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Magic Eden is a decentralized NFT buying and selling platform that allows users to buy, sell and trade unique digital assets. It was built and launched on the Solana blockchain in April and integrated Ethereum-based NFTs in August 2022.
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This week we shine a light on the Magic Eden NFT Marketplace as competition in the digital collectibles trading space heats up. The once mighty OpenSea has seen its market share diminish, and Magic Eden is the one mounting the most serious charge.
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Magic Eden is the leading NFT marketplace on Solana and has expanded operations to Ethereum-based digital collectibles. A team of numerous high-profile, experienced and creative minds launched Magic Eden in September 2021 after securing $27 million in a Series A funding round.
The high-volume platform boasts low transaction costs and no fees for listing NFTs and lets users buy, sell and trade NFTs. Magic Eden announced on Aug. 2, 2022, that it would become multichain and expand its offerings to Ethereum NFTs. However, its primary ecosystem and main blockchain are Solana as of writing.
To use Magic Eden, users need a Solana-compatible wallet, such as Trust Wallet or Exodus Wallet, with enough SOL to pay for an NFT, plus any transaction fees. It’s primarily an interface for Solana NFTs, so any Solana NFT project is hosted on the platform.
The NFT Marketplace also offers an iOS app. However, it only supports browsing when writing, so users still need to use their website and connect your web3 wallet to trade NFTs.
Magic Eden also sells something they call Magic Tickets, which provide access to a decentralized autonomous organization (DAO). In the real world, this is a Discord chat that lets users vote on how the marketplace operates.
Experienced, well-funded team
The Magic Eden NFT Marketplace was founded in September 2021 by Chief Technology Officer and former Uber Eats developer Sidney Zhang, CEO and former FTX employee Jack Lu, Chief Operating Officer and former Coinbase product manager Zhuoxun Yin, and chief engineer and former Facebook developer Zhuojie Zhou.
In July 2022, Magic Eden raised $130 million in a Series B funding round led by Electric Capital and Greylock, with backing from Paradigm and Sequoia Capital. The funding round, which followed a $27 million Series A in March, brought the marketplace to a $1.6 billion valuation.
A combination of deep pockets and a high-level team that previously gained experience working with four of the biggest companies globally place Magic Eden in good stead to go head to head with market leaders and vie for dominance of the NFT marketplace space.
Magic Eden has a launchpad to facilitate projects to mint NFTs on the platform with ETH and SOL compatibility. The main benefit for creators is that they are featured on Magic Eden’s site – like an artist selling at a major auction house, such as Christie’s.
However, Magic Eden states that barriers to entry are high, and the platform has high-quality control measures in place, claiming that just 3% of projects make it through the application process. For creators, this may mean more effort, but for collectors, it means a higher standard of NFT project on Magic Eden.
There are plans for the Magic Eden marketplace to add support for trading in ETH, the native coin of Ethereum, and the blockchain that supports the vast amount of NFT trading activity. Magic Eden’s first ETH-supported collection is Ezu, an NFT project that can be minted in either ETH or SOL. Interestingly, it’s a sister collection of the Psychedelics Anonymous NFT project founded by Lews Gale and the Voltura Labs team.
The cross-chain announcement is a significant step for the Solana-based marketplace and marks Magic Eden’s latest efforts to expand its reach and presence across and into various Web3 communities. Magic Eden says it aims to bring these two communities nearer under the idea that cultural and connective utilities should be shared across chains.
The move opens up several opportunities for creators and collectors. The former will be able to reach new audiences, and access added liquidity, and the latter will have the chance to discover new projects and communities.
Magic Eden vs. OpenSea
Despite OpenSea adding support for Solana NFTs in April 2022, Magic Eden still vastly outperforms OpenSea regarding the number of traders and sales. Magic Eden generated more than $7.5 million in Solana NFT trading volume from over 51,000 traders in the last seven days, while OpenSea gathered a little over $350,000.
Magic Eden captures around 97% to 99% of the daily volume for Solana NFTs, according to a dashboard on Dune Analytics. Still, OpenSea remains the most prominent platform for daily sales across all blockchains. Magic Eden averages around 35,000 SOL daily, or about $9,000 at writing. OpenSea records about $15 million worth of sales in ether every 24 hours.
The significant difference between the two marketplaces is that Magic Eden runs on Solana, which makes it faster and cheaper to use than OpenSea on Ethereum. Moreover, OpenSea has enjoyed an extended time as the leading NFT Marketplace, mainly due to its first mover advantage and brand awareness.
However, as NFTs became more popular and increasing numbers of people wanted to get involved, the need for more marketplaces arose, leading to more competition and the evolution of the space for customers positively.
As of this writing, the most extensive NFT collection by trading volume and floor price is Okay Bears, a profile-picture collection of bears. Perhaps the most exciting thing about this collection of NFTs is that it was replicated and reversed, then launched on Ethereum as Not Okay Bears, where they outsold the original Solana NFT collection.
Solana is also home to countless Ethereum clone collections like Degenerate Ape Society. However, this time around, the Ethereum NFT community flexed its muscles to put its noisy neighbor back in check.
Additionally, while it’s true that Okay Bears had been receiving increased interest along with several other Solana collections, the launch of Not Okay Bears appears to have pushed the original collection value to new highs in less than 48 hours. Looking at the data on Magic Eden over the last 30 days, it’s clear that Okay Bears became the OG NFT collection on Solana.
More importantly, we see other collections making their way up the ranks and increasing their floor price significantly. The added ability for users to pay in ETH may just be the tipping point for the marketplace as a new audience is invited to start trading on Magic Eden.
Eden Games & Magic Ventures
Blockchain gaming is driving record numbers of blockchain users into dapps, and these NFT-infused games have the potential to reach a broader audience outside the standard crypto native one. The future of Web3 games is bright and full of opportunity, and Magic Eden is well equipped to benefit and potentially take center stage.
Since its inception, Eden Games has released over 50 games and seen hundreds of thousands of users mint and trade gaming NFTs on Magic Eden. The secondary marketplace has seen over 21 million SOL traded, and in June 2022, Magic Games represented over 90% of all gaming NFTs sold on Solana.
The launch of Magic Ventures and the appointment of Tony Zhao as its Head of Gaming Investments will allow Magic Eden to invest in games and blockchain gaming infrastructure to help games be as successful as possible. Tony joins Yoonsup Choi, Harrison Chang, Matt Biamonte, and Michael Silvio, who all have in-depth knowledge of Web3 games through their backgrounds in gaming and esports.
OpenSea hacks and exploits
It’s fair to say that OpenSea has not had a good 2022 regarding negative news and platform issues resulting in users losing funds and NFTs. The platform has come under increasing fire, and a former employee of NFT marketplace was even charged in the first ever digital asset insider trading scheme.
While the majority of issues were handled quickly and, in some cases, not the direct fault of OpenSea, it’s almost impossible that all the negative news didn’t result in user confidence in the platform taking a hit, which will inadvertently push NFT traders into the arms of newer platforms – like Magic Eden.
While such a dominant force for so long, Opensea looks like it’s started to feel the heat. While inconclusive, these reasons indicate a more exciting and competitive future for the Magic Eden NFT Marketplace.
A deluge of new features and services are set to come online before the end of 2022, and NFT trading, despite cooling, is nowhere near over. Alongside its strong team lineup and incubator for high-quality games and NFT projects, Magic Eden has the potential to become a serious player in the digital collectibles space and is positioning itself well for the future.
The above does not constitute investment advice. The information given here is purely for informational purposes only. Please exercise due diligence and do your research. The writer holds positions in various cryptocurrencies, including BTC, ETH, and RADAR.