Magic Eden reaches a valuation of $1.6B despite the market crash and economic challenges.
Introduction to Magic Eden
Based on the Solana blockchain, Magic Eden is an NFT marketplace that allows users to buy, sell and trade NFTs by providing a trustless environment.
Headquartered in San Francisco, the company was founded last year and follows the same model as other players in the industry including AtomicMarket and OpenSea. It takes a share of each transaction and is said to be one of the most affordable platforms due to its use of Solana, which is cheaper and more efficient than alternatives like Ethereum.
The sudden increase in the company’s valuation has made it the second-largest NFT marketplace, second only to OpenSea
More about the Valuation
The company reached this new milestone after a new funding round that saw investors add $130m more into the startup helping it reach the $1.6b mark – a 10x valuation increase since March of this year.
Investors include big names such as Avichal Garg, managing partner at Electric Capital, who believes the business is headed in the right direction.
“I invested because I believe the company will ultimately be worth much more,” he said while talking about the platform.
The valuation comes at a time when the market is struggling and even major coins such as Bitcoin and Ethereum are facing challenging times. In fact, even Crytpo.com and Coinbase Global Incorporation appear to be in a bad position and have slashed their ambitions.
The situation has impacted NFTs as well. Global sales saw a decrease of nearly 34 percent in the first quarter of the year. Similarly, Solana has also shed about 80 percent this year so far.
Garg, however, is positive and believes the situation will soon get back to normal.
“I’m not too worried about overpaying because the headwinds will last 18, maybe 24 months, not six years,” said Garg, whose firm joined hands with Greylock Partners for the funding round. “You have to be patient with crypto.”
What’s the Future?
The future of the company seems pretty bright. It has been reporting positive numbers since its launch and made $7.5m in May.
“We weren’t intending to kick off another round immediately, but we had a lot of interest,” said Magic Eden Chief Executive Officer and co-founder Jack Lu. “A lot of investors still feel we are very, very early.”
The company is on an annual revenue run rate of about $100m and is planning to hire more people so it can grow steadily. Moreover, the company is planning to expand into other sectors including gaming while also building on other blockchain technologies.
This will make the platform more stable, especially since Solana isn’t considered as reliable as it once was due to recent blackouts.
The introduction of multiple blockchains will make Magic Eden quite similar to OpenSea, which uses a number of blockchain technologies including Polygon, Ethereum, Solana, and Klaytn. Currently the largest NFT marketplace, OpenSea was valued at over $13b in 2022.