Summary
Magic Eden is a multi-chain NFT trading market created by a team with a Chinese background, established on the Solana chain in 2021, and has rapidly expanded to support Ethereum (ETH), Polygon, BASE, and Bitcoin (BTC) ecosystems. Despite the decline of the NFT market, MagicEden has successfully captured the main market share on the Solana chain due to rapid product iteration and a rich feature set.
The core functions of the platform include an NFT trading market, multi-chain support, a project incubator (Launchpad), staking and reward incentives, an aggregator market, data analysis and rankings, wallet integration, community governance (DAO), and API integration, among others. Additionally, Magic Eden also offers limited-time discounts, rarity scoring systems, on-chain identity verification, membership passes, bulk trading, and custom bundle packages as special features. Through these value-added services and detailed data support,
Magic Eden has lowered the entry threshold for new users, optimized the trading experience, and increased platform user stickiness.
Magic Eden's main sources of income include transaction fees and service fees from Launchpad projects. Although it has not issued tokens, the platform has launched a points system, allowing users to accumulate points through platform activities for future airdrops. By the end of 2024, the platform also launched the test token $TestME, aimed at testing the issuance process for the future official token $ME.
Despite the overall downturn in the NFT market, MagicEden remains competitive, with its growth potential mainly derived from support for the BTC ecosystem, which is still a blue ocean market. If NFTs on the BTC chain become popular, MagicEden is expected to welcome broader development space in the future, further consolidating its leading position in the multi-chain NFT trading market.
Project introduction
Magic Eden is a multi-chain NFT trading market founded by a team with a Chinese background. In the extremely shrinking state of the NFT track, it has gradually captured a large portion of the market share thanks to its rapid iteration engineering advantages. Seeing the development of the Solana public chain, MagicEden was initially created on the Solana chain in 2021. Subsequently, MagicEden supported the ETH ecosystem, Polygon ecosystem, BASE ecosystem, and BTC ecosystem.
Figure 1 MagicEden
Data Source: MagicEden
1. MagicEden platform functions
MagicEden is now not just an NFT trading market; due to business expansion, it currently possesses the following functions:
NFT trading market: Provides a user-friendly interface for browsing, purchasing, selling, and auctioning NFTs. Users can filter by price, rarity, popularity, etc.
Multi-chain support: Not only does it support the Solana ecosystem, but it also expands to Ethereum and Bitcoin ecosystems, allowing users to create and trade NFTs across different chains.
Launchpad: This is a platform for incubating and issuing new NFT projects. Through the Launchpad, project parties can receive support to more easily issue and promote NFTs, while users have the opportunity to purchase in advance.
Staking and rewards: Users can stake their NFTs to earn rewards (such as tokens or other NFTs), thereby increasing the holding value of NFTs.
Aggregator market: This feature can aggregate trading listings from other NFT platforms, helping users find trading prices and supplies from major NFT markets on one platform.
Analytical tools and rankings: Provide market analysis, trading trends, and NFT collectibles rankings, helping users understand popular NFT projects and market trends.
Wallet integration: Compatible with multiple crypto wallets, making it easy for users to deposit, withdraw, and trade.
DAO and community: MagicEden has a community governance and discussion platform, allowing users to participate in DAO voting and provide suggestions for platform development.
API integration: Provides APIs for developers to integrate into other applications, enhancing the platform ecosystem.
2. Unique features of MagicEden
In the main NFT trading, MagicEden has expanded more user-friendly features:
Limited-time offers: MagicEden periodically launches limited-time promotional activities where users can purchase specific NFTs at a discount or special price within a specified timeframe. These limited-time offers increase trading activity and provide users with opportunities to acquire high-quality NFTs at lower costs.
Dynamic rarity scoring system: To help users quickly assess the rarity of NFTs, Magic Eden has designed a dynamic rarity scoring system. When browsing NFTs, users can see the rarity level or score in real-time, allowing them to determine the rarity of a particular NFT within the entire series. This is especially helpful in deciding whether it's worth bidding high prices or purchasing directly.
On-chain identity and certification: To enhance transaction security, MagicEden allows project parties to perform on-chain identity certification for their NFT series to ensure authenticity. The platform will display 'Verified' or 'Not Verified' labels, allowing users to confidently purchase certified genuine NFTs and avoid counterfeit assets.
MagicEden Pass exclusive features: MagicEden has issued a membership pass NFT (MagicEden Pass), allowing holders to enjoy a series of exclusive benefits, such as priority purchasing rights, trading discounts, and limited edition airdrops. This membership mechanism encourages users to remain active on the platform in the long term.
Bulk trading and 'instant transaction': MagicEden supports bulk buying and selling of NFTs, enabling users to trade multiple NFTs at once, suitable for large collectors or investors. Additionally, the platform has introduced an 'instant transaction' feature, allowing users to quickly liquidate their NFTs at the lowest price offered by the platform.
