The Legendary History of Magic Eden

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In February 2022, Magic Eden faces a crisis. After launching Solana, the fast-growing NFT marketplace, a few months ago, it was dealing with a serious mishap: the first major run-off on its platform. Balloonsville, a collection of 5,000 NFT collectibles that have been successfully minted via Launchpad (a market-curated minting service), also minted over 17,890 SOL tokens (worth $2 million at the time), before declaring it all a game Elaborate scam.

Soon Magic Eden was being dragged into the mud by social media and criticized by collectors and creators in its community for allowing this to happen. A tweet sent by Balloonsville shortly before its account was deleted mocked Magic Eden’s lack of monitoring in verifying the authenticity of collectibles and accused the platform of being lax in its process in order to increase revenue through Launchpad.

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The episode served as a wake-up call for Magic Eden, with founders having to decide whether to cut corners or take a financial hit to align their decisions with values. “We were embarrassed to say the least,” reflected Zhuoxun Yin, Chief Operating Officer of Magic Eden. “We had two options: tell users it was their responsibility — essentially yes, no DYOR (do your own research before investing) — or get a refund. It was a pain, but we chose the latter.”

The team spent hours on Twitter Spaces with thousands of community members answering questions and soliciting feedback, and refunding minters who sold below the reserve price. They then rallied community members to advance the Balloonsville project and injected 5,000 SOL tokens into the vault, effectively unblocking the project. Today, “Balloonsville 2.0” is a thriving community-driven NFT project with a gamified ecosystem where users can stake their NFTs for the project’s native tokens and explore its Metaverse.

Still, the episode had a huge impact. Its business fell sharply as the platform overhauled its processes. Magic Eden put its Launchpad plans on hold for almost a month, forgoing upcoming minting revenue, and even introducing incoming creators to rival NFT platforms so they could continue publishing their work. “Our Launchpad business has shrunk by about 70% in a month,” Zhuoxun said. “But we need this time to overhaul our trust and safety processes.” 

Many startups label themselves “customer first” — but only if the service leads to growth. Magic Eden demonstrates a much deeper dedication to customers. “We tell everyone at the company, ‘If you have to choose between Magic Eden and users, choose the best for our users,'” said CEO Jack Lu. 

An emerging web3 playbook

 Today, four months after the Balloonsville run-off incident, MagicEden is almost back. Despite being established less than a year ago, the platform has an annual secondary market GMV (gross merchandise volume) of over $ 3 billion, a monthly transaction volume of over 1.5 million, over 20 million collectibles, and over 250,000 users trading on the platform . On average, each user trades in the secondary market 8.4 times a day, which reflects the differentiated nature of Solana NFT and the low threshold for transaction access. The rapid growth and scale are often unbelievable to those who haven’t paid close attention to the Solana NFT ecosystem.

Despite these successes, Magic Eden’s story hasn’t really begun to tell. For a few reasons, the company is a unique creature in today’s Silicon Valley. Its founders have been able to deal with some of the key choices facing web3 startups: decentralization vs. being accountable to users, scaling fast vs. prioritizing community input and community ownership, and being in the game when the rules of the game aren’t entirely clear. Make bold product decisions in an industry.Despite its fair share of challenges, Magic Eden’s success so far roughly describes what I see as the emerging playbook for web3 startups, given broader market conditions and concerns about Solana’s reliability.

To understand all of their journey so far and how they became the platform of choice for Solana NFTs, let’s dive into the Magic Eden story. 

early start

The story begins 16 years ago in Melbourne, Australia: 16-year-old Jack Lu and Sidney Zhang (the CEO and CTO of Magic Eden, respectively) meet at a bus stop on their way to a math cram school. People quickly become friends. They are all children of immigrant families, and both parents strive to give them the best possible life in Australia. Years later, while working at the cryptocurrency exchange FTX, Jack was one of the first to see the prospects for Solana and was eager to start something new in its ecosystem. He contacted Sidney, who was working in the Meta AI research group at the time, to discuss building an NFT marketplace on Solana. They believe that NFTs are the future of internet culture, community and gaming, and are attracted by Solana’s extremely fast transaction speed and low cost as a good foundation for a consumer-friendly experience. 

