Solana Ecosystem Asset Service Protocol Metaplex: The Invisible Giant in the Boom

The popularity of Solana has surged recently, making it one of the best-performing L1 public chains in its ecosystem. Whether in terms of active address count or fee revenue, Solana's market share in the L1 space has rapidly expanded: the share of active addresses has grown from 3.48% to 56.83%, a year-on-year increase of 1533%; the share of fee revenue has increased from 0.62% to 28.92%, a year-on-year increase of 4564%.

The Meme wave is the main driving force behind the rapid growth of various core indicators in Solana during this cycle. In addition to Solana, some DEX projects also benefited from the Meme wave, as the activity in Meme trading contributed a large amount of transaction and protocol revenue.

This article will focus on another project that benefits from the massive asset issuance of Solana: Metaplex. The main discussion will include the following questions:

1. What is Metaplex's business positioning and business model? Does it have a moat?
2. How is the business data of Metaplex, and how is the business development going?
3. What is the background and funding situation of the Metaplex team?
4. What is the current valuation level of Metaplex, and is there a margin of safety?

Business Positioning and Business Model of Metaplex

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

Metaplex has recently expanded its business horizontally to other foundational service areas in the Solana ecosystem, such as data indexing (Index) and data availability (DA) services. In the long term, Metaplex is expected to become one of the most important multi-domain foundational service projects in the Solana ecosystem.

Metaplex product matrix

Metaplex, as a protocol for asset issuance, management, and standards, serves both NFTs and fungible tokens. The products listed below comprise a comprehensive matrix serving the Solana ecosystem assets.

Core

Core is a next-generation NFT standard on the Solana blockchain. Core uses a "single account design," which significantly reduces minting costs and computational power, and supports advanced plugins as well as mandatory royalty payments.

Bubblegum

Bubblegum is a program used by Metaplex to create and manage compressed NFTs ( cNFT ). Through compression technology, creators can mint a large number of NFTs at a very low cost, with the minting cost for 100 million NFTs being only 500 SOL (, achieving over 99% cost reduction compared to traditional minting methods ), providing unprecedented scalability and flexibility.

Token Metadata( Token Metadata)

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

Currently, all tokens created on the largest meme issuance platform Pump.fun on Solana rely on Metaplex's metadata service. The biggest demand for token metadata is no longer from NFTs, but from the vast number of meme projects being issued.

Candy Machine

Metaplex's Candy Machine is the most commonly used NFT minting and issuing program on Solana, capable of launching NFT collections efficiently, fairly, and transparently.

Other Product Array

Metaplex's other services also include:

• MPL-Hybrid: Hybrid NFT storage and management solution
• Fusion: NFT merging function
• Hydra: An efficient and scalable large-scale NFT minting solution
• Wait a moment

Aura

In addition, in September, the Metaplex Foundation officially announced the launch of Metaplex Aura - a decentralized indexing and data availability network serving Solana and SVM, with the testnet (. Through the indexing and data availability services provided by Aura, Solana and other blockchain projects adopting the SVM standard can read asset data more efficiently and support batch operations at a lower cost, reducing their operational costs by over 99%.

From asset service systems to data indexing and data availability service protocol, with the horizontal expansion of services, Metaplex is evolving into a full-stack foundational service platform for the Solana ecosystem.

![Has the NFT protocol Metaplex been underestimated while quietly profiting in the Solana Meme craze?])https://img-cdn.gateio.im/webp-social/moments-11d46dd7c1f0b08045392152cf860a46.webp(

) Metaplex's business model

Metaplex's business model is simple and easy to understand, which charges fees by providing services related to on-chain assets. Some services in the product array mentioned above are free, while others are paid.

Although Metaplex's direct partners are other projects on Solana, like a TOB expansion business, most of its fees come from small projects or retail users that use large B-end projects, as well as project parties that create various types of fungible tokens and individual users minting NFTs.

Specifically, the fee structure for Metaplex products on Solana is as follows:

• Create Metadata Account v3: 0.01 SOL
• Update Metadata Account: 0.0005 SOL
• Create Master Edition v3: 0.0015 SOL
• Mint NFT: 0.0015 SOL
• Burn NFT: 0.0005 SOL
• Verify Collection: 0.0005 SOL
• Unverify Collection: 0.0005 SOL
• Utilize: 0.0005 SOL
• Approve Use Authority: 0.0005 SOL
• Revoke Use Authority: 0.0005 SOL
• Create Fungible Asset: 0.01 SOL

It can be seen that the absolute cost for users to individually call Metaplex's product services is not expensive. For example, the cost for a user to mint an NFT is only 0.0015 SOL; for a Meme issuer to issue a project and use Token Metadata to add text and image descriptions for their Meme project, it only costs 0.01 SOL once. Such costs are negligible compared to the expected returns for users, or can be said to be almost negligible.

