Magic Eden is a decentralized app built on the Solana blockchain that allows users to mint, buy, and sell NFTs. Its business model is based on a low fee structure and a simple, feature-rich, community-based interface.
Understanding Magic Eden’s business model
Magic Eden has experienced a meteoric rise in popularity since it was launched in September 2021. In an industry dominated by Ethereum-based NFT marketplaces, the Solana-based Magic Eden has somewhat of a competitive advantage.
The platform’s flat 2% transaction fee is popular with traders and the recent launch of prized tokens has only increased its appeal.
Magic Eden also describes itself as a community-centric company that works hard to be responsive to community needs and to serve the best interests of its collections.
To prove its commitment, it airdropped over 30,000 “Magic Tickets” to users which granted them access to a discord-based MagicDAO where P2P interconnectivity is delivered via social programs and rewards.
These programs include AMAs with top Solana members, artist networking events, and exclusive IRL events for members in New York and Los Angeles.
Since the platform is based on the Solana blockchain, fees are rather low when compared to competitors in the same niche.
In addition to the modest transaction fee, NFT listing and offer (bid) fees are waived. Magic Eden also respects the royalties set by creators. This fair and equitable structure makes the platform popular with NFT creators and traders alike.
Magic Eden’s user experience
Magic Eden is often touted as one of the most user-friendly decentralized applications on the market.
The user interface is simple to navigate and there are multiple ways to search its system for popular NFT collections, launches, drops, projects, and auctions.
There is also a content hub for newbies where the fundamentals of NFTs, blockchain, and cryptocurrency are explained clearly and concisely.
The Magic Eden Launchpad offers full-service NFT minting for those who find the minting process confusing.
Launchpad makes the process simple, seamless, and secure for creators. Before launch, the platform also offers outbound marketing support by creating buzz via Twitter, Discord, and Spotify.
Co-founder Jack Yu once noted in an interview that Magic Eden was intentionally made to be simple to use and understand.
This, he believed, would allow artists to devote more energy toward creative output and be less concerned with the complexities of the tech underpinning their work.
Key takeaways:
Magic Eden is a decentralized app built on the Solana blockchain that allows users to mint, buy, and sell NFTs. Its business model is based on a fair and reasonable fee structure and a simple but versatile interface.
Magic Eden’s business model is also community-centric. Company representatives are responsive to community needs and serve the best interests of the platform’s collections.
Magic Eden’s simple and intuitive user interface is another contributing factor to its success. Numerous features and support options allow artists to focus on what they do best and in the process, grow the platform.
According to Joel Monegro, a former analyst at USV (a venture capital firm) the blockchain implies value creation in its protocols. Where the web has allowed the value to be captured at the applications layer (take Facebook, Twitter, Google, and many others). In a Blockchain Economy, this value might be captured by the protocols at the base of the blockchain (for instance Bitcoin and Ethereum). However, according to blockchain investor Paivinen due to ease of forking, incentives to compete and improved interoperability and interchangeability also in a blockchain-based economy, protocols might get thinner. Although the marginal value of scale might be lower compared to a web-based economy, where massive scale created an economic advantage. The success of the Blockchain will depend on its commercial viability!A Proof of Stake (PoS) is a form of consensus algorithm used to achieve agreement across a distributed network. As such it is, together with Proof of Work, among the key consensus algorithms for Blockchain protocols (like the Ethereum’s Casper protocol). Proof of Stake has the advantage of security, reduced risk of centralization, and energy efficiency.A Proof of Work is a form of consensus algorithm used to achieve agreement across a distributed network. In a Proof of Work, miners compete to complete transactions on the network, by commuting hard mathematical problems (i.e. hashes functions) and as a result they get rewarded in coins.A Blockchain Business Model according to the FourWeekMBA framework is made of four main components: Value Model (Core Philosophy, Core Values and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics/incentives through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.Ethereum was launched in 2015 with its cryptocurrency, Ether, as an open-source, blockchain-based, decentralized platform software. Smart contracts are enabled, and Distributed Applications (dApps) get built without downtime or third-party disturbance. It also helps developers build and publish applications as it is also a programming language running on a blockchain.The Graph is an ERC20 Utility Token (built on top of Ethereum) to enable consumers to freely query the blockchain through a fully decentralized database kept by indexers, incentivized by the payment of tokens (called GRT). The network is also ministered by curators and delegators that help maintain a high-quality index.BAT or Basic Attention Token is a utility token aiming to provide privacy-based web tools for advertisers and users to monetize attention on the web in a decentralized way via Blockchain-based technologies. Therefore, the BAT ecosystem moves around a browser (Brave), a privacy-based search engine (Brave Search), and a utility token (BAT). Users can opt-in to advertising, thus making money based on their attention to ads as they browse the web.In 2012, co-founders Christian Larsen and Jed McCaleb created Ripple, a technology acting as both a pre-mined cryptocurrency called XRP and a digital payment platform enabling monetary transactions. Where Ripple is the tech company, XRP is the decentralized ledger.In 2014, Jed McCaleb – which also played a key role in the development of Ripple – created a cryptocurrency to provide fast, reliable, and affordable money transactions. The same cryptocurrency has considerably grown seven years later. It is now one of the most stellar cryptocurrencies to provide a real-time platform that links banks, payment systems, and people. Meet, Stellar!In early 2019, a joint project between TRON and BitTorrent Foundation called BitTorrent Token came to fruition. BitTorrent Token launched to tokenize in-demand file-sharing protocol and enhance content delivery and bandwidth accessibility with blockchain technology.Chainlink is considered the most established decentralized oracle network. As an ecosystem housing several decentralized oracle networks running simultaneously. As a decentralized oracle service built on Ethereum, Chainlink has the power to support the development of blockchain solutions for both traditional businesses and enterprises.Uniswap is a renowned decentralized crypto exchange created in 2018 and based on the Ethereum blockchain, to provide liquidity to the system. As a cryptocurrency exchange technology that operates on a decentralized basis. The Uniswap protocol inherited its namesake from the business that created it — Uniswap. Through smart contracts, the Uniswap protocol automates transactions between cryptocurrency tokens on the Ethereum blockchain.In essence, Polkadot is a cryptocurrency project created as an effort to transform and power a decentralized internet, Web 3.0, in the future. Polkadot is a decentralized platform, which makes it interoperable with other blockchains.Designed and created as an alternative to Ethereum, Cardano claims to be the first decentralized blockchain protocol to use a scientific approach and undergo a peer evaluation.Solana is a blockchain network with a focus on high performance and rapid transactions. To boost speed, it employs a one-of-a-kind approach to transaction sequencing. Users can use SOL, the network’s native cryptocurrency, to cover transaction costs and engage with smart contracts.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
