The state of business
Tough decisions need to be made in order to keep the ScalpEmpire platform alive during the bear market.
History of the project
ScalpEmpire started it’s journey somewhere in Nov 2021. It began with a simple analytics tool for newly listed collections, offering some rarity indicators based on the existing MagicEden listings, before official project rarities, indicating trading opportunities. It was build by Nftoflip (the trader) and 0xMito (the dev) and was leveraging scraping ME website data with no history.
After about a week of public access, early Dec 2021, the first mint followed (the gold coin) and also a rudimentary browser based mint bot. The demand was pretty high as Solana NFTs were very thought after at the time and there was a lot of trading and opportunities for financial gains, so a second mint (the silver coin) followed early Jan 2022. This offered limited access to the tools, for those that did not need all the functionality.
Unfortunately tho, mid Jan 2022 MagicEden enforced their security which effectively cut off ScalpEmpire’s data collection which made the tool unusable. Due to this new technical challenges the old team decided it’s not worth the effort and wanted to abandon the project.
At this time I (kind3r) stepped in and offered to help since I had the technical knowledge, some potential solutions and some free time to spare. And indeed in a few days ScalpEmpire was back up and running. Still, this did not convince the old team to stick around and continue building and instead offered me the opportunity to take over the project.
This meant I could continue developing the tool but also pay for it’s running costs out of my own pocket until I would be able to find a way for the project to sustain itself. I knew this was a difficult task without any mint funds and the fact that holders were promised a lifetime of free access, yet I decided to take on the challenge.
The birth of Nestor
Since the royalties from the initial mints were still going to the previous owners, a new collection had to replace the old coins. Fortunately the Nestor art, inspired by a drawing made by Adurnam, was already in the making and I received it as a legacy from the old team. All that remained was to build a tool so that previous owners of the coin collections could replace them with the new Nestor collection. This switch happened during Feb-May 2022.
I continued to develop ScalpEmpire transforming it from a simple MagicEden scraper to a full on-chain NFT monitoring system, continuously adding new marketplaces and features that we all enjoy today.
You can read more about this in the interview we did with BearLabs:
ScalpEmpire also developed the adoption system (based on the now defunct Cardinal token manager), partnered with various projects to offer their collections access to the tool, developed a subscription and referral system for those who did not want to pay the full price to hold a Nestor, all extra sources of revenues besides the traditional royalties system. The Solana NFT market was in bloom and everything seemed great, for a while at least.
The bumps in the road
Unfortunately tho, this did not last long and in Aug 2022 we were hit by the Slope hack which drained both ScalpEmpire and our personal funds in the process. The only reason we were using Slope was because it offered mobile access to SE platform (at that time Phantom did not have an in-wallet browser and there was no wallet standard). A harsh and very expensive lesson to learn: don’t trust a software wallet and always keep your valuables on a hardware based device such as Ledger.
Barely recovering from this cold shower, the royalties debacle started which led to 0 royalties sales on most marketplaces. While royalties were never a big part of ScalpEmpire’s revenue stream it did affect us indirectly as other projects could no longer sustain themselves, partnerships were canceled and the whole Solana NFT trading ecosystem went down. This also led to building new NFT standards such as MagicEden’s OCP and Metaplex’s pNFT, leading to more complex integrations. It was also at that time AMMs started to become popular and had to be integrated so there was a lot of work to be done with more and more diminishing returns.
As we lacked the active community and marketing skills to promote our product we joined forces with the TAG team, improving their raffle site in return for marketing we did not end up receiving. Also, leveraging existing data collected by ScalpEmpire, the Snapshot, Airdrop and Royalties repayment platforms were developed. Unfortunately they see little usage, again, due to the lack of active marketing.
In an attempt to get an extra revenue stream I started looking into Polygon and Ethereum chains but due to cost optimisation, NFT marketplace activity is very centralised as explained in our previous article. So, another dead end.