Metaplex's moat

In the author's opinion, Metaplex is also a project with a moat, and its moat comes from "high switching costs" and "setting standards."

First, when developers and users rely heavily on Metaplex's tools and protocol for asset issuance and management, wanting to switch the project's assets to another protocol for management later will inevitably face high time, technical, and economic costs.

Second, when the asset format of Metaplex ###, which includes NFTs and FTs (, becomes the standard within the Solana ecosystem, and a consensus for compatibility design among various infrastructures and applications in the ecosystem is established, it will also become a priority for new developers and projects to choose asset service platforms that offer stronger ecological compatibility with the Metaplex asset format.

Thanks to the moat of Metaplex, there are currently no projects within the Solana ecosystem that can compete with it, ensuring Metaplex's strong profitability, which will be analyzed in the next section.

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

Metaplex Business Data: PMF is fully validated, core data shows strong growth

Metaplex's core business currently is to provide asset-related services. We can observe several key indicators such as the number of active users for its services, the number of asset minting projects, and the protocol revenue.

) Metaplex monthly active users

The monthly active users of Metaplex refer to the unique addresses that have transacted with the Metaplex protocol each month.

As of the date of this writing ###2024.11.30(, Metaplex's latest monthly active users reached 844,966, setting a new historical monthly high, a year-on-year increase of 253%.

![Is the NFT protocol Metaplex underestimated while quietly profiting in the Solana Meme craze?])https://img-cdn.gateio.im/webp-social/moments-8d33a991231df02d81b549eb091996bf.webp(

) assets minted through the protocol

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

As of the date of writing ### 2024.11.30 (, Metaplex's data has also set a historical record, with the total number of minted asset types exceeding 1.44 million in November.

It is worth noting that 94% of the assets are fungible tokens, while only 6% are NFTs. In January of this year, this data was 18.6% for fungible tokens and 81.4% for NFTs. This means that in terms of transaction volume, Metaplex's main business now is the service for fungible token assets, rather than NFT services. Most of the issuance of fungible assets comes from the Meme craze.

![Is the NFT protocol Metaplex underestimated while quietly making money in the Solana Meme craze?])https://img-cdn.gateio.im/webp-social/moments-9c2f63abcbfb257fc1895a9661492a79.webp(

) protocol revenue

Protocol revenue refers to the fees received by Metaplex for providing services.

As of the date of writing ### 2024.11.30 (, Metaplex's monthly protocol revenue has reached 3.3 million USD, also setting a new historical high.

![Is the NFT protocol Metaplex undervalued while quietly making profits in the Solana Meme craze?])https://img-cdn.gateio.im/webp-social/moments-e46084d1c6c563ab68f9b7264cc849e9.webp(

It should be noted that, unlike many projects in the Web3 world that rely on token subsidies to drive product demand and exchange project tokens for protocol revenue, Metaplex's business revenue is quite organic and does not involve direct token subsidies. It is a typical project that has achieved PMF) product-market fit (.

From the data in this section, we can see:

• Metaplex, as the underlying asset protocol, directly benefits from the ecological development of Solana, with its core metrics rising in sync with Solana's core metrics, especially the protocol revenue.
• Metaplex benefits from the activity of both NFTs and FTs, and is not just an "NFT asset service protocol". After memes, if Solana can see the emergence of more active tracks, such as Depin, gaming, and RWA, the demand space for Metaplex will be further opened up.
• The business demand for Metaplex is organic, and it can generate revenue without relying on token subsidies.

Metaplex Team: The Ecological OG Close to the Solana Core Circle

The founder of Metaplex is Stephen Hess, who is also the chairman of the Metaplex Foundation. He founded Metaplex Studios in November 2021.

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 the earliest employees of Solana (. He joined when Solana had just launched for a year ), at which time Solana co-founder Raj invited him to join Solana as the head of the product department. During his tenure, his work included Solana Stake Pools (, Solana's staking system ), the SPL governance system, and the development of Wormhole. He was also a team member of the first version of the Solana NFT standard, which ultimately evolved into Metaplex.

In January 2022, shortly after its establishment, Metaplex secured a strategic investment of $46 million from institutions such as Multicoin, Jump, and Alameda. Based on the 10.2% share corresponding to the strategic round of financing in the token allocation table, it can be estimated that the valuation of this $46 million financing round for Metaplex was around $450 million, which is still a quite high first-round primary valuation even during a bull market.

As Metaplex was about to celebrate its first anniversary, in November 2022, FTX collapsed due to massive financial bad debts. Although Metaplex's financial situation was not directly affected by the FTX crash, Stephen Hess quickly announced the layoff decision on Twitter, preparing for the impending downturn of the Solana ecosystem. In hindsight, his actions at that time proved to be very correct, showing foresight for the future.