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Then they brought in Zhuoxun, another Australian expat friend who was a second employee at dYdX and worked as a senior PM at Coinbase, and Zhuojie Zhou, whom Sidne had known since working at Uber in San Francisco. The four co-founders — who formed a combination of marketplaces, consumer products, technical engineering, and crypto-native expertise — quickly assembled and started creating. At first, they used pseudonyms at work because they still had day jobs.Their evenings and weekends were dedicated to Magic Eden: scraping contract addresses, registering collectibles, and cobbling together a minimal viable product using off-the-shelf WordPress themes. 

After two weeks of laying the groundwork, Magic Eden went live on September 17, 2021, with $50,000 in volume on the first day. Feedback was prompt – and very positive. “We knew our strengths,” recalls Zhuoxun. “All of us have worked at companies that lacked product-market fit. We knew instinctively that we were different from those companies.”

How did Magic Eden occupy the Solana NFT market ?  

Magic Eden fills a big gap in the market: in the crowded NFT market space, it focuses solely on Solana, emphasizing user experience and lowering barriers to entry for NFT creators. By the end of the first month, Magic Eden had hit shelves with 200 series, and team members decided to quit their full-time jobs and go all out. “We knew we could create a huge generational opportunity for NFTs,” recalls Jack.

The challenge now is to build liquidity as quickly as possible – in other words, to overcome the “cold start problem” that often arises when launching new markets. In the fall of 2021, many NFT collectibles will take weeks to reach the secondary market, and at the same time, users will not be able to tell whether the collectibles they see are reliable or authentic.Magic Eden greatly reduces this: within minutes of the primary minting of a collection, such NFTs are available for secondary trading on the platform.

Another key strategy to help drive growth is migrating liquidity for existing collections. “We found it impossible to migrate liquidity for existing collections that exist in other markets,” Zhuoxun said. They also recognized that many of the existing top collectibles wanted their own white label market, so they offered to create a white label market for well-known collectibles like Thugbirdz. These marketplaces share a backend with Magic Eden and help draw liquidity from competitors.

Finally unlocked is Launchpad, Magic Eden’s full-service NFT minting platform. At the time, launching NFT projects on Solana was a challenge for creators. They need to search the internet for smart contract developers and pay them to build custom minting websites. In December 2021, Magic Eden began ramping up operations on Launchpad, allowing creators to post their collections on Magic Eden and expose them to the user base. “We learned that if primary mintage appears on the platform, secondary mintage usually stays on the market as well,” Zhuoxun explained. Today, Launchpad is an integral part of the Magic Eden flywheel, attracting top NFT creators who want exposure to the platform’s broad user base. Over 200 projects have been minted through Launchpad, and have earned over $10 million through its primary minting since inception. “Everyone will check out Magic Eden,” Suteki, creator of the anime-based NFT series, explained his decision to release the collectible via Launchpad in early June. “This is where everyone goes to find the Solana NFT project.”

Magic Eden today _ 

Today, Magic Eden attracts more than 20 million unique visitors per month. In addition to Core Market and Launchpad, their integrated game discovery platform, Eden Games, has more than 430,000 monthly active users and has launched 35 games to date. The platform holds the vast majority of the market share, typically accounting for over 95% of Solana NFT’s daily trading volume. Although current market leader Opensea launched support for Solana NFTs in April, the event is widely considered to be a “Magic Eden killer.” Magic Eden now has room to build: After a recent Series B round, Magic Eden entered a bear market with $130 million in funding and a $1.6 billion valuation — and he intends to use the funds to grow the team, execute on his ambitious , and enhance defense capabilities. 

