The Solana NFT space got a shot in the arm with the late April launch of Mad Lads, a buzzy profile picture (PFP) collection that led the market-wide charts. But something else happened amid the trading surge: upstart marketplace Tensor topped the dominant Magic Eden.
Tensor launched in 2022, but saw increasing activity after introducing trading rewards in March. Last week, it clinched majority market share by trading volume on Solana. Data collected by Tiexo shows a slight lead by Tensor over the last seven days, with Tensor commanding 45% of Solana NFT market share and Magic Eden under 44%.
Mad Lads helped push Tensor over the top, as traders apparently flocked to take advantage of its specific promotion around the NFT project rather than Magic Eden’s offering. But can Tensor maintain that momentum after waking Solana’s sleeping giant?
Tensor began picking up considerable market share in March as it launched “loyalty” rewards for traders, echoing the move by Ethereum marketplace Blur that helped catapult it over OpenSea in February. The startup, which raised $3 million in March in a round led by VC firm Placeholder, similarly bills itself as a platform for “pro” traders with what it says is a faster, richer interface.
The Blur comparisons are intentional. Tensor looks and feels much like Blur, albeit for Solana, with a similar-sounding rewards initiative. The startup hasn’t specifically said that it will launch a token, but given that Blur gave out hundreds of millions of dollars worth of tokens in February and said that it will continue doing so, it’s no surprise that traders are intrigued.
Tensor’s market share steadily grew over the last couple of months, co-founder and CTO Richard Wu told Decrypt, but the upstart only leapfrogged above Magic Eden last week after the Mad Lads frenzy took hold.
Magic Eden also offered special promotions around Mad Lads NFTs. Magic Eden offered zero marketplace fees and also said it would give out 2,000 SOL (currently about $43,700) to airdrop to Mad Lads traders over the first 30 days after launch. It later said that it redistributed over 5,000 SOL ($109,400 as of today) worth of Mad Lads trading fees back to users.
Tensor, on the other hand, said that it would divert all of its marketplace fees on Mad Lads trades for the first 90 days to buying up “floor” (or the lowest-price) NFTs from the project, and then give them away via a raffle to traders. Today, Tensor tweeted that it has used 4,280 SOL ($93,650) worth of fees to buy up 58 Mad Lads NFTs to give them away to top traders.
1/4 ITS THAT FOCKING TIME AGAIN LADS 🎒📦
(Reminder: we're giving back ALL of our trading fees on ML for 3 MONTHS to 100% LOYAL USERS)
⚡️~4280 SOL In fees used to sweep Mad Lads in just over a week of trading
⚡️58 Lads given away to MAD Tradooors TOTAL
— Tensor | Pro NFT Trading 📈⚡️ (@tensor_hq) May 1, 2023
Whether it was the promotion or an interface targeted at heavy traders, or perhaps the pairing of both, Tensor ultimately came out ahead as Mad Lads ruled the Solana market.
“If you show people that you're truly about giving back to the community, and trying to make your product the best for Mad Lads or for the next NFT project,” Wu said, “then people will come and trade on your platform, and people will align with a Tensor versus a Magic Eden.”
War of words
There’s an “us versus them” dynamic in Wu’s comments that’s already been resonating across the Solana NFT community on Twitter for days. Tensor’s sudden rise to the top of Solana has inflamed past divisions that emerged over Magic Eden’s approach to the open-source Web3 ethos, as well as its moves around optional creator royalties last year.
On Friday, Magic Eden apparently discovered that Tensor was utilizing its content delivery network (CDN) to populate NFT images on the Tensor marketplace.
Magic Eden replaced the artwork on Tensor with images showing the Magic Eden mascot and logo, and tweeted, “Hey [Tensor], wen image CDN? We replaced some images on your marketplace. Just a harmless prank hehe. Let's build.”
tensor using magic Edens cdn to deliver images, so magic eden fucking w tensor by replacing the images on low volume collections pic.twitter.com/YYN4hMGWaG
— mifellas bad and based little helper (@MMifella) April 28, 2023
Magic Eden deleted the tweet by Saturday following community backlash. Over the past several days, the vitriol has been flung back and forth on Crypto Twitter between the two camps and their supporters, and Tensor’s co-founders have themselves criticized Magic Eden and retweeted other critical tweets about the giant in the Solana space.
“They were in the dominant seat for so long that they felt they didn't need to do anything,” Tensor CEO and co-founder Ilja Moisejevs alleged in an interview with Decrypt. He believes that Tensor’s product is better than those of previous challengers, but also suggested that Magic Eden lost support in the Solana space as it rapidly expanded to Ethereum, Polygon, and Bitcoin.
“I think the community is also a bit upset with the way they've behaved in the last six months, because Solana has clearly gone through really turbulent times,” Moisejevs said.
He suggested that some Solana projects “doubled down” on the space amid the falling price of SOL and fears over the future of the community late last year, and believes Magic Eden did “almost the opposite” in pushing NFTs on other chains.
“They sort of took their foot off the gas when Solana was at its lowest point after FTX [collapsed], and that just rubbed a lot of people the wrong way,” Wu added. “If you're so bullish about building up Solana, why would you leave and build elsewhere at a time when Solana needed people to step up?”
Magic Eden responded to the social media pushback today, as marketing head Tiffany Huang told The Block that the startup is “excited to refocus back on Solana, which is our home,” and it “intends to show the Solana community that we have still got their backs.”
Huang clarified to Decrypt that Magic Eden’s renewed focus on Solana will come via product features and partnerships, including “innovating” on its Diamonds rewards feature that launched in late March as Tensor was on the rise. It will also include “programs that support creators and collectors,” she added.
She also pushed back against criticism by Tensor’s co-founders about Magic Eden’s current closed-source marketplace model, which requires it to co-sign transactions. That throws a wrench into how marketplace aggregators incorporate Magic Eden listings, and raises other concerns about security and composability. But Huang suggested that it’s essential—for now.
The only way for Solana to become #1 is if all NFT protocols are permissionless.
Challenge to @MagicEden: remove your co-signing.
Let's grow the pie together, not fight for the scraps. https://t.co/G5Ua4DNVIw
— Richard | Tensor 🎒⚡ (@0xrwu) April 29, 2023
“The Tensor team knows and understands co-sign is not just an anti-aggregator tool—it's actually a critical part of some of [our] other core marketplace features,” she said, pointing to a tweet where Wu acknowledges as much. “The goal here is to become more open, but we just need to sequence these events so they don't disrupt our marketplace product.”
As the Mad Lads launch hype cools, the remaining question is whether Tensor can stay on top in the Solana space. Just before publication, Magic Eden had a slight lead in rolling 24-hour trading volume per data from Tiexo—but Tensor led that chart as recently as late afternoon today.
Despite the shade, pranks, and gripes traded between the camps—not to mention the market maneuvers over the last week—both startups suggest a more cooperative tone going forward. They both want what’s best for Solana and its community, they tell Decrypt, and wish to grow the market for everyone involved, including each other.
“We should all be seeking to build the pie with excellent user experiences and ingenuity to grow the space,” Huang told Decrypt, rejecting the notion that Magic Eden should fend off upstarts. “I think we're two reasonable companies, at the end of the day, trying to grow Solana.”
“We want to see Magic Eden do well,” Tensor’s Moisejevs said. “That's because we think that if Magic Eden does well, then Solana can do very well. At Tensor, we would rather have a smaller piece of a 10x larger pie than have a larger piece of… ultimately, a pie nobody cares about.”