Leading venture capital firm Sequoia Capital participated in a funding round by NFT marketplace Magic Eden. The VC firm stated that Magic Eden utilizes a better blockchain for NFTs compared to OpenSea, the Ethereum-based NFT marketplace giant.
Magic Eden Raises $27 Million
The Solana-based NFT marketplace, Magic Eden, announced that the platform raised $27 million in a Series A funding round led by Paradigm, which is also OpenSea’s major backer. Other participants included Sequoia Capital, Greylock, Solana Ventures, and Electric Capital.
Magic Eden, launched in September 2021, was co-founded by Zhuoxun Yin, a former product manager for the cryptocurrency exchange pioneer Coinbase. The platform has grown to become the largest NFT marketplace on the Solana blockchain, and is the ninth-largest NFT marketplace overall.
According to data from analytics firm DappRadar, the platform’s total trading volume since its launch is over $736 million.
The news of Magic Eden’s funding round comes shortly after they partnered with sporting entertainment platform Overtime to unveil an NFT collection that improves fan engagement and offers exclusive experiences.
Magic Eden has also launched a decentralized autonomous organization called MagicDAO which allows members to vote on various NFT collections featured on the platform’s homepage. Currently, Magic Eden has nearly 60 employees across the globe and is planning to open its first office in San Francisco in April 2022.
Meanwhile, the news of the Series A funding comes shortly after the platform hit a major milestone. On March 12, Magic Eden revealed that their NFT marketplace surpassed $1 billion in total secondary trading volume, a huge feat for a company only six months old.
Sequoia Capital Partner Favors Solana Over Ethereum
Meanwhile, several prominent venture capitalists are betting big on Magic Eden. OpenSea, which is the number one NFT marketplace, uses the Ethereum blockchain; however, Sequoia Capital partner Shaun Maguire said that relying on this blockchain is a weakness for OpenSea.
According to an earlier Bloomberg report, Maguire hopes that Magic Eden will take full advantage of Solana before OpenSea makes their move on this same blockchain. In Maguire’s words:
“The bet was that they would move fast and that they would capture that advantage before OpenSea would be able to go into Solana.”
Solana, which is dubbed as the “Ethereum killer”, facilitates faster transactions at a cheaper cost compared to Ethereum. While most NFT owners have not started utilizing Solana, Yin believes that the blockchain has an edge over Ethereum in areas like video games, where NFTs could be traded frequently.
The Magic Eden co-founder said that “gaming NFTs will be on places like Solana. They’re not going to be on Ethereum.”
Magic Eden’s $27 million raise is smaller than OpenSea’s Series C funding earlier in January 2022. Led by Coature and Paradigm, Open Sea raised $300 million, which saw its valuation shoot up to over $13 billion. But the Ethereum-based NFT platform has had some misfortunes lately. In January, a hacker took advantage of a bug on OpenSea, which allowed NFTs to be sold at discount prices, thereby causing massive losses for holders. The platform later reimbursed affected users $1.8 million.
OpenSea also suffered a phishing attack in February, with the hacker stealing users’ NFTs. Responding to the news, co-founder Devon Finzer said that internal investigations estimated the loss to be around $1.7 million. One of the affected users, Timothy McKimmy, sued the company for $1 million.