Current status
Unlike some other web3 platforms, ScalpEmpire has a high running cost due to the nature of it’s operations and the speed of Solana blockchain:
- Indexing NFTs in collections and updating them when needed (RPC requires DAS API calls), fetching external metadata and creating thumbnails (network and cpu heavy activity)
- Continuously scanning the Solana blockchain for new marketplace activity (RPC heavy activity)
- Indexing the marketplace activity and pushing it to the users in realtime (DB and network heavy activity)
- Periodical refreshing owners for non-listed NFTs
During the past 10–12 months, there were a lot of optimisations to bring down the cost of the background operations without impacting performance of the platform while also adding new features.
Currently the cost of running ScalpEmpire averages around $2,400 / month split between:
- Backend (DB, scanners, frontend APIs) $1,600
- RPCs (indexing NFTs, scanning activity, updating owners, default RPC for users) $690
- Frontend hosting $70
- Other discord expenses $40
This does not include the countless development hours I put into this project and the community support done by bibise and Adurnam which nobody got financial compensation for. On top of that I invested over $4,600 of my personal funds with probably more to come to cover the costs for Sep 2023.
With the floor price around 1.3 SOL ($26) at the time of writing, revenue from royalties is basically non-existent, Adopt and Subscription programs shut down by Cardinal team (but there was very little usage for those anyway), projects not wanting to spend money on partnerships in this market conditions, ScalpEmpire can no longer sustain it’s running costs so it’s time to make a hard decision.
What are the options ?
Shut everything down
It would be the easy way out from an outsider’s perspective, as many of my friends suggested this option. But it’s not easy for me as I’ve invested most of my free time for the last 18 months in this project and I’m not about to give up on it just like that. Besides, restarting everything after a long break would take a considerable effort to recover all the past activity, both from a time and cost perspective.
Find an investor
Perhaps some other team is interested in taking ScalpEmpire under its wing until the market picks back up (hopefully in a year or so). I can continue maintaining the technical part and development just as I do now, but won’t be making the decisions anymore. There are a lot of synergies with other projects in terms of resources so there is a lot of opportunity for cost reduction and also in terms of marketing. If you are interested or know someone that is, feel free to contact us on our discord.
Change the business model
The lifetime access for owning an NFT model was flawed from the beginning. It is not possible to sustain a project that has monthly costs from an initial one-time purchase and some royalties. To make matter worse, I took over the project without any mint funds so there was no runway or room for error. This is why I immediately started looking for other types of revenues to generate and it worked fine for a while.
The most logical choice would have been to introduce a subscription type model where users would pay a monthly fee, but I did not want to break the initial promise of lifetime access without exploring other options first.
So how would that look like ?
According to our internal stats, there are about 500 unique monthly wallets. Assuming 60% will not be happy with this change, or it’s the same user with multiple wallets we are left with about 200 possible paying users. This would bring the subscription cost to something like $12/month ($2,400/200). It may sound like a lot when we look at the current FP but you are probably already paying multiples of that to services like Netflix, Disney+, Youtube etc. that only serve for entertainment purposes and don’t make a return on your investment.
Conclusion
During the past few months ScalpEmpire has been in maintenance only mode. Me and bibise needed to take a break and clear my head in order to figure out what the best course of action can be. It took a long time to write this article too as I wanted it to give a complete and transparent overview of the project in favour of the community, for both old and new users alike. It would be really painful for me to pull the plug on ScalpEmpire but I can’t afford (from a financial perspective) to keep it running in the current state either so even tho I don’t want to, things need to change. So by the and of the month a decision needs to be made.
Feedback is always welcomed in our discord, even tho we might not reply right away rest assured that we read all your comments.
Website: https://www.scalp-empire.com/
Discord: https://discord.gg/scalpempire
Royalties PoC: https://pay-royalties.scalp-empire.com/
Royalties API: https://github.com/kind3r/scalp-royalties-sdk
Snapshot & Airdrop: https://snapshot.scalp-empire.com/
