Magic Eden, a Solana-based non-fungible token (NFT) marketplace, has seen its valuation soar following a fresh round of funding.
A further $130 million in investments has been raised by Magic Eden in a Series B pushing its valuation up to $1.6 billion. The move comes despite a broader crypto market and NFT trading slump suggesting that investors still see potential in the technology.
According to Avichal Garg, managing partner at Electric Capital which invested in both rounds, the firm’s valuation has surged tenfold since March, Bloomberg reported. Other participants included Lightspeed Venture Partners, Paradigm, and Sequoia Capital.
Like many industry executives who have been through bear market cycles, Garg is unfazed. “I’m not too worried about overpaying because the headwinds will last 18, maybe 24 months, not six years,” he said in an interview.
Magic Eden Chief Executive Officer and co-founder Jack Lu commented:
“We weren’t intending to kick off another round immediately, but we had a lot of interest. A lot of investors still feel we are very, very early.”
Solana NFT marketplace momentum
Magic Eden is a Solana version of OpenSea, founded in Sept 2021 to provide a place to buy and sell NFTs charging a 2% fee. It has grown rapidly since it launched and is now the third-largest NFT marketplace behind OpenSea and LooksRare according to DappRadar.
Many NFT collectors and creators have chosen Solana due to its faster transaction times and lower costs than Ethereum, the industry standard. However, the network has had more than its fair share of outages and reliability issues over the past year.
Solana is second only to Ethereum in terms of 24-hour NFT activity with $4.7 million in daily sales compared to Ethereum’s $15.3 million according to Cryptoslam.
DappRadar reports a daily volume of $4.32 million for Magic Eden, though this is a long way behind industry leader OpenSea with $19.89 million. However, Magic Eden accounts for more than 90% of all NFT transactions on Solana.
The firm will go on a hiring spree with its new investment capital, increasing the headcount from 50 to 140. It also plans to expand and consolidate its collection of Magic Eden NFTs with its larger marketplace, Launchpad which has more than 250 projects.
Magic Eden COO, Zhuoxun Yin, commented that there is still investor appetite to bet on this market.
NFT volumes falling
As reported by BeInCrypto, NFT marketplace volumes have slumped by 75% from Jan to May.
Trading volumes are now at 2022 low and could drop further if the crypto winter becomes a long-drawn-out affair as it was in 2018 and 2019.