Custom NFT collection bundle: MagicEden provides a unique custom collection bundle feature, allowing users or project parties to create and sell bundles containing multiple NFTs, grouping related NFTs together for sale at a higher price. This approach attracts collectors and users interested in specific themes.
NFT staking and yield distribution: Users can stake their NFTs on the platform to earn rewards or participate in yield distribution projects. For example, staking game-related NFTs can yield in-game rewards or participate in profit-sharing. This feature increases the investment attributes of NFTs, allowing users to generate income during their holding period.
'Minting' window: MagicEden offers a unique 'minting window' feature for certain popular projects, where new NFTs can be minted (generated) within a specific short timeframe. This limited-time minting approach gives users the opportunity to acquire NFTs at the original price instead of purchasing them at a premium on the secondary market.
Personalized recommendations based on on-chain and off-chain data aggregation: Magic Eden utilizes on-chain and off-chain data (such as community activity and holder data of the project) to provide personalized NFT recommendations to users. Users will not only see NFTs they are interested in but also receive suggestions to explore new projects or trends, enhancing the efficiency of discovering potential NFTs.
3. MagicEden income
Like other NFT trading markets, Magic Eden's main income comes from two aspects: one is the trading fees from platform users, and the other is the service fees generated from launching projects.
Transaction fee: MagicEden charges a transaction fee of typically 2% of the transaction amount for each NFT transaction. This is its main source of income.
Launchpad fee: MagicEden's Launchpad platform helps new projects issue and promote NFTs. Projects using the Launchpad must pay a certain service fee, or receive a portion of the issuance amount as a return. The Launchpad provides project parties with resources such as platform exposure, promotional support, on-chain certification, etc., thus the fees are relatively high.
The rise of MagicEden
Magic Eden was launched in September 2021, and on a day in May 2022, its daily trading volume exceeded that of OpenSea, which was valued at 13 billion USD at the time. What allowed a new platform created in less than a year to surpass a five-year-old leading giant? This is inseparable from the prosperity of the Solana ecosystem and the NFT market at that time. However, more importantly, it was MagicEden's special product design.
1. Detailed user guidance
The background of Magic Eden's birth is the bull market, at that time the market had a large number of new users entering, many of whom had never traded coins before or used centralized wallets. They entered the market to play with NFTs. This posed a considerable challenge for newcomers. Therefore, Magic Eden initially guided users step by step, providing detailed onboarding guidance and a complete set of video explanations from creating a wallet to the first purchase of an NFT. This greatly reduced the entry barrier for users.
Figure 2 MagicEden Help Center articles
Source: MagicEden
Figure 3 what is an NFT
Source: MagicEden
2. Detailed data of the MagicEden NFT market
In addition to providing good user guidance, MagicEden's advantage lies in the detailed data offered by the platform. I remember when I first played on OpenSea, the criteria for judging purchases often depended on how attractive the NFT looked. Because everyone's aesthetic standards are different, the path to success cannot be replicated. After entering MagicEden, it set up features such as popular NFT series, release calendars, and data dashboards, allowing players to track and research the projects they are interested in directly within the platform for trading decisions and asset allocation, achieving a closed loop. There is no longer a need to look at the data of various NFT series on other platforms. Users have transitioned from trading aesthetics to the era of trading data.
Figure 4 MagicEden trading panel
Source: MagicEden
This is the advantage of the team background; the team members come from major web2 companies: Google, Meta, Uber, etc., and they deeply understand the importance of product design for projects, having polished a fairly mature project from the start.
Track analysis
The NFT track emerged in 2021. Under the explosion of bored apes, the track reached its most prosperous period. However, with the arrival of the bear market, the decline of NFTs has been even more severe compared to FTs. According to data from the NFTScan website:
Figure 5 NFT market data
Data Source: NFTscan
Currently, a total of 2.1 billion NFTs have been issued with a market value of 24 billion USD, but the 24-hour transaction volume is less than 10 million USD. The vast majority of NFTs are in a state of being valuable but having no market. Undoubtedly, this remains a deep bear market for NFTs, with the total trading volume of all NFTs not exceeding the daily trading volume of a popular meme coin. Additionally, due to the limitations of NFTs themselves, they cannot be directly listed on centralized exchanges. This not only deprives NFTs of more backing but also results in a lack of liquidity. Centralized exchanges can only create another NFT market. However, such markets often have very few users. Currently, liquidity has basically disappeared. However, the blockchain itself is continuously developing towards decentralization and on-chain progress. Currently, the number of active users on-chain is only about one-tenth of that on centralized exchanges, indicating significant growth opportunities. The NFT track will also experience an explosive growth as centralized exchanges transition to decentralized exchanges, leading to a shift in such paradigms. Following this reasoning, the NFT track may explode in the late stages of a bull market, resulting in a diversion of funds and causing token prices on centralized exchanges to fall. Therefore, paying attention to the development of the NFT track can better help one grasp market trends and adjust their positions.
Currently, the most important application in the NFT track remains the NFT market. OpenSea, established in 2017, has undergone over 7 years of development. There are currently 238 trading markets across the entire blockchain.
