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OpenSea competitor Magic Eden hits unicorn status in nine months

Jun 21, 2022
Animated illustration of a hand holding a rotating glowing golden pixel coin.

Illustration: Aïda Amer/Axios

Magic Eden, an NFT-marketplace company built on Solana, announced that it had raised $130 million in Series B funding valuing it at $1.6 billion on Tuesday.

  • Electric Capital and Greylock Partners led the round.

Why it matters: Investors may be pulling back from the broader crypto and NFT market, but some startups are still able to raise like its 2021.

Of note: Magic Eden is now a unicorn having been around for just nine months.

  • The company's shiny new unicorn valuation came together fast. It was founded nine months ago and follows a $27 million Series A funding round in March.

Details: The recent market volatility gave even the venture capital industry a renewed interest in profitability, with Magic Eden appearing to fit that bill. The company is cash flow positive and profitable down to the "very last line," says CEO Jack Lu.

  • Magic Eden posted its best month ever in May in terms of transaction volume, with revenue of $7.5 million. It also managed to surpass its more established competitor, OpenSea, in a single day in May.
  • That may be in part attributable to Magic Eden's relative youth, as well as its current Solana focus. Solana-based NFT transactions tend to have significantly less onerous transaction fees than Ethereum, OpenSea's homebase.
  • Another attractive piece: Magic Eden powers marketplaces for other NFT makers, creating "a more resilient" business model, especially in rocky times, says Greylock Partner Mike Duboe.

Yes, but: Overall, Magic Eden's monthly transaction figures still lag behind OpenSea, with DappRadar estimating volumes of $386 million on OpenSea in the last 30 days against Magic Eden's $160 million.

  • OpenSea has also made efforts to lower its own transaction costs and has expanded into Solana-based NFT-trading itself.

Adding to the intrigue: NFT land is a spider web. Magic Eden and its competitor OpenSea share several investors, including Paradigm and Coinbase Ventures (whose parent company has its own NFT marketplace).

  • When asked about the potential conflict of interest, Magic Eden's Lu says he's not concerned and believes multiple platforms can exist.
  • "I think the mental model for us is: Everyone is really getting into this space to bet that this is going to be 100x to 1,000x bigger in the future than what it is today," says Lu. "There's many analogies to the early days of social media. Everyone said LinkedIn, Facebook, and Pinterest would be competitive. But over time, the space grew. "

What to watch: The NFT surge of the last few months has been defined by artwork and profile pictures. Magic Eden is now expanding heavily into gaming NFTs and exploring ways to reach more users by operating on chains other than just Solana.

Editor's note: This article was updated to fix an error with Magic Eden's transaction volume figure.

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