Author: Alex Xu, Mint Ventures

1. Introduction

If we want to talk about business development in this bull market cycle Which is the best L1? Most people’s answer will be: Solana.

Whether it is the number of active addresses or fee income, Solana's market share in L1 has rapidly expanded:

Number of active addresses: Solana’s share of active addresses increased from 3.48% to 56.83%, a year-on-year increase of 1533%;

L1 monthly active address market share, data source: tokenterminal

Fees : Solana’s fee revenue share increased from 0.62% to 28.92%, a year-on-year increase of 4564%.

L1 monthly Fee revenue market share, data source: tokenterminal< /em>

The Meme wave is the core driving force behind the rapid growth of Solana’s core indicators during this cycle. In addition to Solana, others also benefited from the Meme wave. There are Dex like Raydium, Meme The active trading has contributed a huge amount of transaction and agreement revenue, and its price has recently reached a new high in this round.

In this article, the author will focus on another project that benefited from Solana’s massive asset issuance: @metaplex.

This article will present and discuss the following 4 issues:

Metaplex’s business What is the positioning and business model? Does it have a moat?

How is Metaplex’s business data and business development?How about it?

Metaplex’s team background and financing status. How would you evaluate the project team?

What is the current valuation level of Metaplex? Is there a margin of safety?

This article is the author's staged thinking as of the time of publication. It may change in the future, and the views are highly subjective. There may also be facts, data, and reasoning. Logical errors, criticism and further discussion from peers and readers are welcome, but this article does not constitute any investment advice.

The following is the text part.

2. Metaplex’s business positioning and business model

Metaplex protocol is a digital asset creation based on Solana and a blockchain that supports SVM (Solana Virtual Machine) , sales and management system, which provides developers, creators and enterprises with the tools and standards to build decentralized applications. The types of crypto assets supported by Metaplex include NFTs, FTs (fungible tokens), real world assets (RWA), gaming assets, DePIN assets, and more.

Metaplex has also recently expanded its business horizontally to other basic service areas of the Solana ecosystem, such as data index (Index) and data availability (DA) services.

In the long term, Metaplex is expected to become one of the most important multi-field basic service projects in the Solana ecosystem.

2.1 Metaplex’s product matrix

As an asset issuance, management and standard system, Metaplex serves both NFTs and homogeneous tokens, as follows The listed products form a comprehensive matrix serving Solana's ecological assets.

Core

Core is a new generation NFT standard on the Solana blockchain. Core adopts It adopts a "single account design", which greatly reduces the casting cost and computing power, and supports advanced plug-ins and mandatory payment of royalties.

BackView knowledge: Solana’s account model

In order to understand the advantages of the "single account design" architecture, you need to first understand the Solana area The account model of the blockchain and the storage method of traditional NFT.

On the Solana blockchain, all state storage (such as token balance, NFT metadata, etc.) are related to specific Accounts are associated. Each account can store a certain amount of data, and the size of the account is limited, and rent needs to be paid to maintain the storage of this data. Therefore, how to efficiently manage accounts and store data on the chain is a key issue that developers on Solana need to consider.

The design of traditional NFT

< em>In traditional NFT design, each NFT usually has multiple accounts to store different information. For example, a typical NFT may involve the following accounts:

Master account: stores the ownership information of the NFT (such as who is current owner).

Metadata account: Stores the metadata of the NFT (such as name, description, image link, etc.).

Royalty Account: Stores information related to creator royalties.

Although this multi-account design is more flexible, it will cause some problems in actual operation: < /p>

Complexity: Managing and interacting with multiple accounts adds complexity, especially when data needs to be queried and updated frequently.

Fees: Each account needs to pay rent to maintain its storage status, and more accounts mean higher fees.

Performance: Since multiple accounts are involved, more blockchain resources may be required during operation, affecting performance and transaction speed.

Advantages of "Single Account Design"

Metaplex Core has proposed the standard of "Single Account Design" in response to the above problems. Single account design will All NFT-related information (such as ownership, metadata, royalties, etc.) are centrally stored in one account, which simplifies the account structure, reduces account costs, improves interaction efficiency, and enhances the scalability of NFT. This design is particularly suitable for implementing large-scale NFT projects (such as games, Depin, etc.) on high-performance, low-cost blockchains like Solana.