In addition to product execution, their growth has also been driven by a community-focused approach, as mentioned by multiple creators and collectors. “They have a good reputation for listening to the community,” says Suby. Suby is the founder of Okay Bears, a Solana NFT series that was minted via Launchpad in April and quickly hit the NFT leaderboard.”They’re not necessarily doing everything right, but they’re always adapting and responding to the needs of the community.” The company even has its own term for this building philosophy: “Twitter-driven development.”

Build culture with heart

A startup, they say, is a mirror of its founders, from the cultural values ​​they set to the expectations they set through role models. Judging from the conversations and interactions with the Magic Eden team, their culture is brought into focus through their actions. In an environment riddled with scams, Magic Eden has thoughtfully put in place measures to prevent bad behavior and manipulation. While other companies often make changes to products in veiled ways for fear of disappointing their users, Magic Eden strives to explain to the community why the change is happening — even if they might be disappointed. The team is persistent, always online, and responding to requests 24/7: Keeping the Magic Eden running can feel like looking after the boiler of a steamboat, requiring constant effort to keep the business moving forward. 

The cultural structure of the Magic Eden team is slightly different. When asked what makes MagicEden different from other startups, the team cited a focus on performance (“We fight to win”); being a true web3 rather than a web2 (prioritizing community input over centralized decision-making) , as well as unity and ownership (“your teammate’s problem is your problem”). 

Immigration journey

To gain a deeper understanding of a company’s culture, it’s helpful to trace the founders’ stories back to their roots. All four co-founders are American immigrants (Jack, Zhuoxun, and Sidney are Asian-Australians; Zhuojie lived in China before coming to the US for graduate school). Zhuoxun spent his childhood in Malaysia until his mother moved to Australia when he was five years old. “She ran an advertising agency for eight years and then sold it so we could get a better education in Australia. She made it all happen. Her hard work and sacrifice were my benchmarks.” Likewise, Jack Said his drive and ambition echoed what he saw from his parents, who immigrated to Australia in their 40s despite having successful careers in China. “They don’t want to live a life where they can see 10, 20 years in the future,” he said. “This willingness to take a chance and explore the unknown really inspired me.”

Every founder has their own story of deviating from the path of least resistance to get to where they are now. For Zhuojie, that meant diving into a new programming language and learning blockchain development from scratch while he was chief engineer. Zhuojie recalled his reaction when he got a call from Sidney asking him to help start Magic Eden, saying, “I’m curious about Rust (the programming language for the Solana blockchain), web3, NFTs, crypto, and running a startup.” .

set the standard

Magic Eden sees itself as the manager of the ecosystem – the flag bearer in the NFT field, with higher responsibilities to users. In a world where the challenges of working with web3 applications are significant for newbies, Jack takes the opposite stance, arguing that Magic Eden should keep the web3 core while giving people a similar feel to working with web2 applications The feeling: “The user experience won’t suffer. It needs to be fast, clear, and low-fee.” This sense of responsibility to the ecosystem also extends to the platform’s attitude toward trust and security, as the Balloonsville incident demonstrated: “Trust Security and security is a pervasive issue across the crypto industry. I support greater user protection and creating more security and reliability, rather than a ‘buyer conceit’ approach.”

To ensure this level of accountability, Magic Eden has a comprehensive screening process for new employees. Before each newcomer joins, they go on a one-week work trial with the company, during which they acquire the knowledge and skills they need to become members of the organization and work alongside the rest of the team. This approach has been successful – the team now has more than 100 people. “The reason is simple,” Zhuoxun explained. “If you look at the market for homogenized tokens, it has been growing slowly but steadily, and the market is now huge. This is even more the case for NFTs, because the application of NFTs is more than that of homogenized tokens. There are far more applications. If you think of NFTs as a category, we are at the forefront of that category.”

