Magic Eden wants to drag NFTs from ‘ultra bear market’ with $1m creator fund

In a bid to jumpstart the struggling market for nonfungible tokens, NFT marketplace Magic Eden is dangling a $1 million pot for projects on the Polygon blockchain that can show they are more than just a collection of expensive cartoon avatars.

“VCs are not necessarily super active in writing checks to web3 projects, let alone anything in the NFT space,” Chris Akhavan, head of gaming at Magic Eden, told DL News.

“We thought we could help fill that gap and basically support some really strong teams out there that want to innovate and want to build in this ultra bear market and ultimately help the whole collective ecosystem find the next path towards growth, towards more sustainable projects.”

Like other digital assets, NFTs sank in 2022 after the Terra blockchain collapsed, precipitating the current bear market. The value of weekly trade volume is down more than 90% compared with its pre-crash figures, according to data compiled by Hildobby, a pseudonymous data analyst at crypto venture fund Dragonfly.

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The NFT market weakened even further in 2023, suggesting its troubles might be deeper than the tepid demand for digital assets writ large.

The number of weekly trades, which held steady post-Terra, are down roughly 75% this year. The number of weekly trades is also down sharply in 2023.

Amid this wreckage, Magic Eden is hoping it can find — and nurture — the next big NFT project. And it’s betting it won’t come from a Bored Ape Yacht Club-style collection of profile pictures.

“One thing that I feel is probably — I won’t call it stale, but is maybe capped or limited and we don’t necessarily need a lot more of, is your traditional 10,000 [profile picture] collection with no utility,” Akhavan said.

“We’re hoping to see projects that have really like starting to introduce some more interesting utility beyond being a PFP project.”

Akhavan praised those early projects for drawing attention to the asset class. But the market for profile pictures is likely saturated, he said.

“Our belief is this market is going to come to life and it’s going to have another bull market,” he continued. “Most likely, it’s going to be because something new gets created.”

The $1 million will be split among applicants who will receive funding based on the quality of their pitches and their needs. Akhavan estimated that most grants would be worth at least $10,000, but he kept open the possibility that a select few could be given more than $100,000.

Perhaps more important than the money, Magic Eden will also offer grantees mentoring, which he likened to “hand holding to the absolute max.”

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Magic Eden has assembled a group of successful NFT creators on Polygon to serve as mentors and advisors to selected teams, who will help with marketing, technology, and any other issues their mentees might encounter.

“More often than not, the failure — outside of [not] having the capital for these great big ideas — is the integration with the community aspect,” Johnson said.

“There’s this unique way of community building that very few people actually understand, and with NFTs being such an attention economy, you have to obviously have a strong grasp of the overall community sentiment.”

NFT projects also have a reputation for over-promising and under-delivering, Johnson said.

“There are clear failures that everybody’s made at some point in this space,” he continued. “Hopefully, through this advisory cohort and who we [at Magic Eden] have, we can help try to minimise that for those that are coming into this creator fund.”