Bubblegum

Bubblegum is Metaplex's program for creating and managing compressed NFTs (cNFTs) . Through compression technology, creators can cast a large number of NFTs at extremely low cost. The casting cost of 100 million NFTs is only 500 SOL (a cost reduction of more than 99% compared to traditional casting methods), providing unprecedented scalability and Flexibility, it is precisely because of the launch of Bubblegum technology that large-scale, low-cost NFT casting became possible. DePIN projects including Render and Helium began to migrate to Solana, which also gave birth to innovative NFTs such as DRiP. Platform, the following table lists application examples of Bubblegum by these three representatives.

Token Metadata p>

The Token Metadata program allows appending additional data to fungible and non-fungible assets on Solana. Token Metadata is naturally important for information-rich NFTs, but in fact most of the homogeneous token projects on Solana also need to use Token Metadata.

What most people don’t know is that all tokens created on Pump.fun, currently the largest meme distribution platform on Solana, rely on the metadata of Metaplex Services, now the biggest demand for Token Metadata does not come from NFT, but from the massive distribution of Meme projects.

For the Meme project, the benefits of using the Token Metadata program when issuing tokens are very obvious:

The first is to ensure the standardization and compatibility of its issued tokens. Using Metaplex's Metadata service, these tokens will be more easily recognized by mainstream wallets (such as Phantom, Solflare), their names, icons and other additional information will be displayed correctly by trading platforms, and their names, icons and other additional information will be displayed correctly by trading platforms, as well as by other Solana applications. Seam integration.

The second is to provide on-chain storage and transparency. The Metaplex Metadata service stores token metadata on the chain, making it easier to verify token information and data and prevent tampering.

The additional information such as pictures and text provides multi-dimensional material for Meme speculation, making Meme no longer just a name and a string of contracts. The dissemination, secondary creation and narrative provide material.

New Meme tokens are constantly refreshing on pump.fun, source ：pump.fun

As the Meme craze on Solana continues to heat up, more than 90% of Metaplex's protocol revenue has already been generated by fungible tokens ( Meme), this reality is related to "Metaplex is a Solana ecological NFT basic protocol" is inconsistent with the public perception, and there is a serious misunderstanding.

Candy Machine

Metaplex’s Candy Machine is the most commonly used NFT minting and issuance on Solana Program that can launch NFT collections efficiently, fairly and transparently.

An array of other products

Metaplex's other services also include:

MPL-Hybrid: A hybrid NFT storage and management solution that aims to combine the advantages of on-chain and off-chain storage to provide an efficient and economical storage method for NFT. It is especially suitable for storing large files (such as high resolution) or needs to be dynamic Updated NFT project.

Fusion: NFT merging function allows users to merge multiple NFTs into a new NFT, which can be used to enhance the user's interactive experience and provide better NFT projects. Multiple ways to play, it can be used for games, collections, and art projects.

Hydra: Efficient, scalable large-scale NFT minting solution, designed for projects that require minting large amounts of NFTs (such as games, social platforms or loyalty programs) design.

...

Metaplex’s existing product list (asset service category) is as follows:

p>

Image source: Metaplex Developer Documentation

< p style="text-align: left;">Aura

In addition, in September, the Metaplex Foundation officially announced the launch of Metaplex Aura, a decentralized index and data availability network (test network) serving Solana and SVM. Through the indexing and data availability services provided by Aura, Solana and other blockchain projects that adopt the SVM standard can read asset data more efficiently, support batch operations at a lower cost, and reduce the cost of their operations by more than 99%. , as shown below:

After adopting Aura, large-volume asset asset operations Cost before and after comparison, source: Metaplex Official promotion

When the product preview was released, Metaplex also listed cooperation agreements to support the product, many of which are well-known projects in the Solana ecosystem. They will also be potential future users of Aura.

Source: Metaplex official recommendation

From asset service system to data index and data availability service agreement. With the horizontal expansion of services, Metaplex is developing towards a full-stack basic service platform of the Solana ecosystem.

2.2 Metaplex’s business model

Metaplex’s business model is simple and easy to understand, that is, charging for services related to assets on the chain. Among the product array mentioned above Some services are free and some are charged.

Although Metaplex directly cooperates with other projects on Solana, like a TOB expansion business, most of its fees come from the use of B-side large-scale projects Small projects or retail users, including project parties that create various types of homogeneous tokens, as well as individual users of Mint NFT.

