CoinW Research Institute: In-depth Report on Magic Eden

Abstract

Magic Eden is a multi-chain NFT trading platform founded by a team with a Chinese background. Launched in 2021 on the Solana chain, the platform has since expanded to Ethereum (ETH), Polygon, BASE, and Bitcoin (BTC) ecosystem. Despite the overall decline in the NFT market, Magic Eden has secured significant market share on Solana due to rapid product iteration and innovative features.

The platform offers NFT trading, multi-chain support, launchpads, staking rewards, aggregated markets, data analytics, wallet integration, DAO governance, and API tools. Other unique offerings include timed promotions, rarity scoring systems, on-chain identity verification, membership passes, batch transactions, and customizable bundle options.

Magic Eden’s primary revenue streams are transaction fees and service fees for launchpad projects. Although it has not yet released their token, it introduced a point-based system and a test token ($TestME) in late 2024 to prepare for a formal token launch.

In a challenging NFT market environment, Magic Eden remains competitive, with its future growth potential largely tied to the underdeveloped BTC NFT ecosystem. If BTC NFTs gain popularity, Magic Eden could further solidify its leadership in the multi-chain NFT marketplace.

Project Introduction

2.1 Magic Eden Platform Functions

Magic Eden offers:

• NFT Trading: A user-friendly marketplace for browsing, buying, selling, and auctioning NFTs.
• Multi-Chain Support: Compatibility with Solana, Ethereum, Bitcoin, and other chains.
• Launchpad: Assists creators in launching NFT projects.
• Staking and Rewards: Incentives for NFT staking.
• Aggregated Markets: Displays prices across NFT platforms.
• Analytics: Trends and rankings to aid user decisions.
• Wallet Integration: Supports multiple wallets.
• DAO Governance: Community input on platform development.
• API Access: Tools for developers.

2.2 Unique Features

Magic Eden stands out with:

• Limited-Time Promotions: Discounts on selected NFTs.
• Dynamic Rarity Scores: Helps evaluate NFT rarity.
• On-Chain Identity Verification: Ensures authenticity of NFT collections.
• Magic Eden Pass: Exclusive perks for pass holders.
• Batch Transactions and Instant Transactions: Efficient NFT management for collectors.
• Customizable NFT Bundles: Combine NFTs into sets for sale.
• Personalized Recommendations: Data-driven NFT suggestions.

2.3 Revenue Sources

Magic Eden earns through:

• Transaction Fees: Typically 2% of trade value.
• Launchpad Service Fees: For NFT project promotion and support.

The Rise of Magic Eden

Since its launch in September, 2021, Magic Eden’s trading volume had been on a rise until one day in May, 2022, it surpassed Opensea, the NFT trading behemoth with a $13 billion valuation. What lead to this rapid surge was the prosperous Solana ecosystem and NFT market and most important of all, the unique product design of Magic Eden.

3.1 Comprehensive User Guidance

At its inception during the bull market, Magic Eden catered to inexperienced users by providing step-by-step guides, video tutorials, and a help center, significantly lowering entry barriers.

3.2 Detailed Market Data

The platform introduced comprehensive data dashboards, allowing users to analyze projects directly, moving NFT trading from buying the look to data-driven decision-making.

Market Analysis

The NFT sector peaked in 2021 but has since declined. Today, the total NFT market cap stands at $24 billion, with daily trading volumes below $10 million, as per NFTScan. Markets for most NFT collections have huge spreads. And NFT is indeed in deep bear. Lack of liquidity on CEXs without enough hype is the major culprit.

However, decentralized ecosystems continue to grow, and NFTs may experience renewed interest in future bull markets.

Magic Eden’s multi-chain strategy and its focus on underexplored BTC NFTs position it well for potential market recovery.

Comparing to Opensea, Blur, Tensor, LooksRare, and OKX NFT, Magic Eden falls behind Opensea like the others but is actually on the same level in terms of 24-hour trading volume. Many marketplaces have released their token and use it as an incentive to trade. Magic Eden has yet to release its token but is able to accumulate almost $1 million in trading volume.

When it comes to product, Magic Eden has an undoubted edge. With their proprietary wallet, users will tend to stay on their platform for everything blockchain.

Tokenomics

Magic Eden’s native token, $ME (future release), is designed for:

• Staking and Rewards: Incentivizing user engagement.
• Governance: Voting on platform decisions.
• Ecosystem Growth: Rewarding contributors.

Token Allocation

• Total Supply: 1 billion.
• Distribution: Community (37.7%), contributors (26.2%, locked for 18 months), strategic partners (23.6%, locked for 12 months), initial distribution (12.5%).

With Magic Eden’s multisig wallet and safety council, $ME will be safeguarded by the team and community both.

At the end of October, Magic Eden released their test token, $TestME, to familiarize users with the entire token claiming process, and to help the team single out any potential problem before releasing $ME.

Over a quarter million wallet addresses claimed $TestME. Eligible addresses must be active on Magic Eden over the past 6 months with at least 1 order size exceeding 100 USD. Other address are randomly selected among those active in trading before launch.

Team Background

• CTO, Sidney Zhang: Former Uber Eats founding engineer and AI researcher at Facebook.
• CEO, Jack Lu: Ex-Google product manager with experience in blockchain projects.
• COO, Zhuoxun Yin: Early employee at dYdX, formerly at Coinbase.
• Chief Engineer, Zhuojie Zhou: Senior engineer at Facebook AI and Uber. Open source community core contributor and community champion at Kong APT Gateway.

Funding and Investment

Magic Eden has raised $159 million across three rounds, with notable investors including Paradigm, Sequoia Capital, and Solana Ventures, achieving a valuation of $1.6 billion.

Seed round: $2.5 million from 6th Man Ventures.

A round: $27 million from Paradigm, Sequoia Capital, and Solana Ventures.

B round: $13 millioln from Electric Capital, Paradigm, and Sequoia Capital.

Future Prospects

The BTC NFT ecosystem presents significant untapped potential. With its robust infrastructure and early entry into this blue ocean market, Magic Eden could unlock new growth opportunities and reinforce its leadership in the NFT sector. As the bull market goes into full swing, funds will flood into all markets and by then, we may get to see Magic Eden’s true potential.