Looking back on the NFT marketplace Magic Eden | Chain Reaction Podcast

He everyone it's jacine melanic welcome To chain reaction a show that unpacks And Dives deep into the latest trends Drama and news breaking things down Block by block for the crypto Curious this year we're doing monthly Series diving into different topics and Themes in crypto and to start things off This month we're focusing on nfts I'm Interviewing some of the biggest nft Players and Founders about how they've Weathered the booms and bus in the Sector what they're focused on and what Could be next for the industry this week We're sharing a conversation that I had Last year in June with Jack Lou from Magic Eden at the time the marketplace Was adding support for the Bitcoin BRC 20 tokens it was expanding its web3 Gaming suite and in general the nft Market was less hot for a lack of better Words at the beginning of this month February 2024 nft sales volume hit $1 Billion for the first time since February 2023 when we recorded this Episode nft sales volume was down around 640 million at the beginning of the Month so things were in a pretty Different place jack and I also talked About the multi-chain expansions and he Shared some of his best advice for the Nft community looking back on this Conversation I think it's a great Addition to the nft series to kind of

Add some context for what a crazy year This has been how much things have Changed and you know some things have Stayed the same especially for people Building in the NF te- space I think so Much of what Jack and I talk about is Still top of mine so I hope you enjoy This Conversation today's guest is Jack Lou Co-founder and CEO of nft marketplace Magic Eden prior to co-founding the Company in 2021 Jack was a product Manager at Google and a consultant for Boston Consulting Group magic Eden has Quickly grown to become one of the Largest nft marketplaces with over 8,000 Collections about $3 billion in nft Transactions and 22 million unique Monthly visitors it originally began as A salon based nft trading platform but Has expanded its support to other Blockchain networks like polygon Ethereum and Bitcoin last June magic Eden raised $130 million in its series B Round bringing its valuation to unicorn Status at 1.6 billion Jack also Previously joined us on chain reaction For an episode in August of last year But a lot has changed since then so We're excited to have him back on Jack Welcome to the show yeah thanks for Having me again yeah I'm excited to get Into everything with you but before we Start talking all things nft and about

Your magic Eden Marketplace I've been Asking our guests to tell me about one Of the most interesting people in crypto You've met or talked to in the past 12 Months and what did you learn from them Oh interesting well I would have to say You know we've been making a really big Push into the Bitcoin ecosystem recently Just met a lot of really like kind of OG Founders who started off in the Bitcoin Ecosystem have either remained there or Moved on to other ecosystems one of the Folks I met recently is actually like JP Founder of X wallet very very Significant wallet player and we were Just having dinner one night and he's Been in the crypto game for like 10 Years so this is his like fourth bare Market and he just epically chill and You know it was like you know nothing Nothing has happened I was kind of like Man JP like how did you do it after After 10 years you know like it feels Like one year in crypto is worth five so It feels like you probably wor like two Careers already which just a bunch of Jokes around that just how to you know Keep a level of mindset and and think Longterm about that in crypto so that Was super interesting conversation yeah He's been through the Ringer right that's right it's got a Little bit of white ha and I was like JY But you're actually like in your 20s

Right he was like yeah that's that's Actually it that's just what 10 years in Crypto do do you uh but yeah that was a Fun conversation right I'm glad you Brought up Bitcoin too because magic Eden also recently announced this week That the brc2 standard is now available On secondary platforms and the the Bitcoin Launchpad in a sentence or two Cuz maybe our listeners have no idea What I'm talking about can you explain What brc2 is and what does this mean for Traders on your platform yeah absolutely I'll try my best for one to two Sentences or a few sentences we'll give You a little room thank you thank you Sting the really high but yeah like you Know in a nutshell I think BTC is you Know the original blockchain but up Until very very recently BTC has been a Very static Blain in terms of it only Serves one use case like Bitcoin as Money right but in the last 6 months There was some very very exciting Technological breakthroughs on the btz Ecosystem and these new basically new Technology standards that allowed other Developers to now create their own Either nfts or funable tokens and BRC 20s is a is a technology standard that Has taken traction on top of BTC that Allow developers to basically build Their own funable tokens on top of BDC Yeah we're super super excited because