Figure 6 NFT market data
Data Source: NFTscan
Among the top ten NFT markets (as of October 31, 2024), four markets have issued tokens, and 8 markets involve the Ethereum chain. To compare a few representative markets:
OpenSea, Blur, MagicEden, OKX NFT. OpenSea ranks first in both historical transaction volume and recent transaction volume. Aside from OpenSea, the other three markets have reached their current overall trading volume due to token incentives (brushing trading volume to obtain NFTs). Although MagicEden has a points system, it differs from directly issuing tokens for incentives. From this perspective, MagicEden is actually the second in the market.
Figure 7 NFT market data
Data Source: NFTscan
From the comparison of trading volume, it can be seen that MagicEden is in the same tier as Tensor, with a similar magnitude of 24-hour trading volume.
In terms of products, MagicEden's product strength is clearly stronger. MagicEden has launched its own wallet. In the blockchain era, due to the nature of wallet connections, most users have no loyalty to projects because the migration cost is too low. Therefore, many projects have launched loyalty programs, hoping users will stay on their platforms, especially various NFT platforms. If your listings are all on their exchange, then you will have 100% loyalty and enjoy the best rates and rewards. However, wallets are clearly a higher-level strategy because using the project's wallet inevitably familiarizes users with using their exchange.
Token economic model
Currently there is no token economic model.
MagicEden has its own points system, which also secures future airdrops. Any activity within the platform has the opportunity to accumulate diamonds, although details have not yet been provided.
However, the project party recently launched the test token $TestME, with the claiming time set from 11 am to 5 pm Pacific Standard Time on October 29 to October 31, after which the remaining supply will be destroyed.
The official launch of the test token serves two purposes:
1. Help users familiarize themselves with the process of claiming tokens.
2. Help identify and resolve any potential issues before the official $ME token issuance.
Figure 8 Claim test token $TestME interface
Source: MagicEden
This was the previous interface for claiming the test token, which is now closed for claims. A total of 250,000 wallets participated in the claim, and the enthusiasm for claiming was very high. To claim the test token, users need to download the MagicEden wallet and meet the following conditions:
1. A wallet that has recently used the Magic Eden platform, or has bought, sold, or accepted bids in the past 6 months with at least one transaction exceeding 100 USD.
2. Randomly select users who have recently traded tokens on-chain.
Team background
CTO: Sidney Zhang
In 2013, Sidney founded his first cryptocurrency company and began working in cryptocurrency business focusing on Bitcoin developer APIs. In 2015, he joined Uber and became one of the founding engineers of UberEats, working from scratch until it soared. Later, Sidney worked at Uber Advanced
After working for several years at Technologies Group on autonomous driving production modeling and research, focusing on computer vision and prediction, he joined Facebook's artificial intelligence team and then co-founded MagicEden with others.
CEO: Jack Lu
Jack began to get involved in the cryptocurrency field in 2013 when he started hacking Bitcoin wallet applications. Before co-founding Magic Eden, Jack worked as a product manager at a cryptocurrency exchange and Google, and was a consultant at the Boston Consulting Group.
COO: Zhuoxun Yin
Since 2017, Zhuoxun has worked full-time in the cryptocurrency industry; he was the second employee of dYdX and a senior product manager at Coinbase. Before entering the cryptocurrency industry, he worked in strategic roles at early-stage companies and provided consulting services to corporate clients at Bain & Company.
CE: Zhuojie Zhou
Rex started his cryptocurrency journey around 2014, engaging in cryptocurrency mining. He was previously at Uber,
An early engineer at Checkr, recently a senior engineer at Facebook AI responsible for developing PyTorch DevInfra, he then co-founded Magic Eden with others. He is passionate about the open-source developer community and has created Flagr, OpenMock, Open Privacy Vault, and DSRHub. Rex is also one of the community champions of KongAPI Gateway.
Investment background
Figure 9 MagicEden financing details
Data Source: CryptoRank
Financing details:
Seed Round: On October 1, 2021, investment firm '6th Man Ventures' invested 2.5 million USD.
Round A: On March 14, 2022, investments of 27 million USD were made by Paradigm, Sequoia Capital, Solana Ventures, and others.
Round B: On June 21, 2022, Electric Capital, Paradigm, Sequoia Capital, and others invested 13 million USD.
Overall, MagicEden has raised 159 million USD with a valuation of 1.6 billion USD.
Project prospects and outlook
Currently, the potential of the NFT track is greatest in the BTC ecosystem, as the total market value of NFTs on other chains is significantly higher than that of the BTC ecosystem. Here, only MagicEden supports the BTC ecosystem.
The development of NFTs on other chains will only rebound and grow due to the influx of FT funds during a bull market. The BTC ecosystem is still in a growth phase and is currently a blue ocean. Therefore, it can be said that MagicEden is a unicorn in this track. As long as BTC's NFTs gain recognition from a broad user base, MagicEden's growth will open a new ceiling.