Planning the future  for the Magic Eden community 

Today, Magic Eden leads the Solana NFT market by a wide margin. It has achieved this in just nine months – demonstrating both its effective strategy and the dramatic changes the landscape can undergo in a short period of time.”They’re in the best position to win, but nothing is certain,” Okay Bears founder Suby said of Magic Eden’s future. 

One of Magic Eden’s challenges was scaling as a fast-growing, remote-first startup while maintaining a strong company cohesion. The team is spread across the globe, and building a remote culture is the result of a lot of thought by the founders. “We’ve had success recruiting people from our own network, but we need to cast the net wider and look for talent in different places,” Sidney said.

Another outstanding issue is the dependence of Magic Eden’s current platform on the Solana network. In June, during Solana’s most recent outage — the network’s fifth failure in 2022 — the network stopped producing blocks for about four and a half hours. Solana has just over 1,000 validators compared to the 300,000+ validators that secure the Ethereum network, so it is often criticized for its lack of decentralization. As Ethereum scaling solutions enter the market and gain adoption, Solana’s advantages of being fast and low in transaction fees may be undercut by a similar experience on Ethereum, which also provides better security. It remains to be seen whether the ecosystem will continue to see strong NFT transaction numbers and user growth, especially in the current bear market.

Cross-chain scaling may be necessary in order to grow, scale and de-risk itself. However, Magic Eden’s defensive source for other marketplaces entering the Solana ecosystem – which is distinct from the community of Ethereum NFT creators and collectors – is also a double-edged sword, in my opinion, and may hinder its entry into the Solana ecosystem. New ecosystem development. Watching Magic Eden continue to maintain its market share unfold in real time taught us a lesson: network effects are not global, but community specific. Expanding to other chains in the future will mean resetting its network effects and will require gaining a foothold in a whole new community and rebuilding how Magic Eden is used.  

path to maturity

Despite these headwinds and challenges, Magic Eden still has a lot to look forward to as it charts its course. Talking to the team found that the company is keen to explore three main growth directions and opportunities:

• Develop a vertical strategy around the game

• Embed more social experiences in Magic Eden

• Community ownership

One of the team’s expansion strategies was their explicit intention to go vertical around the game. As more and more games roll out NFT elements, and Solana’s low fees and high speed are naturally suitable for gaming use cases, Magic Eden hopes to play a bigger role in this ecosystem. “We want to involve game creators and provide SDKs and other tools to make it as easy as possible for them to build their marketplace,” Zhuojie said. The team also plans to leverage Magic Eden’s wide distribution — over 400,000 unique wallets per month — to promote the game to its user base and convert NFT collectors into players.

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Another area of ​​opportunity is social, and having more community interaction around NFTs. Today, most NFT marketplaces focus on the transaction itself, while the initial stages of creating purchase intent or sparking inspiration take place on other platforms like Discord and Twitter. The user experience is clunky and disjointed: users must check multiple platforms to discover, communicate, transact, and connect, giving the opportunity to build a more cohesive commercial experience that is reflected in the social activity that occurs around NFT purchases and ownership. The inherently social nature of NFTs was demonstrated during the Trippin’ Apes Tribe NFT minting, when live chat was activated within Magic Eden’s Launchpad, attracting over 9,000 concurrent participants. Capturing each user’s end-to-end buying journey — especially on mobile, where Magic Eden has racked up over 200,000 downloads with little to no marketing — is a key way for Magic Eden to strengthen its network effects.

Finally, community ownership. While the team has yet to announce any token plans, the team’s crypto-native DNA and web3 ethos of increasing community engagement are already evident. In February of this year, the company airdropped thousands of Magic Ticket NFTs to active wallets as an entry ticket and governance token for MagicDAO, whose mission is to “work with our community to create a stronger Solana NFT ecosystem” . Magic Eden injected 1,000 SOL tokens into the DAO. Benefits and rewards for DAO members include access to a Whitelisted position on Launchpad, access to IRL events, and dedicated AMAs and feedback sessions.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/the-legendary-history-of-magic-eden/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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