You know for 10 years BTC has had this Like single use case it didn't support a Lot of you know applications on top of Its environment but now with this new Technology like BLC 20s it you know Makes room for other developers like you Know Magi Eden and other folks that come To the ecosystem build on top of Bitcoin So super super exciting to be making This vc20 launch okay that's super Exciting and as I mentioned in the intro The marketplace has expanded to other Blockchains outside of salana like Polygon ethereum and Bitcoin networks What we just talked about but can you Walk us through the team's decision Making behind that and how has that been Paying off and why expand Beyond salana Yeah absolutely so I think this time Last year when we chatted you know uh we Always had this Vision around here we Need to go multi-chain and in a sense That makes a lot of intuitive sense Right like what magic Eden is really About is trying to bring the delight and Value of nfts to all users and we see The change as kind of a means to an end In some ways right like there are Different blockchains that can serve Those use cases and what we did over the Last six months is actually effectively Expand from one chain from Soul to four Chains so you know e polygon and BTC the Reasoning behind that has always been uh

These other blockchains we see very very Interesting and kind of different use Cases toward Soul had as well so on Ethereum they were very you know stored Collections and creators with long Histories in nfts and that's kind of Where the origin of nfts really started From the ethereum ecosystem and really Wanted to partner with them on polygon We see a lot of creators especially in The gaming sphere and that's a category That we really wanted to go deep in and Do a lot of Partnerships in and very Proud to say we've had a lot of traction In the last six months and then when BTC This new technology called ainor really You know became a thing in January 2021 It was like a massive like unlock of new Innovation on BTC and because there is Just so much history Prestige and of Course you know attention on BTC we Thought wow this seems like so so Interesting that we have to make a play And and make a bet here so the BTC story Was a little bit like we were looking at It we thought yeah there is just so much Liquidity and history on BTC but there Is zero like daps and nfts on top of it It would make sense that if a new Technology like nfts was unlocked on BDC That it would grow much more inside Starting from zero and then we basically Held a little internal hackathon within Magic Eden and brought all the engineers

Together and we hacked something Together and launch something within Less than a month Yeah all right less than a month that's Pretty impressive do you think the Demand is strong enough for trading There on these new blockchains that you Just added and by new I mean like the Ones you just added a magic aen they're Not all new in that sense but what are You doing to get users onto your Platform opposed to the ones they've Been previously using once you've added These new blockchains yeah there's a Couple of things I think number one we From a DNA perspective we've always Focused on just making this uh Experience and simple and making the User feel the value of coming to trade And engage in Commerce on nfts on Magic Eden so that's has been our philosophy That we've taken to all of these new Chains that we've taken whether it's to Polygon ethereum and also to BTC and Then the other piece is also like just Working with the most exciting and the Biggest creators we have this belief From the found of Mag even to now and we Still have this High conviction that It's the creators who are you know Really innovating and bringing their Ideas to life with nfts and this new Technology and then with that kind of Bring those dreams to life they then on

Board those users into the nft ecosystem And Maga will be there to facilitate That and be a great partner to them so By always yeah helping and partnering With the top creators we are also Onboarding Their audience on mag in that Way right so it's like a ripple effect In a way that like when one comes the Rest will too yeah yeah a bit like that It's interesting too like I think in BTC Especially there is also a lot of cross Chain overlap so there are a lot of Salana community members and ethereum Community members who have tried and Checked out BTC in that way we've been Very lucky to have also met those users And those community members as well yeah It'll be exciting to see how that all Pans out too in the future we're going To take a quick break before we get into The rapid fire Segment Jack I want to move into a Section that we call Rapid Fire round Where I just ask you questions sure and You give short responses it could be You're you'll you'll get the hang this You're smart okay so my first question For you jack is you can only buy nfts From one blockchain for the rest of your Life which one would it be oh not trying To sound like a show but you know we are Really excited about BTC right now so I Think it would have to be BTC yeah There's a lot of longevity I think in of

Course the environment and the chain Also the Collectibles that's on BTC Right now have like some very special Onchain characteristics as well which we Very excited about M all right Bitcoin Nfts on Top uh which is your favorite nft that You own oh so I actually own a an nft From a collection called aurori on Salana and this is a yeah this has been My like day one and a day one fan of the Team and of the project yeah and I've Never changed actually it's my profile Photo from like from the found of Mag Yeah so it's a great team they're Building a game on soul in a support of Soul from very very early on and yeah Also just love the art of that Collection as well okay how many nfts do You own do you know yeah L count L count Definitely L count do you think there's A chance magic Eden would acquire Another nft Marketplace Never Say Never Never Say Never don't have any immediate Uh you have immediate plans right now But you're always open and I think There's many many great teams in many Great products obviously like right now The market is down compared to like 18 Months ago but for Magic 's perspective It feels busier than ever it just feels Like there's so many cool innovations That we want to check out and explore But we just don't have enough internal