In the author's opinion, charging dispersed users is a better business model than charging for large-scale cooperation projects on the B-side (such as Pump.fun) , because:

Small project users or retail users make more emotional decisions and are not as price sensitive as the B-side, because Metaplex For them, the service price accounts for a very low proportion of the total cost. The absolute fee paid by each small user is not high, but when the number is large enough, the total cost is very considerable

B-side projects can become distribution channels for its services, helping Metaplex’s services reach more dispersed users. Metaplex itself does not need to spend extra energy and costs on marketing promotion and channels

User groups are more dispersed and less concentrated. Facing basic service providers such as Metaplex, it is more difficult to negotiate prices. Metaplex has the ability to maintain product profit margins and even raise prices at the appropriate time

Specifically, the charging standards for Metaplex products on Solana are as follows:

Image source: Metaplex Developer Document

It can be seen that in fact, the absolute charge for a user to call Metaplex's product services alone is not expensive. For example, the user Mint The cost of an NFT is only 0.0015 SOL; a Meme issuer releases a project and uses Token Metadata to add graphic and text introduction and other information to his Meme project, and only needs 0.01 Sol at a time. Such costs are minimal, or basically negligible, compared to users' revenue expectations.

Of course, it needs to be explained that the issuance of a large number of homogeneous tokens represented by Meme has brought income to Metaplex on the one hand, and Meme on the other hand. The sustainability of the boom is questionable, which will also affect the sustainability of Metaplex's revenue. As strong as Solana, its Meme popularity also fluctuates greatly. In the week of September when it was the coldest, the number of newly listed tokens on Dex was only about 1/3 of the hottest week in May, while in mid-November this week The number increased another 10 times.

The number of new token varieties added to Solana Dex every week, source: Dune< /em>

2.3 Metaplex’s moat

In the business world, the moat of an enterprise\project may come from many advantages, such as cost advantages brought by scale and geographical location, value accumulation brought by network effects, and high users brought by brand effects. Stickiness and premium capabilities, competition barriers brought by administrative franchises and patents, etc.

Projects with strong moats are reflected in the competitive landscape by later competitors finding it difficult to catch up when they enter the same track, or the overall cost of catching up. It is very high, so high that it is much greater than its expected income, so that there are relatively few competitors in this track; financially, it is reflected that the project has a steadily increasing profitability, and the cost of marketing and development is relative to the income. The proportion is not high.

In the Web3 field, there are not many projects with strong moats, such as Tether in the stable currency field and Aave in the centralized lending field.

In the author’s opinion, Metaplex is alsoFor projects with moats, the moats come from "high switching costs" and "setting standards."

First, when developers and users rely heavily on Metaplex's tools and protocols for asset issuance and management, they later want to switch the project's assets to other protocols for management. , will inevitably face higher time, technical and economic costs.

The second is when Metaplex’s asset formats (including NFT and FT) become a common standard in the Solana ecosystem and become compatible with various infrastructure and applications in the ecosystem. The consensus of the design will also become a priority for new developers and projects to choose the more ecologically compatible Metaplex asset format when choosing an asset service platform.

Thanks to Metaplex's moat, there is currently a lack of projects in the Solana ecosystem that can compete with it, ensuring Metaplex's strong profitability, and this part will Analyzed in the next section.

In addition to asset services, the data indexing and data availability services that Metaplex is testing are also expected to create a second business growth curve for Metaplex in the future. Considering that the target of this service is highly overlapping with Metaplex's original customer base, its newly expanded business may also be more easily accepted and experienced by existing cooperative customers.

3. Metaplex business data: PMF has been fully confirmed, and core data has grown strongly

Metaplex's current core business is to provide asset-related services, and we can observe the performance of its services The core indicators include the number of active users, the number of assets minted projects, and protocol revenue.

3.1 Metaplex monthly active users

Metaplex monthly active users refer to independent addresses that have transactions with the Metaplex protocol every month

Metaplex monthly active address, data source: Metaplex Public Dashboard, the same below

We can see that as of the author’s writing date (2024.11.30) Metaplex’s latest monthly active usersThe number of households was 844,966, a record monthly high and a year-over-year increase of 253%.

3.2 The number of assets minted through the protocol

The number of assets minted through the protocol refers to the types of assets minted through the Metaplex protocol

Metaplex monthly asset casting types number

As of the author's writing date (2024.11.30), Metaplex's data has also reached a record high, with the total number of minted assets in November exceeding 1.44 million.

What’s more noteworthy is that 94% of the assets are fungible tokens, and only 6% of the assets are NFTs. In January this year, this figure was still 18.6% versus 81.4%, which means that in terms of business volume, Metaplex’s main business is now homogeneous token asset services, not NFT services. Most of the minting and issuance of homogeneous assets comes from the Meme craze.

