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Magic Eden Rivals Say NFTs on Solana’s Biggest Marketplace Are at Risk




In brief

  • Leading Solana NFT marketplace Magic Eden has faced growing criticism about recent platform changes and its escrow-based trading model.
  • Magic Eden defended its API changes in comments to Decrypt and said that it plans to switch to a non-escrow system in the future.

There’s no bigger player than Magic Eden in the Solana NFT space. Launched last fall, the marketplace routinely commands 90% or more of all trading volume on Solana and has turned that dominance into a $1.6 billion valuation as of its latest VC funding round in June.

But as Magic Eden’s star rises, members of the Solana NFT community—both builders and collectors alike—are increasingly sharing concern that the platform has become much too “centralized” on its way up. They point to recent changes that limit access from third-party aggregators and tools, as well as the way Magic Eden manages its custody of users’ NFTs—which could leave users’ assets vulnerable to attack.

“People should be 100% aware that a hacker could get the keys to Magic Eden and ‘rug’ everyone of their NFTs,” Marty, pseudonymous founder of Zion Labs, which makes Solana NFT tools, told Decrypt. “This wouldn’t happen if it was decentralized and if their code was open-source.”

In comments sent to Decrypt, Magic Eden didn’t specifically address the perceived risks of its escrow-based trading model, but said that it believes the alternative is currently less safe for users. The marketplace plans to embrace an escrow-less system in the future, but doesn’t believe that the tech is secure enough yet.

Escrow or no?

Discussion over Magic Eden’s policy of holding users’ listed NFT assets in an escrow wallet isn’t new, but the debate is picking up steam. Magic Eden takes custody of all listed assets rather than allowing them to remain in users’ own wallets, and user NFTs are held in an escrow wallet via the marketplace smart contract.

That practice was common in the early days of the Solana NFT market, but more recent entrants to the Solana ecosystem—like OpenSea and Hyperspace—do not take that approach. When you list a Solana NFT for sale on those marketplaces, it remains in your wallet.

Last Wednesday, OpenSea tweeted out against “Solana marketplaces taking custody of NFTs,” and while Magic Eden was not named, the target was obvious. “We believe marketplaces that custody your NFTs limit choice and utility, and compromise security,” OpenSea tweeted at the time. The two marketplaces have sparred over this point before, with Magic Eden recently retorting with a link about OpenSea being sued by a user over an unwitting Ethereum NFT sale due to a UI loophole.

Metaplex’s Auction House protocol for Solana enables NFT trading without the need for a marketplace to take custody of an asset. A source close to Metaplex, who asked not to be named, confirmed to Decrypt that Magic Eden’s marketplace contract is based on an early version of Auction House, which is designed as a permissionless, peer-to-peer trading system.

However, Magic Eden has made substantial changes to that contract code, along with that of its launchpad contract based on Metaplex’s Candy Machine minting tool. Magic Eden has also closed them off to the rest of the community. “They’re closed-source and permissioned derivatives of open-source tech that was provided by Metaplex,” said the source.

That approach adds potential risk for NFT traders. Closed-source software can’t be audited by the community and benefit from bug bounty programs. Even Metaplex doesn’t know what’s currently in Magic Eden’s marketplace contract code.

What would happen if Magic Eden’s escrow wallet was compromised? Or what happens if Magic Eden suddenly shutters, as some other crypto firms have in recent months amid the recent market crash? The Metaplex source said that the “centralized” escrow wallet holds some 180,000 NFTs, as of late last week.

In response to Decrypt’s questions, Magic Eden co-founder and Chief Technical Officer Sidney Zhang said that the marketplace plans to transition to a custody-free model at some point—but that current solutions aren’t adequately secure, in his team’s view.

“We are actively exploring escrowless models and plan to move to an escrowless model, but we believe the current smart contracts to implement escrowless mode that other marketplaces use are unsafe,” he wrote. “There are many security implications of this transition, and we want to do it carefully to ensure that our users do not get their assets inadvertently lost through stale listings.”

Zhang pointed to the aforementioned issues on OpenSea from earlier this year, in which some users’ Ethereum NFTs were sold for well below market price. OpenSea blamed a disconnect between its UI and the Ethereum blockchain for “inactive” offers going through, and ultimately reimbursed users to the tune of $1.8 million in ETH.

“Fairly complex smart contract changes need to be made to prevent these scenarios,” Zhang added. “We’re actively exploring how to do them in the best way.”

Recent tweaks

Besides ongoing concern about Magic Eden’s escrow-based model, the marketplace has faced increased scrutiny of late over changes made to how its platform works—and how third-party apps and protocols can build on top of or alongside it.

