A huge shift is coming for Magic Eden, the prominent cross-chain NFT marketplace. On Monday, the startup announced that it will open-source its minting and trading protocols in collaboration with a new Non-Fungible DAO—which itself is planning to launch a crypto token called “NFT” to reward NFT traders.
On Tuesday, Magic Eden revealed more of how it plans to amplify its existing Diamonds rewards program across blockchains, while also discussing with Decrypt the ways in which users may benefit from the NFT token launch.
Magic Eden General Manager Tiffany Huang told Decrypt that the Non-Fungible DAO will award the NFT token to people “who are using the protocols that they’re governing”—which will include the Magic Eden marketplace and minting protocols across chains.
Huang said that it’s not yet clear which chain or chains Non-Fungible DAO will launch the NFT token on, although Magic Eden itself started on Solana and still is primarily associated with the chain. And while no specific details are available in terms of timing or token allocations, the connection between the NFT token drop and Magic Eden trading has been made explicit.
Introducing Magic Eden Rewards
We’ve spent the last year designing a long term, cross-chain NFT rewards program built for everyone. This isn’t just another points campaign. It’s a meticulously crafted plan to give back to Magic Eden’s OGs, collectors, creators, and degens alike.… pic.twitter.com/RQkJpoZEvi
— Magic Eden 🪄 (@MagicEden) January 23, 2024
“What we can objectively say is that people who use Magic Eden’s protocols will receive the [NFT token],” Huang affirmed.
At the same time, Magic Eden will expand its existing Diamonds reward system and bring it across all four chains that it serves. Huang described the Diamonds model and the DAO’s NFT token drop as being “parallel paths” for trading rewards, saying that Magic Eden’s own internal Diamonds ramp-up will continue on indefinitely.
“Magic Eden’s Diamonds program is something that we want to live on forever,” Huang said, “even beyond Non-Fungible DAO releasing their NFT token.”
Diamonds are currently live on Solana and will be part of the upcoming Ethereum NFT marketplace—created in collaboration with Bored Ape Yacht Club creator Yuga Labs—that’s now planned to launch in late February. After that, Magic Eden will bring such rewards to Bitcoin and Polygon, as well.
Magic Eden will also implement rewards into its new cross-chain crypto wallet, which launches to the public on January 29 following a closed beta debut last November.
Unlike some other points-based models that primarily focus on rewarding NFT traders that list their assets for sale or providing liquidity to trading pools, Huang said, Magic Eden also plans to provide rewards to the average retail user who’s simply buying NFTs via the marketplace.
The Diamonds model will provide an array of quests to complete to earn points, she added. Magic Eden will also do a massive drop of Diamonds on February 2 to longtime users, offering rewards that date back to the start of the marketplace in 2021.
There’s clearly overlap between the NFT token rewards and Diamonds, but Magic Eden is treating them as individual initiatives.
“You’ll get Diamonds the more you use Magic Eden, and then you’ll get NFT the more you use Magic Eden,” she explained. “But there’s not a direct correlation between Diamonds and the token. They’re two separate programs.”
What is the Non-Fungible DAO? For now, it’s not entirely clear.
Huang described it as a “community-owned” organization with its own team separate from Magic Eden, and that the team has “historically launched different tokens.” Decrypt asked to be connected with the Non-Fungible DAO team, but did not make contact before this story’s publication.
Decentralization is essential to the global adoption of NFTs. Magic Eden will be open-sourcing and contributing all of its NFT trading and minting protocols to Non-Fungible DAO. https://t.co/5gUzwqdDnh
— Magic Eden 🪄 (@MagicEden) January 22, 2024
We’ve seen examples in the past of decentralized foundations or organizations used to launch tokens used by crypto apps or protocols, as well as NFT projects. It’s seen as a means to try and avoid regulatory issues from the SEC and other agencies, though the approach tends to raise the question of whether it’s all a ruse—a bit of “decentralized theater,” if you will.
For example, ApeCoin is ostensibly the token of the Bored Ape Yacht Club ecosystem, but Bored Ape creator Yuga Labs denies responsibility for creating it, despite embracing the token with its projects and being granted sizable allotments. The official line is that ApeCoin was created by the ApeCoin DAO.
It may be much the same with Magic Eden and the Non-Fungible DAO, as the marketplace is the only prominent supporter associated with the DAO as of now.
Asked about the concept of decentralization theater and given the ApeCoin DAO example, Huang responded that Magic Eden has long wished to embrace a more open-source model. Getting there hasn’t been a straight path, however; Magic Eden has been criticized in the past for using closed-source code and resisting composability with other protocols.
The $NFT community will control and steward the future development and adoption of the DAO’s protocols, where each token holder gets to vote on governance and use of the ecosystem funds.
— Non-Fungible DAO (@Non_FungibleDAO) January 22, 2024
“In my view, it was fair that there was that discussion and a fair amount of disappointment from the community at the time about that,” Huang admitted. “As we grew bigger, it just became really clear that we had to pick a lane. And we ultimately wanted to pick the ethos of Web3 over everything.”
Magic Eden announced last year that it would eventually open-source the smart contracts that power its Solana protocols, and already launched open-source code when it started supporting Bitcoin Ordinals. Huang said that it will do the same on Ethereum and Polygon in the months ahead, following a long period of reflection about Magic Eden’s role in the NFT world.
“I think we—in the fog of war—thought that we had to become closed-source in order to just keep building and not getting distracted,” she said of Magic Eden’s past mentality as it started to expand cross-chain. “I think there were mistakes that we made in terms of our attitudes towards that.”
Now, however, Magic Eden is pushing towards a future in which its tech can be used by other builders to launch their own marketplaces that might target specific markets or niches, for example, and try to expand the broader NFT industry.
Why now, though? The Non-Fungible DAO launch and Magic Eden’s expanding rewards plans come as rival Tensor has taken over substantial NFT trading market share on Solana—as much as 70-80% lately. Tensor has its own rewards model that hints at a potential token launch, which may be fueling its growth.
Huang said, however, that it’s a matter of Magic Eden having gradually built up to this point, through the launch of cross-chain infrastructure and its wallet, plus what she had described as the company’s evolving stance on open-source tech. It’s finally time, in their team’s view.
“Think about it like two long years of playing chess,” Huang said. “We finally have all the right pieces, and then we need to drive adoption for those pieces. And we also want to show appreciation to the community that stayed with us for so long.”
Edited by Guillermo Jimenez