3.3 Agreement revenue

Agreement revenue refers to the payments Metaplex receives by providing services.

Metaplex monthly agreement revenue

As of the author's writing date (2024.11.30), Metaplex's monthly agreement revenue is as high as 3.3 million U.S. dollars, also a record high.

It should be noted that unlike many projects in the Web3 world that rely on token subsidies to drive product demand and spend project tokens in exchange for protocol revenue, Metaplex's business The income is quite organic and there is no direct token subsidy. It is a typical project that achieves PMF (product fit with market demand).

Through the data in this section, we can see:

Metaplex as the underlying The asset protocol directly benefits from the ecological development of Solana, and its core indicatorsAs Solana's core indicators rise simultaneously, especially protocol revenue

Metaplex benefits from the activity of NFT and FT at the same time, and is not just an "NFT asset service agreement" , after Meme, if Solana can emerge with more active tracks, such as Depin, games, and RWA, the demand space of Metaplex will be further opened

Metaplex The business needs are organic, and it can obtain income without relying on token subsidies

Next, let’s take a look at the team behind the Metaplex project and the project tokens situation.

Metaplex team: an ecological OG close to Solana’s core circle

Stephen Hess

The founder of Metaplex is Stephen Hess, who is also the founder of Metaplex Foundation President, who in 2021 Founded Metaplex Studios in November.

As a graduate of Stanford's Symbolic Systems major (which focuses on the design of human-computer interaction systems), Stephen Hess is also one of Solana's earliest employees (he Solana had just been launched for a year when he joined), when Solana co-founder Raj invited him to join Solana as the head of the product department. During his tenure, he was involved in the development of Solana Stake Pools (Solana’s staking system), the SPL governance system, and Wormhole. He was also a member of the team that worked on the first version of the Solana NFT standard, which eventually evolved into Metaplex.

In January 2022, not long after Metaplex was founded, Metaplex received a strategic investment of US$46 million from institutions such as Multicoin, Jump and Alameda. If allocated according to the token Strategies in the tableThe 10.2% share corresponding to this round of financing can be estimated as Metaplex’s $46 million round of financing at that time, which corresponds to a valuation of about $450 million, which is a very high first-round valuation even during the bull market.

And just when Metaplex was almost a year old, in November 2022, FTX collapsed due to huge financial bad debts. Although Metaplex's financial situation was not directly affected by the FTX collapse, Stephen Hess quickly announced the layoffs on Twitter, preparing for the impending Solana ecological depression at the time. It later turned out that what he did at the time was very correct, he had a clear understanding of the future, and in terms of cost control, he did not have the habit of spending money lavishly like many Web3 teams.

According to Metaplex's current Linkedin information, the team size is more than 10 people, which is still quite streamlined. However, judging from its monthly project work reports, this streamlined Our team has strong product delivery capabilities and aggressiveness, and is very efficient in product iteration and new product development.

Metaplex’s monthly work report, source: official blog

Looking back at the work resume and project development history of the founder of Metaplex, Metaplex basically conforms to the author's conception of the comprehensive elements of an excellent Web3 team:

Core members have the education, work skills and experience background that match the entrepreneurial project, and have no credit record

Being in the core circle of the public chain ecosystem where they are located Recently, the dialogue channels are smooth, and the product concept is recognized by the public chain ecological community

Good sense of product (fewer detours), hard work, and good results delivery

Have awareness of cost control and do not spend money recklessly

Received top VC investment in the industry and have excellent comprehensive business resources

In addition, on September 9, 2024, The Block disclosed that well-known institutions such as Pantera Capital and ParaFi Capital purchased a large number of Metaplex (MPLX) tokens from Wave Digital Assets this year. These tokens were originally held by FTX. The comprehensive cost of the purchase was roughly US$0.2-0.25 (with certain lock-up terms).

5. MPLX: Token Utility and Valuation Level 5.1 Basic Token Information

Metaplex’s protocol token is MPLX, with a total amount of 1 billion.

