How Magic Eden has been deceiving the public to seem like the most successful NFT marketplace on Solana
In the last few weeks, Magic Eden has risen above all other Solana NFT marketplaces as a fan-favorite. Ask anyone on Twitter or Reddit, jump into any collection’s Discord server, and the answers will heavily feature praise for one “ME”. This got me interested, of course, and I started researching. Pretty soon, it became startlingly clear that the numbers don’t match up.
Here’s what I mean:
How can one marketplace (and not even one that’s existed since the beginning) record such enormous numbers while the NFT space is experiencing a bear market phase? How can their numbers so drastically surpass all other competitors, even a veteran like Solanart? Has there been a major shift in the past month, or is there something more sinister lurking behind this magical rise to supreme power?
I’m not one to take “facts” at face value, so I did what any self-respecting crypto sleuth should do when faced with a mystery: I started digging. And the deeper my shovel struck, the more unpleasant truths surfaced.
The public (read: You) should be aware of the truths that are hiding in the Magical NFT Garden of Eden. What you’ll find below will seem almost like the plot of a movie with a grand finale at the end, so get some popcorn and settle in. Let’s jump down this rabbit hole I’ve dug together and see how deep the deception runs.
Tricking users with misleading UI
Everyone who’s into NFTs knows that (trade) volume is the basic metric by which you judge the success of a collection and the success of a marketplace. But did you also know that Magic Eden displays the volume of all marketplaces?
When you visit a collection’s page on ME, you can see the four major metrics: floor price, total volume of trades, average sale price and number of listed NFTs. What’s interesting about one of these, namely the ‘Total Volume’ metric, is what hides behind a mouse-over. Less informed ME users would look at the numbers and instantly decide that this is the place to be, whether to buy or sell NFTs, because “Magic Eden has the biggest volumes”.
But when you leave your cursor hovering over the ‘Total Volume’ metric, it reveals the full text otherwise indiscernible from the card itself, and it says (pardon the caps), ‘TOTAL VOLUME (ALL TIME, ALL MARKETPLACES)’.
Interesting.
So the volumes displayed on ME aren’t just ME’s volumes? Correct. The numbers actually represent the sum of volumes across Solana NFT marketplaces. This is why, to speak plainly, “Magic Eden has the biggest volumes”. And that begs the question… Is Magic Eden intentionally using these tricks to mislead the public in order to draw more customers?
Let’s keep digging.
Presenting volumes of other marketplaces as their own
I had already started jotting down notes about my discoveries when Solanart tweeted this:
Is it just me, or have they also noticed that something is amiss? It seems they feel as if someone is stealing their data and presenting it as their own…
But let’s focus on Degen Apes and the ‘Activity’ tab on their collection’s page on ME.
Notice the transactions that end with XX.00204428 or XX.002044279? These are all Solanart marketplace transactions. No wonder they’re upset.
For fellow crypto sleuths who want to follow this trail of breadcrumbs themselves, here’s a link to the first transaction from this list to get you started:
Now, if you dig deeper into other collections that are traded on both marketplaces, you will notice that the volumes presented on ME and ME’s actual volumes differ significantly.
Here are some numbers I got while analyzing their own 24h activity list and doing some simple math:
- Presented volume: 1090.929406 SOL
- Actual ME volume: 64.73 SOL
Since these numbers change every minute, I encourage you to do as I did: don’t take anything at face value and do your own research. To do your own calculations, all you need to do is copy data from the ‘Activity’ list of a collection, paste it into Excel, and compare the numbers ending in XX.0020442X (Solanart sales) and the round numbers (ME sales). Let Excel do all the “math-ing” for you.
Showing false statistics on DappRadar
This is where things start getting even more intriguing.
Magic Eden, the second NFT marketplace in the world! That’s quite impressive. And I can understand why there are so many comments singing praises about this marketplace. With a volume of $20,000,000 per day? They’re absolutely leaving their Solana competitors in the dust.
But are they?
To understand how Magic Eden (and by association DappRadar) is deceiving the public, you need to first understand how DappRadar collects data and what these numbers mean. This is where more technical skills are required for research, so here’s a quick guide:
- ‘USERS’ refers to the number of unique wallet addresses interacting with a dapp’s smart contracts; meaning, these are not users, but wallets interacting in all types of transactions (they could easily be bots, too).
- ‘VOLUME’ refers to the total amount of incoming value to a dapp’s smart contracts; meaning that the value is calculated with little comprehension of what that dapp is doing with the money and how.
DappRadar counts every SOL that interacts with ME’s program as volume. Every SOL.
So the number you’re reading is not the actual volume of sales. It is actually the amount of SOL going through the smart contract. As Magic Eden enables both direct purchasing and bidding, DappRadar is showing the sum of all these transactions as one number. On top of that, bids are calculated twice. Once when a bid is placed, and again when it is removed.