Folks and resources to build and like Explore all of them so you know Partnerships Acquisitions were open to All forms of that and never say never Okay and then talking about all things Blockchains will magic Eden expand into Other blockchains within the next 12 Months again Never Say Never as well I Think right now we're pretty which ones Are you eyeing so I think right now We're not eyeing any cuz just going from 1 to four in 6 months is like having Four kids you know like four babies that We have to love them all and nurture all Of them and right now we definitely feel Like okay we you know we need to Consolidate polish up the experience on All of these different ecosystems and There's a lot of work that we want to do To improve the product for our users There so maybe as of right now it's like Kind of like FL is enough and we need to Focus but at the same time there is just So much more Innovation that's coming Right there's a lot of chains whether That's very specific to gaming so there Is a lot of these like category specific Ecosystems that's popping up and there's Many many really great pains and Ecosystems that's just within that Category that would make a lot of sense For us to expand into and number two There is like a lot of ethereum Innovations like around l2s that was

Recently launched the arbitrum optimism Base and all that and we're very very Fascinated about the Innovations there And then lastly I think if this trend With BTC continues I don't think the L1 Can support all of the demand that there Is for BTC so there's a whole kind of Unexplored space around BTC l2s as well So yeah too much choice too much Opportunity not enough not enough time To explore them all actually all right Fair enough we'll see we'll see my last One for you jack is are you worried About NF trading volumes being down not Really yeah I have to say maybe that's a Counting intive thing look of course Market conditions now compared to a year Ago is very different right but I would Say that's pretty true for for a lot of Sectors in technology not just crypto And not just nft right there's you know Been a rebalance in the market but in a Sense like nft trading volums go up and Down there's Market volatility that's Just part and parcel of the business That we're in and that's just something That we have to you know manage to play In this industry but our mission has Always been more about focusing on the Long term right so how can we onboard More users show them the value of nfts By focusing on a simple delightful Product showing the utility of this new Technology so where we're lucky enough

To have the runway to really uh plan for That longterm and yeah not worry too Much about the short-term volatilities Here yeah okay that's actually something I did want to talk about because like Obviously we had the nft craze in 2021 Early 2022 is Market was going pretty Wild I guess for context I wrote down Some of the numbers but the total nft Sales had an all-time high in January 2022 around 5.9 billion and in the Current month it's about half a billion 4 51 million that's like Crypt slam data If anyone wants to go look that up and Then it's also down from more recent Highs of about 1.1 billion in February And it's like important to note this is Across all marketplaces all blockchains Etc it's not just magic Eden but like The whole nft ecosystem so kind of Building off what we were just talking About my question here is how does magic Eden's strategy account for you know Lower sales volume and what are you Doing to mitigate that risk in that Long-term Vision that you were just Talking about like are you going to Expand Elsewhere for more revenue or is It going to continue to focus in this Area and you're just going to kind of Head yourself so when it does drop you Have a little leeway yeah that's a good Question I mean those volume drops are Definitely there for nfts I think that's

Also there for D5 fungible tokens wide Swaps of you know the crypto industry For us I think there's a couple of Thoughts here right so number one there Is definitely just a good internal risk Management and internal Prudence there Is definitely a piece around just Managing the burn and all of this and You know we've been kind of hitting and Actually over hitting all of our like Finance forast so kind of had any issues There and yeah feel very very lucky and Privileged to be in that position and Number two is just continuing to Innovate right the space despite all of The macro changes that has caused Volumes to go down actually we think the Pace of activity and demand is still Super super healthy give you two Examples of that you know just last week Sou be sold like 11 mil of nfts and they Sold like one piece for 6 mil right so The demand for digital Goods is there It's irrefutable if it's still there in This type of Market it's going to be There in a different type of Market Condition as well and from a magic Eden Perspective another example would be Like for BTC at ecosystem ecosystem went From Zer to 250 mil traded in the space Of a few months and we've done about $200 million of trading in like three Months so all of that is in recognition That hey the demand for digital goods

