

It is a hybrid of technology elements such as virtual reality, augmented reality, and video in which users “live” inside a digital universe.

The Metaverse’s supporters expect its users working, playing, and remaining connected with friends through everything from concerts and conferences to virtual excursions around the world.

In terms of functionality, it’s a shared virtual space made possible by the merging of virtual reality and digital reality. In other words, it is ‘device-agnostic’ and not controlled by a single company. It’s a self-contained virtual economy powered by non-fungible tokens (NFTs) and digital currencies.

Some of the most famous examples of today which could lead the Metaverse of tomorrow are Meta by Facebook, Microsoft Mesh Platform by Microsoft, and holding concerts by the likes of Ariana Grande and Travis Scott on the Epic Games platform.

What is the value of these lands?

In a decentralized Metaverse like Decentraland, the land is limited. The price of that land is rising.

‘Why do you need land?’ can be a question that surface often. You’ll need land in the Metaverse if you want to make a game, organize an event, or open a business.

It was anticipated early on that some truly talented people, entrepreneurs, programmers, and artists, would develop some fantastic new metaverse ideas. In that aspect, organizations like Terrazero help the user buy that needed land.

How does this mortgage work, and who owns these virtual lands?

According to the Terrazero CEO, Dan Reitzik, this is more of a loan than a mortgage, even though it’s to buy land.

The criteria that Terrazero has set is that first, they will see the person behind the Company or idea to make sure that these people are actively building stuff that’s going to attract more users in the Metaverse.

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Customers must then present a business plan to the Company to know that they will be able to repay the loan over time. If it appears viable, it will purchase the land on their behalf.

The deed is an NFT. Until the loan is paid off, the Company keeps it in its cold storage. Developers, on the other hand, are given land rights, allowing them to build whatever they want. If the customer does not pay, the Company has that as collateral.

TerraZero’s demand has been so high since it began that it will need to underwrite these loans or mortgages, and it has no plans to self-finance them indefinitely. However, those particulars are still being ironed out.

When all of the programmers came together three years ago to build this decentralized Metaverse, many of them and their advisors owned 10, 15, or 20 pieces of land. Those land parcels have changed hands several times in the last few years.

When TerraZero purchases land, it does so from a third party. Decentraland is not selling it to the Company. Decentraland operates on something called a DA, a ‘decentralized autonomous’ organization.

There is no CEO, no corporation that declares, “This is what we do in our world.” It is literally up to the community to decide.

How can you buy land in Decentraland?

Land in Decentraland can be purchased with the MANA cryptocurrency, which is entirely decentralized. MANA is used to conduct all transactions in this virtual world.

Trading takes place in the marketplace, which serves as a one-stop-shop for land, estates, avatars, and other items needed to build a world. The Ethereum blockchain is used to track land ownership, and users must keep their MANA tokens in an Ethereum wallet. Designers can use animation and interactions to create their worlds on the platform.

Now the Ethereum smart contracts come into picture and they can be divided into three layers. The consensus layer keeps track of who owns what regarding land purchases.

The content layer manages parcel distribution and renders content like audio, video, and voice chat. Finally, within Decentralised, all peer-to-peer connections, such as social interactions, are done through the real-time layer.

The Decentraland team has also created an NFT marketplace and a drag-and-drop editor for users outside of the gaming area to create settings. The marketplace allows users to manage and exchange land tokens, which are priced in MANA.

Owners can also use the marketplace to buy, sell, and trade parcels and other in-game items such as wearables and unique names. It’s worth noting that all transactions when buying Decentraland NFTs are resolved between Ethereum wallets and thus are validated and recorded on Ethereum’s blockchain by the Ethereum network.

Owners can use Decentraland’s building tools to create a one-of-a-kind experience within their land plots. Developers can utilize its editing tool to access customization libraries and payment implementations, allowing them to create interactive scenes.


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