The discussion gained steam last week thanks to a viral Twitter thread from user “Pland,” who wrote that Magic Eden is “not a permissionless dapp anymore” due to a recent smart contract change. Smart contracts hold the code that power decentralized apps (dapps) and NFT assets. Similar rumblings circulated on Twitter in June, but the latest thread gained more traction.

According to developers that Decrypt spoke with, the contract change made it so that Magic Eden has to sign every transaction that takes place on its marketplace, which wasn’t previously the case. As a result, some third-party apps that aggregate listings from multiple marketplaces were broken, along with so-called “sniper bot” tools that can be used to buy specific NFTs.

Magic Eden acknowledged the change to Decrypt, explaining that transactions now require two signatures: one from the end user, and one from an API key provided by Magic Eden. An API key is used to authenticate developers and third-party programs that wish to access an app or service. Ethereum-centric marketplaces like OpenSea also have an API system.

“This change was rolled out so that we can maintain core site reliability and reduce botting that would jeopardize our users’ listings and trades,” Magic Eden co-founder and chief engineering officer Zhuojie Zhou told Decrypt. “We very much welcome the ecosystem to take part in our API program.”

Overwhelming activity from automated bot programs has slowed, and at times entirely taken down the wider Solana network in the past, most notably in April. Solana Labs recently instituted a number of changes to try and improve network stability.

Zhou said that Magic Eden has given out more than 300 API keys to date to developers, including aggregators like Tensor and NFTSoloist, plus wallet app makers like Exodus and Slope. He also noted that the makers of the popular Solana wallet Phantom required Magic Eden to have an API to verify that transactions were coming from its servers.

“We believe in supporting a formal developer ecosystem that enables a secure and reliable marketplace,” Zhou added, “and remain open to evolving the API program based on partner developers’ needs.”

An ‘anticompetitive move’

Some builders in the Solana space, however, see the shift as a rejection of decentralized principles, not to mention a decision made to stymie potential rival developers in the NFT space.

“We were surprised to learn they were doing this, because it’s completely centralized with no plausible benefit to end users,” a representative from NFT marketplace aggregator Hyperspace told Decrypt. “It’s in fact detrimental to users, as it increases reliance on their servers and consequently leads to an increased failure rate of transactions.”

The representative, who asked not to be named, said that Magic Eden reached out to Hyperspace ahead of the change “and threatened to shut us down if we didn’t change our platform to fully benefit/service them.” Magic Eden allegedly wanted Hyperspace to “exclusively direct listings to Magic Eden and only operate via their API,” the rep added.

“We categorically deny threatening them in these discussions,” a Magic Eden representative told Decrypt. “We encourage our partners to integrate with Magic Eden as deeply as possible in order to provide the fullest technical and operational support possible. Unfortunately, Hyperspace was not interested in such a partnership and has been antagonistic since.”

Hyperspace said that it discovered a workaround to Magic Eden’s API and continues to serve aggregated listings, but other aggregators (such as CoralCube) have apparently lost functionality as a result. “Since then, they have continued to try to and are actively working on how to block us out,” the Hyperspace representative alleged of Magic Eden.

Some builders in the Solana space told Decrypt that they believe that Magic Eden’s move was intentionally designed to exclude NFT aggregators that gained traction in recent months. It ultimately gives Magic Eden control over who can tap into its listings and benefit from its liquidity.

“We have been vocal against what has been a strictly anticompetitive move and a breach of open web principles,” the Hyperspace rep said. “We feel it’s our responsibility to stand up for decentralization and interoperability in the Web3 space, and the entire Solana ecosystem and Solana Foundation should be [up] in arms to prevent this from getting any further.”

The debate rages

Furthermore, Magic Eden has taken flak when implementing new features that appear to be strongly inspired by external Solana apps. Last week, the announcement of the Magic Eden List feature—which lets projects create allowlists of users ahead of NFT drops—got pushback for being very similar to Blocksmith Labs’ Mercury tool.

“It seems like a direct attempt to box out anyone who can do anything remotely better,” pseudonymous NFT collector Topo Gigio told Decrypt of Magic Eden’s feature additions. Meanwhile, Marty of Zion Labs alleged that Magic Eden is “using venture capital as a weapon” as it rapidly expands to become an all-in-one Solana NFT resource.

Magic Eden’s Zhou responded that the startup is a “user-first company” and that it makes feature additions based primarily on user requests. He claimed that expanded features on the platform are in service of collectors, and rejected the debate over centralization.

“This conversation is not about centralization vs. decentralization, and never has been,” Zhou said. “Partner toolings have existed on top of Magic Eden’s evolving marketplace experience since we launched, and we have no plans to change that approach.”