And digital ownership is still really There and we but mag should continue to Innovate and take big bold bets to grow Into these new use cases accommodate and Support this kind of new innovation and Then the last thing I would say is you Know we have some really long-term bets As well right so we we've always been Super interested in like nfts with Utility in gaming where gaming has this Huge mainstream use case right and Digital ownership digital Goods digital Commerce these are Concepts very well Understood in that industry already and The these are you know W ski making Continue to make really big Investments And big pushes into gaming and as an Example this year we were at GDC which Is like the premier gaming conference And we were one of the only major nft Market places there did a lot of Partnership work with very elite like With three games like azra where you Know the founders made like Star Wars Games with millions and millions of Users before you know whereas in that Sense we're still betting a lot for the Long term where we think the big up high And the Bigg opportunity is still yet to Come yeah yeah earlier this year Mt Magic Eden also extended support to Launch magic Eden games which is Something you kind of just brought up Now so I guess what is been transpiring

There and how do you see like the gaming Ecosystem becoming a key part of your Business model how do you decide what Games are featured there I just have Like a bunch of questions on that one Yeah that's right yeah absolutely don't Worry yeah so I think for gaming the our View on it is the Market's very exciting It's definitely going to be here but It's still a little early as well so We're trying to calibrate what is the Right products to have within this state Of the market so to double click on a Few of those like statements number one We see a very very healthy Creator Pipeline into gaming so we understand There is a lot of inbound interest and Existing interest of web 3 gaming Developers and for us that's always been A leading indicator that like an nft Ecosystem and Industry is going to take Off with the inflow of creative interest And the inflow of interest and these Creators they are just getting like more And more credentialed in some ways like Raising more money with even more gaming Production expertise and so on that Makes us super optimistic about the Space nevertheless the other piece to it Is yeah gaming development just takes a Long time that industry is very Different to like art nfts where you Know the production cycle can be a lot Faster so we just have to be a bit more

From our perspective we're being a bit More disciplined and patient about think About when the best games are going to Launch and what is the right product to Launch for the that stage of the market As for mag right now the thing that We're focusing on is really trying to Help web3 Gamers and web3 gaming curious Folks discover these games because a lot Of these games are not yet launched and That's why we launched this product Called the mag Eden gaming Hub where you Can follow news about web 3 games check Out certain leaderboards of things That's dropping soon see commentary and It's more Discovery portal and then once The games are alive we'll have some Other products to help those users Experience the utility of nfts in those Games you think gaming will kind of be The opening door so to speak for Mainstream audiences to get into web the And especially nfts I think it could be One of them yeah I think we we Definitely have that conviction whether It'll be the only one or whether it be The biggest one it's really really hard To say I definitely feel that yeah Crypto has a way of like humbling like Predictors right like you know it always Comes from this really weird esoteric Thing and then it looks like a toy and Then becomes really huge and that seems To be the story of crypto you know from

Past precedent Logically and and from what we see would We definitely think that gaming could be Really really big but whe it would be The only thing or whether it would be The biggest thing we're not sure and of Course the best case scenario would be Like there is multiple pillars that is You know making web 3 and huge and That's actually just going to be better For all of us are there other use cases Or sectors within crypto that you're Keeping an eye on that would be kind of A propeller to in addition to web 3 Gaming yeah I think there's a couple That you know we've always been pretty Interested in just like having a look at But haven't it's not super close to our Business I think number one is at least For the nft use case like something like Ticketing would make a lot of sense Where you know there is already Secondary markets for ticketing the Pricing is not very efficient but then It's also a use case that's very easily Understood when tickets could be applied The another one is just social and I Think like different companies have had Different cracks at trying to do web3 Social but it's still a space that has a Lot of wi space to be explored but you Know we're very interested in apps like Lens protocol Fox and stuff like that That have you know R new takes on like

You know how content and how people Engage with each other in web three but Then how like value from that content Distributed in a more Equitable way I Think our thought would be that more and More people are flowing into web3 there Is more and more onchain users the data Just shows that and as more and more Users flow into this ecosystem of course Some of the behaviors that we always Want which is connect with each other You know communicate with each other Those needs will want to be manifested Somehow and you know when there's enough Of a big Market there we think you know Very very cool Innovations will come Along as well all right I also had Another question for you jack to shift Gears a tiny bit there was a time when Royalty fees were all the hot gossip and That was what everyone was talking about Whether or not nft should have them is It fair to creators is it better for Platforms etc etc and I'd argue that Conversation has kind of died down but As the reporter I am I'd love to just Follow up on that uh where does magic Eden stand on all of this you think that It's an Ever Changing position or that The nft ecosystem will find its footing And stay there when it comes to royalty Fees yeah absolutely digging up the old Controversial Topics yeah I just want to