To make matters more interesting, every time a bid is placed on ME, a new wallet is opened. And a new wallet equals a new user by DappRadar’s calculation.
So, if a marketplace would like to boost its volumes on DappRadar, what would it do? Naturally, it would boost the bids, as this generates volume twice and increases the number of “users”.
Here’s the 24h data I pulled after analyzing all ME transactions (at the time I’m writing this):
- Volume: ~23,204 SOL
- No. of NFTs sold on ME: 16,695
- No. of bids placed: 6,703
- Volume generated by bids (both placed and withdrawn): ~19,059 SOL
- Volume of sales made through bids (bids that were accepted): ~1,225 SOL
- No. of sales made through bids: 446
Interestingly enough, the time between bid placement and bid withdrawal is, on average, around 1 minute. Does anyone else smell bots? But then, who could run these bots?
Magic Eden hasn’t released any APIs exposing how the marketplace works. It’s centralized since all NFTs are held in one ME wallet. And don’t even get me started on the dangers of this approach… If a hacker decides to have some fun and gets control of a single private key, all NFTs from that wallet could disappear before you can blink.
In short, no one but Magic Eden itself could bot its own marketplace.
And do you know what’s so cool about blockchain? You can’t hide these things. Once dirty play is revealed, nothing can wash off the filth, it stays there for eternity.
But, I digress.
Things are still warming up, the grand finale is yet to come.
Deceiving the public with incorrect volumes
The power of wording is quite impactful.
But I didn’t catch the part where they inform the public that they’re boosting “transaction value” with bots, bids and other suspicious strategies… Anyway, isn’t that 1M SOL from their own funds?
And on that note, we enter the endgame.
Launching their own collections to boost volumes
One detail I’ve seen overlooked in this space is how easy it would be for a marketplace to launch its own collection as a “stealth mint” and present “trading” of that collection as if it was a real collection. All that would be left to do is use foul play to boost volumes to get customers investing in a scam.
Take a look at these:
With a volume of over 3,000 SOL, you’d think, “This must be something big! There must be a strong community behind it! There must be a lot of traction for this collection to reach 3k in volume on a secondary market in less than a day!”
Well, you’d be wrong.
Stealth mint, “SOLD OUT UNDER 1 MINUTE”? In today’s market? With a little over 1,000 followers on Twitter and no website?
Even NFT “n00bs” know it’s impossible to sell an entire collection in a bear market with no community to speak of. Not to mention it’s virtually impossible to reach 3,000 SOL after minting 999 pieces (speaking of, where exactly did that mint take place?). Ask any legitimate collection how hard it is to sell nowadays; mints last for days even with a 10,000-strong community backing you and following your project.
I have analyzed dozens of collections on ME (and so can you). This is the pattern I’ve uncovered:
- “SOLD OUT” in minutes
- Small number of Twitter followers or Discord members
- Stealth mints (sometimes even free mints)
- Marketplace on the profile is always ME
- No website
- Usually pixel art-style NFTs resembling one another
- Inexplicably large volumes
These collections make thousands in volumes everyday, yet no one knows about them, they were never in any NFT launch calendar and they are not present on any other marketplace, not a single one.
Need I say more?
If you were wondering why “Magic Eden has the biggest volumes”, there’s your answer.
How’s that for a grand finale?
Conclusion
The beauty of blockchain is that it holds no secrets. What I’ve dug up with just a little research is right there on the network for everyone to see. And what the evidence spells out is that Magic Eden is running an elaborate scheme, deceiving and scamming every member of the Solana NFT ecosystem.
The biggest victims are unsuspecting users who are being led to believe ME is “the place to be” in the Solana NFT space. Meanwhile, traders are unknowingly investing in rug pulls and trading on a platform with few authentic sales, and legitimate collections are forced into exclusive deals, strong-armed by Magic Eden’s bot army. To make matters worse, this cycle of lies is propagated by platforms like DappRadar who present misleading statistics without doing due diligence to protect its own users from fraud. After all, if one marketplace can fix its stats so blatantly, what’s stopping all others from doing the same?
It is my genuine hope that this article provokes other crypto sleuths and true blockchain enthusiasts to engage in more in-depth forensics on Magic Eden, DappRadar and any other dirty players in the ecosystem, and share their findings with the rest of the world. This space deserves so much better.
I wrote and published this article anonymously, as I fear that if my identity is revealed, my other writings could become a target of Magic Eden’s paid bot army populating Twitter and Discord (every marketplace has them and they are impossible to miss).
As I already said, I don’t expect you to take all I’ve pointed out here at face value. In fact, I urge you not to. I beg you to DYOR and compare notes. See if we all come to the same conclusion.