For some participants in the Web3 space, the overall conversation around Magic Eden is very much about centralization vs. decentralization—including how a major player in the space should approach matters like asset custody, open-source code, and composability of blockchain assets and protocols.

Between its continued use of escrow plus API-centric changes, Magic Eden’s decisions aren’t sitting right with everyone lately. But Magic Eden remains in a place of power as the primary destination where Solana collectors buy and sell.

Criticism of Magic Eden is growing, but it remains to be seen whether many NFT projects will choose to launch elsewhere (as some have recently on OpenSea), as well as whether notable collectors will opt to take a public stand and withdraw from the marketplace.

Topo Gigio is one of those people. Tweeting that he’d “fall on my sword” and forgo liquidity, the collector claimed that he will no longer use the marketplace, noting Magic Eden’s escrow policy and contract changes. In a message to Decrypt, he also cited its perceived “deflection of responsibility” around a controversial NFT drop, DegenTown.

All of the liquidity is at Magic Eden—they won’t miss me,” he told Decrypt. “I was happy to take my high-value assets, but low-volume trading elsewhere.”

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Tulip Protocol Officially Integrates Chainlink on Solana Mainnet




Tulip Protocol Officially Integrates Chainlink on Solana Mainnet

Today, Tulip Protocol made the announcement that they have integrated Chainlink Price Feeds in order to better secure their yield aggregating platform that is running on the Solana mainnet. The team had previously stated their intention to integrate Chainlink Price Feeds, and at this point, the connection has been completely put into action. Chainlink is the premier decentralized oracle network in the world, safeguarding tens of billions of dollars in smart contracts. It has diversified its offerings across other blockchains, notably Solana, Fantom, Polygon, BNB Chain, and others.

In a recent blog post, the team behind the Tulip Protocol explained that they had integrated Chainlink to provide users with more confidence that leveraged positions will be liquidated equitably using extremely accurate price data and that the protocol will continue to be completely collateralized at all times.

According to Tomasz Wojewoda, Head of Global Sales at Chainlink Labs:

“We’re pleased that Tulip Protocol has integrated Chainlink Price Feeds on Solana, helping secure its yield aggregation protocol with highly robust, decentralized market data. With the high-throughput performance of Solana and the strong security guarantees of the Chainlink Network, Tulip Protocol is able to empower users with a performant and secure platform.”

Tulip Protocol Seeks To Take Advantage Of Solana

Tulip Protocol brings together lenders who receive a return on their deposits and borrowers who are interested in gaining access to leverage. Users who initiate leverage positions are responsible for maintaining a loan-to-value (LTV) ratio that has been previously established. The Tulip Protocol then uses the asset price data that is provided by Chainlink Price Feeds to verify that this ratio is accurate. If the value of the collateral falls below the threshold that was established by the protocol, then their position will be immediately liquidated to assist in guaranteeing that the lenders will be repaid.

Tulip Protocol intends to capitalize on Solana by giving users the ability to more regularly reinvest their income and grow their assets without having to pay exorbitant amounts of gas expenses. Chainlink oracles can now be natively integrated on Solana, making it possible for Solana-based applications to benefit from enhanced levels of security and transparency. Yesterday, OpenOcean made the announcement that they would be integrating Chainlink Price Feeds in order to help secure the limited order functionality on many chains. These chains include Avalanche, Ethereum, Polygon, Fantom, and BNB Chain.

According to Senx, Co-Founder of Tulip Protocol:

 “We’re excited to be using Chainlink Price Feeds on Solana to help secure our yield aggregation platform. By leveraging the most secure and reliable on-chain data available, we’re able to provide our lenders and borrowers with greater assurances that liquidations are based on accurate price data, and the protocol will maintain a healthy loan-to-value ratio through all market conditions.” 

Allowing Stakers To Benefit From Higher APYs

Natives of the blockchain as well as newcomers to the technology are beginning to understand that decentralization does not necessarily equate to a secure platform. Given that Web3 services are currently disclosing their susceptibilities to attacks from both within and outside the network, further initiatives should be undertaken to improve the safety of user assets. Fortunately, a growing number of blockchain businesses are beginning to add various levels of security to their services in order to solidify the trust of their existing customers and attract additional investors in the near and distant future.

Tulip Protocol is the very first yield aggregation platform to be built on Solana, and it features auto-compounding vault techniques. The dApp was developed to make use of Solana’s blockchain, which has a low cost and high efficiency, hence enabling the vault techniques to compound frequently. Stakeholders are able to reap the benefits of greater APYs as a result, without the need for active management.

