NFT Aggregation
VeradiVerdict - Issue #188
Hyperspace is building out an NFT marketplace aggregator tool on Solana for trading NFTs. The Solana NFT marketplace ecosystem is currently fragmented and inefficient, and Hyperspace solves this issue by allowing users to directly buy and sell their assets on Hyperspace itself or other Solana NFT marketplaces at no additional fee. As the variety and sheer number of NFTs on Solana grows, Hyperspace is positioned to become the choice platform for new and existing buyers and sellers.
NFT markets have soared recently as their use cases continually expand and new projects pop up daily. The digital assets can be used for more than just trading: some lesser-known utilities of NFTs include proof of attendance, identity verification, and access to exclusive events. Recently, in response to the situation in Ukraine, Beeple created a piece that shows a Ukrainian flag with the caption “STAND WITH UKRAINE.” Two Google sheets composed of Ukrainian NFT creators went viral on Twitter and led to a rise in sales by these artists. A group of NFT advocates including sartoshi, Brandon Mighty, and Julia Beliaeve recently announced RELI3F, are releasing many collections of pieces in a blind mint in support of Ukraine. They raised more than 370 ETH in just one day through the primary sale and donated the proceeds directly to Ukraine’s relief efforts. Donors not only receive an NFT but also an immutable record of their backing of organizations supporting Ukrainians. Use cases like these show the power of digital assets to help the world in ways that have never been seen before – especially amidst a crisis. The community-oriented mindset of cryptocurrency as a platform for doing good fuels and strengthens these initiatives.
A strong and trusted marketplace is the backbone of a vibrant NFT ecosystem on a blockchain as it influences an NFT projects’ economic success. OpenSea is Ethereum’s leading NFT trading platform, averaging around $169M in trading volume daily. Nearly 2M NFTs have been sold on the platform thus far in February. The protocol is distinguished by its ease of use, aesthetic layout, and intuitive UX. Historically, other blockchains have lacked well-designed and performant NFT marketplace with a seamless UX and UI. However, lower costs and higher efficiencies have spurred the popularity of alternative blockchains – and there’s a demand for NFTs on those platforms as well.
Trading NFTs on Ethereum poses structural problems such as high gas fees and slow transaction speeds due to network congestion. However, many NFT projects prefer launching on Ethereum because it’s the most trusted, incumbent player, and has a massive user base, which helps to ensure the best financial outcome for the project. Furthermore, most successful NFT projects to date have launched on Ethereum. This trend creates a virtual cycle of art being locked on the Ethereum chain with NFTs continually being bought and sold on OpenSea. If users wanted to buy NFTs on other blockchains, until recently high-quality projects just weren’t being published on networks besides Ethereum.
However, this trend has been changing rapidly. We’re seeing a market shift by artists to launch a higher concentration of NFT projects on Solana, a blockchain distinguished by its minimal gas fees and rapid transaction times. Because of these features, Solana NFT trading and analysis platforms are easier to scale and more conducive to rapid community growth. There’s massive potential for higher liquidity and trade volumes and simply more art projects, all enabled by the Solana chain. These characteristics also lower barriers to entry for newer artists, collectors, or individuals simply interested in the NFT space. A broader population gaining access to digital art means more inclusivity and less gatekeeping for individuals who may not be as cryptonative or have as much capital as those on Ethereum. This in turn will lead to more amazing artwork being minted on the Solana chain that may have been previously hindered by Ethereum’s cost. The shift has already started: Solana NFT total sales volume surpassed $1B in January.
The still-nascent Solana NFT Ecosystem. Source: Hyperspace
As we’ve seen the NFT market on Solana develop rapidly through the launch of various NFT marketplaces above, a great platform is needed to help artists and collectors buy and sell pieces. This is where Hyperspace – formerly Solanalysis – comes into play. Hyperspace solves the marketplace fragmentation problem by consolidating NFT buying and selling marketplaces. The platform started by aggregating NFT data before eventually launching an aggregator shopping tool as well that allows users to buy and sell NFTs on Solana’s dominant marketplaces directly from the Hyperspace website. By serving as a marketplace of marketplaces, Hyperspace will become the choice protocol for power users looking to shop for the best deals. The platform will also allow artists to list NFTs directly on Hyperspace. According to Hyperspace, no marketplace on Solana holds more than 50% of NFTs for sale – a stark contrast to the Ethereum ecosystem. Individuals interested in buying NFTs may simply decide against it because of the overwhelming amount of marketplaces available and the fact that they may not know if they are getting the best deal on a given NFT. Because NFT buying and selling marketplaces are more fragmented on Solana compared to Ethereum, this tool will be incredibly useful for Solana users looking to easily compare and trade NFTs across many platforms. Entire NFT market efficiencies will arise from Hyperspace’s powerful aggregation mechanism. Pantera is thrilled to have co-led Hyperspace’s $4.5M seed round with Dragonfly as the Hyperspace team builds out the premier NFT marketplace on Solana.
