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Hello!
I made the mistake of going to Trader Joe’s on 6th Avenue right after work yesterday. I thought I’d never make it out of the crowd of shoppers in business attire or yoga clothes.
My neighborhood grocery store is almost never crowded, and you won’t hear people yapping into their headphones about making deals, either. That’s why Brooklyn is the best borough. But I digress:
Solana NFT Marketplace Hacked
Yesterday, longtime Solana NFT marketplace Hyperspace announced it would shut down its business on September 17. It was the latest salvo in a long-running slump in the NFT space, which has yet to recover from the massive crypto crash of 2022.
Hyperspace launched in September 2021, as hype around the nascent Solana blockchain was growing and SOL was approaching what is still an all-time high price. At the time, it was Solana’s NFT tracking tool. In February 2022, shortly after NFT marketplace OpenSea reached a $13.3 billion valuation, Hyperspace raised $4.5 million in a round led by Dragonfly and Pantera.
Since then, Hyperspace has operated an NFT marketplace and launchpad, and added availability to the Sui and Avalanche blockchains. But Hyperspace never reached hyperspace.
Industry sources and a Hyperspace co-founder told me that Hyperspace’s downfall was due to the company’s failure to find a meaningful niche in the NFT market, which has yet to regain its vaunted status in 2021.
Hyperspace co-founder Kamil Mafoud told me he doesn’t see the platform growing big enough to justify venture-scale returns. He said Hyperspace has tried to adapt many times, and the platform has had decent success “by being siloed.”
“But at least for me personally as a founder, I don’t want to be in a situation where I have to fight the market. It’s much better to go attack a bigger market and grow that way,” Mafoud said.
When I asked what that larger market would be, Mafoud said he and his team hadn’t decided yet, but acknowledged that “NFTs have a much smaller TAM than almost all other sectors of crypto.”
It certainly seems to be true. NFT trading volumes remain a fraction of what they were in 2021 and 2022. Popular NFT marketplace Magic Eden is planning to expand beyond NFTs. Starbucks, X, and GameStop have all shut down NFT initiatives in the past few months, while lawsuits have been flying in over ill-fated fees. There’s already a pretty big graveyard of past Solana NFT startups. Oh, and the SEC served OpenSea with a Wells notice last week.
It makes you wonder how NFT platforms can be a profitable business these days.
Bangerz, an anonymous contributor to NFT platform 3.land, said NFT platforms may need to adjust their expectations.
“Using NFTs as a powerful way to raise money to do something is just super cool,” Bangerz said.[A]rt is fun and culture is fun… NFTs are fun when they’re not $300 lol.”
Mafoud said something similar when I asked him about the success of memecoins compared to NFTs.
“NFTs are a scarce thing,” Mafoud said. “And they were very good until they weren’t.”
Mafoud added that he will remain in the Solana ecosystem with his next project, and that Hyperspace has “lost some of its focus” on Solana by moving to other networks.
– Jack Cuban
Zero in
I’ve been looking at NFT Pulse a lot lately. It has really nicely aggregated NFT data.
Here you can see how Solana, Polygon, and Base have taken NFT market share from Ethereum over the last two years. At the start of 2021, the NFT market was mostly all Ethereum. Today, Ethereum has 33% market share, while Solana has 28%.
And despite the challenges facing NFT marketplaces, some are doing well, most notably Solana. Magic Eden has generated $56 million in trading revenue over the past year, while OpenSea and Tensor have collected around $26 million and $12 million, respectively, rounding out the top three, according to NFT Pulse.
– Jack Cuban
One good DM
Message from Adam GutierrezSenior Developer Support Engineer at Phantom:
