Solana NFT Marketplace Magic Eden Looking to Challenge OpenSea

Updated by Ryan James
In Brief
  • Magic Eden is hoping to capture some of OpenSea's share of the NFT pie.
  • The company has raised $27M to commence its efforts at operating a viable Solana NFT marketplace.
  • The company is betting on the in-game trading of NFTs on Solana.
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Some venture capitalists hope that the Ethereum-based OpenSea will soon take a backseat to Magic Eden, a new NFT marketplace on Solana.

Forty-three percent of all NFT purchases take place on OpenSea, with $23.3B in total sales, according to research firm DappRadar. But it is limited by the blockchain it operates on, which is Ethereum.

Venture capital titan Sequoia Capital has set its sights on Magic Eden, a company using the Solana blockchain to authenticate NFTs on its marketplace. Research by Etherscan indicates that Solana is capable of greater transaction throughput and lower transaction costs than Ethereum. However, history tells us that the cheapest or more efficient tool does not always end up superior. “We’ve also seen that most innovative projects choose Ethereum,” said Tim Beiko, a contributor to Ethereum.

Investors optimistic on Magic Eden’s potential

Nevertheless, Shaun Maguire of Sequoia Capital is optimistic about Magic Eden’s potential to a marketplace before OpenSea, despite the former receiving only $27M in a funding round compared to OpenSea’s $13B in January. Maguire is the lead investor in the funding of Magic Eden and is effectively hedging bets made by a former Sequoia partner who has invested in OpenSea. Magic Eden and its shareholders are waiting with bated breath to see if and when OpenSea lists Solana NFTs, with OpenSea having already conducted trials on that blockchain.

Zhuoxun Yin, a former Coinbase product manager, co-founded Magic Eden with Jack Lu in 2021, as NFTs surged in popularity. The popularity of NFTs has dropped significantly since then. Despite this, NFT sales totaled $2.9B in Feb. 2022, according to CryptoSlam, and long-term investors like Marc Andreessen and Reddit co-founder Alexis Ohanian invested in a $30M fund dedicated to purchasing NFT artwork.

NFT trading on video games a likely target

Up to this point, NFT owners have largely neglected Solana, with Magic Eden, the largest marketplace on the Solana blockchain, being the ninth-largest NFT marketplace overall, according to DappRadar. Solana is used primarily for decentralized finance. Yin believes that Solana is more suitable for video games, a medium where NFTs are more likely to be traded often. Mini Royale: Nations is a multiplayer game where NFTs can be bought and sold on the Solana blockchain.

Magic Eden will use funds from investors to encroach on OpenSea’s market, with its 55 employees scattered across the globe. Its first physical office will open in San Francisco in April 2022, and it has created a decentralized autonomous organization MagicDAO. Anyone can join in voting on which NFT collections are featured on the home page.

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