Polkacity is a 2021 NFT project that sold virtual city assets, such as taxis, gas stations and shops, with the promise of a share of in-world revenue. This guide explains how Polkacity worked, why the income-asset model is fragile and legally risky, and how to design a virtual asset marketplace on safer terms.
What Polkacity was
Polkacity launched in 2021 and described itself as a "contract-based" virtual city. Where Decentraland sells empty land parcels, Polkacity sold working businesses inside its city.
- Each asset was an NFT, and each asset type had a limited supply.
- An asset's owner received a share of the income that Polkacity assigned to that asset type.
- Buyers paid with POLC, an ERC-20 token, and Polkacity also paid rewards in it.
- The team built a 3D city client and added other EVM chains to lower fees.
In 2021 many metaverse tokens were sold with a promise of income. Most of them, POLC included, lost most of their value after the market fell, and activity in their worlds faded.
Polkacity today: Metachain
The polkacity.io domain now redirects to Metachain, a separate blockchain from the same team. The Metachain whitepaper (version 1.1, on GitHub) says Metachain was first created to support Polkacity, and describes these features:
- Consensus. Metachain uses QBFT proof of authority. Approved validators take turns to create blocks, and at least two thirds of them must sign each block.
- Nodes. Polkacity owns the four launch nodes, and the plan offers 11 more nodes for sale, for 15 nodes in the first five years.
- Token. The METAO token has an initial supply of 8 million and a cap of 10.4 million, and nodes earn METAO for each block.
- Zero-fee transactions. A contract owner who stakes METAO can let users send transactions with no gas fee.
- Bridge. The bridge is meant to convert POLC and METAO to tokens on Ethereum and BNB Chain.
The Metachain site lists Polkacity as an "AR NFT MultiChain Social Platform and Video Game" and adds a Texas Hold'em poker game. A proof-of-authority chain with four company-owned nodes at launch is far more centralized than Ethereum.
Why the income-asset model is fragile
A taxi NFT that "earns" is easier to sell than a picture, but the risk lies in the source of those earnings. In income-asset worlds, rewards came from three sources:
- sales of new assets to later buyers;
- new tokens released from a reward pool;
- a small amount of real spending inside the world.
If most rewards come from the first two sources, payouts shrink as soon as growth slows.
The model also carries a legal risk. In US securities law, the Howey test treats an asset as an investment contract when buyers expect profit from the efforts of others. An asset sold with an income promise that depends on the platform's work can meet that test, and other countries apply similar tests.
A safer design for a Polkacity-style marketplace
| Element | Polkacity model | Safer option |
|---|---|---|
| Asset purpose | Passive share of income | A game function, such as a shop that players run or a vehicle that opens new routes |
| Revenue source | New tokens and new asset sales | Real spending inside the world, ads and sponsored venues |
| Payout | Automatic yield | Rewards earned through active play, or no payout |
| Currency | Project token | A stablecoin or the chain's native token for prices |
| Marketing | Return on investment | What the asset does and who owns it |
Marketplace components
- Asset contracts for each category, with ERC-721 for unique buildings and ERC-1155 for vehicles with many identical units.
- Primary sale contract with a supply cap for each asset type and prices that rise in phases.
- Secondary marketplace with filters for district, asset type and upgrade level.
- Map view that shows buyers where an asset sits in the world before they buy.
- Revenue distribution, if the design has any. Owners claim their share from a rewards contract and pay the gas themselves, so the project does not pay to push each payment.
The 3D world is a separate and much larger build, which the guides to metaverse 3D space development and metaverse NFT marketplaces cover. For a land-based world, compare the Decentraland clone guide.
Primary sales and pricing
Income-asset worlds usually sold assets in tiers, where each asset type had a fixed supply and a price based on how much in-world activity it was supposed to capture. A primary sale of working assets stays safer under four rules:
- Price on use, not on projected yield. Describe what the asset lets the owner do in the world, and do not publish return figures.
- Release in phases. Sell more assets only as the number of active players grows, so each new asset has users.
- Publish treasury rules. State what primary-sale revenue pays for, such as development, servers and events, and how much, if any, goes back to holders.
- Add upgrades and upkeep. Some assets need upkeep or improve through play. Upkeep and upgrade costs take tokens out of circulation, and these assets favor active owners over passive holders.
Effort
The marketplace and the asset contracts are a modest build. Two engineers can deliver audited contracts and a filtered marketplace on one EVM chain in two to three months. That figure is an estimate from the component list, not a quote. The 3D city client, the simulation of in-world activity and the content pipeline cost much more and can take well over a year with a game team.
Build sequence
- Define what each asset does in the world before you set any price.
- Model the economy under slow growth, not only under launch demand.
- Get a legal review of how the assets are described and sold.
- Build the contracts and the marketplace on a low-fee chain, then audit them.
- Release a playable part of the world before selling large numbers of assets.
Frequently asked questions
Is Polkacity still active?
The polkacity.io domain now redirects to Metachain, a proof-of-authority chain that the same team built for Polkacity and other games. The Metachain site lists Polkacity and a poker game. POLC lost most of its value after 2021, as most income-pitched metaverse tokens did.
What is the POLC token?
POLC is Polkacity's ERC-20 token. Buyers used it to buy city assets, and Polkacity paid rewards in it. The Metachain whitepaper plans a bridge to convert POLC to other tokens.
Can NFTs legally pay their holders income?
In some cases, yes, but income rights make an NFT more likely to count as a security. The structure and the marketing both matter, and the answer differs by country.
Should city assets be ERC-721 or ERC-1155?
Use ERC-721 for unique items, such as one specific building, and ERC-1155 for groups of identical items, such as one vehicle model. Many projects use both standards.