The clear leader in Solana NFT’s right now. Most volume, best user interface, rock solid reputation in the community, and the company that competition is gunning after. I figure it is as interesting of a time as ever to dive into the landscape of NFT’s on Solana due to the massive growth. I’m going to break down the reasons why Solana will succeed, and each one of there three biggest competitors, Opensea, Coinbase, and FTX.
I don’t think the majority of NFT’s will be on Ethereum because you don’t need the level of security that Ethereum provides for 99% of what’s on here. I also don’t think that the layer 2’s on top of Ethereum will be released and gain traction quick enough to offset the market share that they have already lost. Solana has found it’s market fit as a leader in the smart contract blockchain race with cheap and fast transactions. The user experience is amazing, everything is almost instant and moving NFT’s to being listed, delisting, or changing the price all takes just a few seconds to complete. Not to mention it costs a fraction of a cent to transfer between wallets. They do lose a bit of decentralization with the high cost of running a validator on the network, and do not have the level of security that Ethereum has proven out over it’s lifetime, but I am of the opinion that this is a level of security that isn’t necessary for an NFT ecosystem. Because they are building a whole new ecosystem on a whole new programming language, it is more of an open fighting ground for competition, and we are seeing a lot of different approaches to how things are done. Within the NFT marketplace landscape, we have seen a battle between a few different players, but Magic Eden has taken the top spot by creating the best experience for anyone interested in the NFT market, on the best protocol for the job.
Opensea is the biggest marketplace for NFT’s, period. There is no question about it. In January 2022 there was $5 billion in volume on Opensea! Source: Dune.xzy. Where I found that total volume of Magic Eden was just over $500 million in it’s whole existence. That’s 10x the total volume in a single month and hard to imagine. They will be supporting the Solana network soon. This is extremely bullish for NFT’s on Solana getting the exposure to this many new users, but I also think that it will probably take a while to get it right for Opensea. Still this is a giant threat to Magic Eden. I don’t think that users in NFT’s have any real long term loyalty. This is a greed centered sector of the crypto market right now, and if you can sell something faster, potentially for more money, that’s where users will go. I think that the distinct advantages that Opensea will have are: liquidity, established market, dollar amounts in the listing, brand name recognition to the masses, and a connection to clients outside of their platform. For ME, they can’t compete on the liquidity, but they have an established and trusted market. Interestingly enough while I was researching this, I found out that there is an airdrop of Magic Tickets that give you access to their Magic Dao. I love it. Create the community surrounding the brand, include as many loyal customers as possible, and both sides benefit and create a better experience. I didn’t qualify for this because I didn’t link my email or discord to my account. I kind of liked the anon ways, but it makes sense to essentially pay their loyal customers for access outside of their own product. Thinking back to Opensea, I actually love seeing lowball offers come through in my email, or if a listing gets sold, so I ended up linking both. Incentivizing clients to give up a little privacy is the way to go. I use Google Photo’s and I give them access to my photo’s, but they give me awesome memories, effects, and make my pictures look way better in return. In this scenario, we give our email and discord username, and in return get access to the MagicDao or at least an NFT they can sell off if they aren’t interested in participating in the ecosystem. I see this as the way to fight off competition and keep the attention of their clients on their product.
Now we’re going to transition from decentralized marketplaces into the centralized platforms. Coinbase is a monster. It’s huge, and it’s responsible for onboarding millions of people into crypto, including myself in 2016. They are expensive for trading and it doesn’t matter. They give safe exposure to crypto assets with a great user experience and quick deposits. They have been around for years and aren’t going anywhere fast. Combine that with their upcoming NFT platform and I think we could have a catalyst for our next boom. This will expose so many more people to an easy to use NFT platform. I think of this as an onboarding of normies to NFT’s. I don’t see why anyone would switch from self custody of their assets and using a decentralized marketplace to a centralized one; unless the incentives were massively outweighing the draw backs. I’m on the waitlist, as well as over 3,700,000 others. That’s almost 4 million eyes on each project they choose to support. They will have mostly Eth NFT’s, but there will be support for Solana NFT’s as well, and I can’t wait. This is bullish for everyone in NFT’s if they haven’t already priced it in. This is huge news, but I still think that the power users won’t use it. I think that this will serve as the introduction of the masses to NFT’s, provide a safe space for people to play around, but users will ultimately want more control than what Coinbase will offer. I wouldn’t put this as direct competition, more of a complimentary catalyst. I would absolutely think that this is a great opportunity to onboard millions of users to self custody and ultimately being their own bank. I think that this will have a positive overall effect and ME is well positioned to benefit from Coinbase’s move. We can also look at the benefit in the bigger picture of getting people onboarded to a financial system outside the current boundaries, with self custody of sovereign crypto assets.