Know no fair not fair enough so a couple Of takes there it's true that I think The topic today feels like it's died Down it's settled somewhat and even you Know magic you didn't admittedly we even Had some controversial takes on this Before right where we're supporters of Royalties then we made a a very Controversial move optional royalties And actually we were the yeah we were The first major Marketplace to do that Before open SE and before blood it you Know launched on E and we c a lot of Flat admittedly but I actually think you Know looking back now that was a yeah it Was a very tough and controversial Decision but it actually turned out to Be the right one in the sense of where The industry was moving it was very hard To fight Market forces and economic Forces when underlying technology itself Could not protect roties so that's like One I guess Reflection Point on this Even though it was controversial we Thought it was the right decision I Think it's been proven out that being Said though I think there's two things Number one we deeply still believe that Supporting creators is absolutely Critical to the ecosystem and at least In Soul you see the rise of these smart Contract enforced royalty Solutions so There is this thing called P nfts it's a New standard new technological standard

Within soul that enforces royalties at The standard smart contract and protocol Level and mag are very proud supporter Of that standard and we partner with you Know the publisher of that standard Metlex to support it and we're very Proud to support creat a monetization in That way secondly we have always put a Lot of thought and investment into one Of our creator products which is called Launchpad and we're one of the first Marketplaces to do that on average Creators make around over $300,000 in Revenue when they become a Launchpad Customer with mag Support over 500 Creators and you know we will continue To invest in those kind of products that Give Creator monetization opportunities To creators outside of royalties outside Of our royalties context and we still Want to support creators absolutely that Sense and then the you know the last Thing I'll would say is you know the Book is still yet to be written on What's the best way to support creators And give them the monetization Opportunity in nfts I think the beauty Of nfts and web 3 is it's like Programmable right it's like a Lego Block where you can code anything bu Yeah you can you can put something into Software as far as your imagination can Permit it and we are still yet to see I'm sure you know the best Innovations

Are still yet to come for Creative so in That sense we'll always be very excited To support the future there okay Jack to Wrap things up what is one word that you Would use to describe magic Eden or that You want it to be known for long term I Think one word would be bold You know Despite everything within the you know The volatility of the crypto or nft Market I think Magen would never lost Out DNA of being bold right of trying to Push the balance and of trying to test Something new so when new technologies Come along we would like to be at the Forefront of trying them out innovating On what the use cases and then Ultimately Translating that into how to Give users delight and give value so Yeah we would love to be known as as That company okay great and my last Question that I always like to ask gu is Can you leave us with a piece of advice Perhaps for nft collections or something In that realm oh so as in like for Listeners in relation to nft collection Yes I think just pick something that you Like you know there's a lot of talk I Think in this kind of Mark around trying To make money from nfts and so on but Really the soul of the space and the Spirit of what made it so interesting in The first place was it's about art it's About culture and it gives you this Emotional resonance right that's a bit

Apart from like the financialization Aspect of it which is so common in Crypto just pick something you like it Doesn't have to be expensive doesn't Have to have you know great prospects But if you pick something you like you Know you'll never feel like you up BR I Like that I think I feel the same way You know if I like a piece of art in my Apartment I'm always happy to look at it So I think it could apply to nfts too Absolutely yeah yeah great well amazing Jack thank you again for coming on the Show awesome thank you so much Jackie Thank you for giving me the TR we'll be back next week with Conversations around what's going on in The wild world of web 3 with top players In the crypto ecosystem you can keep up With us on Spotify Apple music or your Favorite pod platform And subscribe to Our companion newsletter also called Chain Reaction links to the newsletter And stories we talked about can be found In our show notes and be sure to follow Us at chain reaction on Twitter chain Reaction is hosted by myself jacn Melanic and produced by Maggie stamitz With assistance from Yad karney and Editing by Kell Bryce Durban is our Illustrator and Henry pette manages Tech Crunch audio products thanks for Listening in see you next Time