Image source: Project White Paper

< p style="text-align: left;">The specific token distribution is as follows:

Creators and early supporters 21.9%, 50% of which within one year In the form of airdrop (the first airdrop will start in 22 years 9 issued monthly), and the remaining 50% will be released monthly in the next year;

Metaplex DAO 16%, no lock-in, distributed according to DAO proposal;

Metaplex Foundation 20.31%, no lock;

Strategic Round 10.2%, 50% of which 50% will be released one year after the first airdrop (September 22), and the remaining 50% will be unlocked monthly in the next year;

Partners Everstake 10% , locked for two years (locked until September 2024), linearly released for one year, unlocking;

Metaplex Studios 9.75%, locked for one year (locked to September 2023), will be released linearly over two years and is being unlocked;

The community will airdrop 5.4% and be released immediately;

The founding consultants account for 3.34%, locked for one year, linearly released for one year, all unlocked;

3.1% of founding partners, locked for one year, linearly released for one year, all unlocked.

According to the current official circulation data , MPLX’s circulation rate is 75.6%, and most of it is already in circulation, especially investors’ shares, which have basically achieved circulation, and the unlocking selling pressure is relatively small.

Most of the "uncirculated" portion of the total amount mainly comes from Metaplex The shares controlled by the DAO and Metaplex Foundation, the tokens held by the treasury, and the portion not unlocked by Everstake and Metaplex Studios.

5.2 Token Utility

The current utility of MPLX is mainly governance voting. In addition, Metaplex announced in March 2024 that it will use 50% of the protocol revenue to repurchase tokens (including historical accumulated protocol revenue). The repurchased tokens will enter the treasury and be used to develop the protocol ecosystem.

The agreement officially began to repurchase tokens in June 2024. Since then, 10,000 SOL has been used to repurchase the token MPLX every month. So far, It's been going on for 5 months.

Due to the rapid increase in protocol revenue, Metaplex will increase the monthly amount of protocol repurchase from 10,000 SOL to 12,000 SOL next month.

In addition to governance and repurchase, the next scenario of MPLX will be activated by the Aura function mentioned above. After the subsequent Aura function is officially launched, MPLX is expected to become The pledged assets of Aura nodes capture the income generated by Aura.

5.3 Agreement Valuation

When measuring the valuation of Metaplex, we still use the comparative valuation method, but considering that Metaplex does not have the same track as Solana, Comparing the target competing projects, the author finally chose Raydium, which also belongs to the Solana ecosystem, and has also benefited from the Meme craze this year with a significant increase in protocol revenue, and also has a buyback mechanism, as a reference for comparison and valuation.

Judging from the comparison of protocol revenue and the protocol's market value, Metaplex's valuation is higher.

But it needs to be emphasized that although the two projects have some commonalities, they are still two tracks of the same ecology, and their business positioning is very different. The above Valuation comparison only has certain reference value.

5.4 Potential driving factors and risks

Overall, the advantages of Metaplex are obvious:

Located in the upstream ecological niche of the asset service track, it has the right to formulate asset standards and directly benefits from the prosperity of the Solana ecosystem

Product PMF It has been fully verified, can achieve positive cash flow without relying on token subsidies, and has a relatively clear business moat

Actively expand on the basis of existing business The second growth curve

The overall quality of the team is good, very close to the ecological core circle, diligent and enterprising, and aware of cost control

The token has a repurchase mechanism, and the absolute market value of the project is relatively low (circulation market value 260 million+, FDV350 million+), and the plate is relatively light

The potential upward driving forces for Metaplex's market value in the future are:

In addition to Meme, other active tracks have emerged in the Solana ecosystem to further expand the scope of asset issuance. market, whether Depin, games, RWA, or NFT that has been cold for a long time

Metaplex can be launched on larger trading platforms, such as Binance or Coinbase, to obtain better liquidity Sexual premium (in terms of project quality and low market value, I think it is worth considering by the currency listing team. Projects with real business needs and positive cash flow are scarce in the market)

Directly increase payment service charges. The current charging base is low, and the project has the ability to increase prices. Even if the price increases by 100%, the asset creation fees paid to Metaplex will still account for a very low proportion to users and can be ignored

Of course, Metaplex also faces some potential risks and challenges, such as:

Solana Meme craze subsided, resulting in a rapid decline in the number of asset castings and business Reduced income

Metaplex's current income is collected in one lump sum according to the types of assets created. Those projects with relatively fixed asset types cannot bring sustainability to Metaplex in the long term. Revenue

Summary

Different from the impression that "Metaplex is an NFT asset protocol" in most investors' minds, Metaplex is actually a basic protocol serving all types of assets in the Solana ecosystem, and is a direct beneficiary of the Meme craze that has continued since the beginning of the year. .

If we continue to be optimistic about the Solana ecosystem in the future, then Metaplex, which occupies the "upstream ecological niche" of "asset issuance and management", deserves our long-term attention.