The reason why I think that Coinbase isn’t that big of a direct threat to ME is because we can use FTX’s NFT launch as an example. Different scale and userbase, to be sure, but this was a prominent centralized exchange launching a great centralized NFT marketplace. FTX is more heavily used by more advanced users or businesses due to their massive derivatives market, but their aim is to also pick up the every day users that historically have chosen Coinbase. They offer better rates on trades and have a seamless user experience in their crypto offerings, they even offer cheaper costs for selling and purchasing NFT’s on their platform than ME and Solanart. I’ve poked around on their NFT marketplace and it was great, not a lot of liquidity, not a lot of listings, but it’s a great marketplace. The two competitive edges that they have is that you can buy any of their NFT’s with a credit card and they will custody it. No buying Solana from fiat, no deposit wait times, no moving to self custody and worrying about your keys. I think this is a pretty huge barrier for a lot of people. Just log in and buy is huge. They also custody your token’s so that the learning curve isn’t as steep and it’s a great product. I’ve recommended this to people wanting to get into NFT’s but won’t listen or put in the work themselves to learn how to do it on their own. But this will only take people so far. Current users of FTX are advanced enough to not want to use a centralized solution, and new users using a credit card to purchase won’t be on there forever. It’s way more fun to move your tokens around between your own wallets, move to hard wallet, get verified on discords, it’s really not a long term play to use their custody unless the users are just casual users. This leaves Magic Eden in a pretty good spot when facing all centralized competitors because it is after the power users and the long term players. The platform that helps bring on artists and launch their products and makes the trading of those seamless will have its place in the ecosystem and it’s proving out to be worthy of the top spot.
It would be hard to write this without mentioning a couple of the other current competitors that were also early to the Solana NFT marketplace landscape. Solanart is the next biggest competitor, and is a solid platform. They were first to market and it seems like they kind of rushed a minimum viable product out that wasn’t ready to scale yet. They dealt with horrible lagging issues anytime a new project was released and suffered the consequences. I still use it on occasion for certain projects that are listed only on there, but I don’t see anything compelling from them that is on par with ME. Exchange Art is a great platform as well but I think they will stay more in the small release, one of one and auction’s space. They seem more like where the artists and punk rockers go, kind of like the NFT’s you can find on Tezos. Other than that I know that Tom Solport of the Taiyo Robots is building something out that some people are pretty excited about. I don’t really view that as a huge threat, but more of a fun project to track, and that goes for other marketplaces that projects build for their own product. It’s a good idea, good roadmap space filler, but kind of a nothingburger at the end of the day.
In conclusion I think that Magic Eden is extremely well placed to thrive in the next few years as this technology becomes widely adopted. NFT’s are the best way to introduce newcomers to crypto and will onboard more people than any single protocol will. Solana is removing the high costs associated with minting, buying, selling, storing, moving, and even destroying NFT’s and still has massive growth potential. Centralized marketplaces will not have a long term product that will compete with a well run and established decentralized option. Opensea has the biggest potential to be a threat simply due to the volume that they bring to the table and the exposure that they have. The steps that Magic Eden has taken recently to build a community around their product and engage clients outside of their protocol are absolutely steps in the right direction. Allowing people to change the price of listings without delisting alone was a massive step in the right direction. Creating accounts for each user, with linking Discord and email to build relationships outside of their product is extremely valuable. Airdropping an NFT with access to the MagicDAO to power users is a genius idea and will only help improve the experience for them, as well as the offerings ME can provide. Ultimately customers decide what they want and having direct access is extremely valuable to the builders and the users. I used the launchpad recently and it is a fantastic product that brings creators into the ecosystem and offers a trusted solution for buyers. All these additional services on top of the core product are what is going to secure their position at the top. There is no resting on their laurels or slowing down of new offerings and this is how they stay on top. I’ve also seen a lot of FUD on the airdrop of the tickets, but have seen community managers out on Twitter clearing everything up. In very clear ways and extremely fast, another way that insulates them from competition is to actually have support and be client focused in the public realm. Putting the user front and center will be what wins this race for them, and the steps they have taken show their commitment to hold a new standard in the industry. I’m excited to track their progress and see what this exciting future will bring.