Trending NFT projects on Solana. Source: Hyperspace
Current Market State
Magic Eden is currently the most popular trading platform on Solana, followed by Solsea, Solanart, and DigitalEyes, and others. Magic Eden has no listing fees for NFT creators, but takes a 2% transaction fee on every piece sold. There’s currently no additional fee for transacting on Hyperspace (according to Mafoud). Therefore, the user base will likely grow rapidly since there’s no downside of buying or browsing for NFTs on Hyperspace. As they compare potential assets to buy across platforms, users will be incentivized to use Hyperspace because of the protocol’s breadth of NFTs. This makes the protocol extremely compelling as both a data aggregator and a trading enabler. Currently, Hyperspace supports direct trading on the major marketplaces – Magic Eden, Solanart, Fractal, Solana Monkey Business, and plans to integrate more platforms soon.
Solana HODL Whales collection. Source: Hyperspace
Product
Hyperspace is compatible with Phantom, Sollet, Slope, and many other wallets. Upon visiting the site, the user can browse the top trending collections on the platform. After selecting a project, they can see details on the art such as number listed, total supply, 1-day volume, and floor price. The user can set a price range that they’re willing to purchase the NFT at, and can filter by collection attributes, which are often used to determine rarity. Transactions are quickly and inexpensively executed. This beautiful and performant UX will attract users new and familiar with NFTs to the vibrant Solana NFT ecosystem.
MonkeLabs Collection. Source: Hyperspace
Mechanism
Hyperspace directly connects to each NFT platform in order to act as the “middleman” between the buyer and seller, according to the co-founder Kamil Mafoud. Hyperspace’s marketplace contract was designed for composability – one of their goals is to enable platforms to “create their own web3 stores and monetize their audience by surfacing liquidity from [Hyperspace].” Hyperspace can essentially act as Solana’s Shopify for NFTs because brands will be able to build their own web3 marketplaces on top of the protocol. In turn, they’ll achieve better market exposure and higher revenues, and Hyperspace will gain more user traction. Since users will be able to directly list their NFTs on Hyperspace itself, buyers have the option to purchase from the platform or another marketplace on Hyperspace. This will attract a wider variety and higher number of buyers. As an increasing number of users switch to Hyperspace, sellers will default to listing on it versus other marketplaces that don’t capture as much market share. Because of Solana’s rapid NFT ecosystem expansion, many marketplaces go down frequently due to their fragile infrastructure not being equipped to handle the number of users. Hyperspace serves as an additional frontend for individuals to access their assets in an ecosystem that’s often congested in terms of user load.
Team
The leaders behind Hyperspace are Kamil Mafoud, Santhosh Narayan, and Johnny Tan. Mafoud, who attended MIT with Narayan, was previously a GM at Future Foods, a cloud kitchen, and a fintech analyst at Morgan Stanley. He also founded Dealtorch, a graphic design marketplace for small businesses. Narayan was previously the Head of Growth at Future Foods and has also worked at Morgan Stanley and Balyasny Asset Management. He’s also the founder of Live Sports Markets, a sports betting platform. Tan is a software engineer at Amazon helping to develop QuickSight Q, their machine-learning powered BI service. Tan has an impressive background in software engineering at Moody’s Analytics Accelerator, along with startup experience at Thirty Madison and a vast experience in ETH. The level of technical expertise and variety of building experience make the trio perfect for building out Hyperspace and the future of the NFT space on Solana more broadly.
The future of NFTs on Solana
As users shift to buying NFTs on Solana due to its low costs and high speeds, we expect Hyperspace to explode in popularity. Many NFT projects will continue to be launched on Ethereum; however, as more artists and collectors enter the space, we expect market share to favor Solana more than it has previously. The blockchain’s accessibility will hopefully encourage new digital artists to launch incredible pieces at minimal costs, allowing for more art to flow into the ecosystem. On the buyer side, Hyperspace will enable stronger community formation around collections and will help shape user identity as they curate their NFT collection. Hyperspace will also become increasingly trusted by users as they shift to a fully decentralized model where the marketplace is community owned and governed.
We’re fortunate to work alongside Hyperspace as their traction grows and they enable a more diverse, strong, and accessible NFT trading landscape on Solana.
- Paul Veradittakit
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ABOUT ME
Hi, I’m Paul Veradittakit, a Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing in blockchain companies and cryptocurrencies. I’ve been in the industry since 2014, and the firm invests in equity, early stage token projects, and liquid cryptocurrencies on exchanges. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.