Magic Eden is the largest marketplace in the ecosystem, and recently raised a war chest of funds that valued the young startup as a crypto unicorn.
Now we know how the firm is spending some of that cash: it has launched a gaming-centric investment arm.
Today, the firm revealed Magic Ventures, a venture investment arm that will focus specifically on Web3 gaming. To pursue that mission, the company has hired Tony Zhao—formerly of Chinese gaming giant Tencent—as its new head of gaming investments.
Zhao told Decrypt that Magic Ventures’ investments will be “purely strategic in nature” and provide support to developers of NFT-powered video games, rather than approach investments with the expectation of making a return on the funds.
“We're not thinking about returns—never have and never will,” said Zhao. “It's just to align our partnership together, right? We truly want to be the go-to partners for these developers.”
When Magic Ventures signs game developers, they’ll enter a Magic Eden ecosystem that offers a launchpad for primary sales of new NFTs, as well as the secondary marketplace for ongoing sales. The Solana-based marketplace currently commands 90% or more of Solana’s entire NFT market share. Zhao said that the goal is to help ease the entry of game makers into the Web3 ecosystem.
“Developers can focus on one thing that they know how to do, which is to build great games,” he explained. “We’ll help them to take care of all the Web3 elements and to help them onboard into the ecosystem.”
Zhao said that Magic Ventures has already made some investments with more on the way, but would not disclose which projects or startups it had invested in.
He added that there’s no fixed number in terms of total dollar amount that will be invested across projects and that the typical investment size is “pretty small” given the strategic nature.
“We're not here to fund the entire development [of games]” he said. “Our value-add is not capital—it’s all of these infrastructure solutions and an NFT experience that no one else in the market can provide.”
Along with the venture arm, Magic Eden's Eden Games division announced that it has reached agreements with the makers of several Solana games—including Aurory, Mini Royale: Nations, and Genopets—to power in-game NFT marketplaces for each. Once launched, players will be able to buy and sell NFTs within each game without needing to go to an external marketplace.
It’s designed to be a seamless process for players, particularly for those who don’t already know how to handle a crypto wallet and self-custody assets. Zhao said that the infrastructure is provided to developers so that they don’t have to build out integrations from scratch.
NFTs are blockchain tokens that represent ownership of an item, such as artwork, collectibles, and interactive video game items. In the gaming space, NFTs can represent things like unique weapon designs, character avatars, and customizable virtual land plots.
As mentioned, Magic Eden recently became a crypto unicorn with a valuation above $1 billion. The firm raised $130 million last month at a $1.6 billion valuation, just nine months after the startup was founded.
The NFT marketplace plans to support additional blockchain platforms in the future beyond Solana, although no specific chains have been announced.
Magic Eden’s increased focus on Web3 gaming puts it in direct competition with Fractal, a gaming-centric Solana NFT marketplace co-founded by Justin Kan, also co-founder of video game streaming platform Twitch.
Fractal only focuses on interactive gaming assets, while Magic Eden also supports profile pictures and other types of NFT assets.
Zhao said that both Magic Eden and Fractal are focused on growing the Web3 gaming space, but that he believes that Magic Eden provides the more comprehensive suite of solutions to launch and support Solana-based games—and suggested that the results back up his confidence.
“Both of us want to expand the ecosystem. For game developers, we show them data, right? It's up to them to decide who to ultimately pick,” he said. “The results have informed developers that there's a good reason to partner with us instead of Fractal.”