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Is your SOL safe? What we know about the Solana hack




On this week’s episode of “The Market Report,” Cointelegraph’s resident experts discuss the latest updates concerning the recent Solana (SOL) hack.

To kick things off, we broke down the latest news in the markets this week:

Bitcoin realized price bands form key resistance as bulls lose $24K, significant whale activity between $22,000 and $24,800 adds to the complexity of the current spot market setup. Bitcoin (BTC) consolidated lower on Aug. 9 after familiar resistance preserved a multi-month trading range. When will we finally break out of this price range and make the move towards $30K?

Institutions flocking to Ethereum for 7 straight weeks as Merge nears: Report, “Greater clarity” around the Merge has driven institutional inflows into Ethereum products, according to a CoinShares report. Is the ETH merge finally around the corner and will it bring new all time highs to ETH or has the price already been factored into the current price?

Circle freezes blacklisted Tornado Cash smart contract addresses, Crypto data aggregator Dune Analytics said that, on Monday, Circle, the issuer of the USD Coin (USDC) stablecoin, froze over 75,000 USDC worth of funds linked to the 44 Tornado Cash addresses sanctioned by the U.S. Office of Foreign Assets Control’s Specially Designated Nationals and Blocked Persons (SDN) list. Could this mark the end for Tornado Cash or is there a way they can redeem themselves?

Next up is a new segment called “Quick Crypto Tips,” which aims to give newcomers to the crypto industry quick and easy tips to get the most out of their experience. This week’s tip: Have some funds ready to buy further downturns.

Market expert Marcel Pechman then carefully examines the Bitcoin and Ether (ETH) markets. Are the current market conditions bullish or bearish? What is the outlook for the next few months? Pechman is here to break it down. The experts also go over some markets news to bring you up to date on the latest regarding the top two cryptocurrencies.

After Marcel’s market analysis, our resident experts discuss whether your SOL is safe and the latest updates on the Solana hack. We also discuss why the network has been victim to so many hacks and downtimes. What exactly do these exploits mean for the Solana platform and if you should be worried.

Lastly, we’ve got insights from Cointelegraph Markets Pro, a platform for crypto traders who want to stay one step ahead of the market. The analysts use Cointelegraph Markets Pro to identify two altcoins that stood out this week: Radicle’s RAD and DigiByte’s DGB.

Do you have a question about a coin or topic not covered here? Don’t worry. Join the YouTube chat room, and write your questions there. The person with the most interesting comment or question will be given a 1 month free subscription to markets Pro worth $100!

The Market Report streams live every Tuesday at 12:00 pm ET (4:00 pm UTC), so be sure to head on over to Cointelegraph’s YouTube page and smash those like and subscribe buttons for all our future videos and updates.

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Web3-Based ZepetoX to Build on Solana




Web3-Based ZepetoX to Build on Solana

Singapore, Singapore , Aug. 09, 2022 (GLOBE NEWSWIRE) — Today, the ZepetoX team (ZTX, announced its foray into the web3 space, sharing its vision to build an open world that empowers creators and communities to build, play and earn.

ZepetoX is the crypto metaverse initiative jointly incubated by ZEPETO – Asia’s largest metaverse platform with over 320 million registered users – alongside leading global blockchain organizations including Jump Crypto.

As the sole blockchain project comprehensively backed by ZEPETO, ZepetoX will have exclusive ties to ZEPETO in terms of IP including technological, design, and content assets as well as bridges to facilitate user onboarding between the two platforms. ZepetoX’s blockchain development efforts will be advised by Jump.

“ZepetoX is our official venture into the blockchain industry. We feel that web3 opportunities should be advanced through a crypto-native approach, which is why we are excited to have Jump as a contributor to developing a new platform that would have exclusive connections to ZEPETO. Overall, we believe that ZepetoX can build the ideal web3 platform to not only bring blockchain to our existing users but also to expand our footprint in the blockchain space through various disruptive initiatives,” said Daewook Kim, CEO of Naver Z – the operating entity of ZEPETO.

“We are excited to support ZepetoX’s efforts aimed at onboarding new audiences into the rapidly growing crypto space. ZEPETO’s expertise and technological know-hows accumulated over the past years from building an immersive social platform will serve as a springboard for ZepetoX,” said Saurabh Sharma, Partner at Jump Crypto.

Building on the Solana network, ZepetoX will offer a web-based 3D open world with varying levels of gamification integrated as well as opportunities for users to monetize via ownership of digital assets and social interaction. Ultimately, ZepetoX aims to empower self-expression through customizable avatars and lands that can be equipped with NFTs from a rich collection of assets created by diverse creators, DAOs, or communities.

“I am thrilled to see IP powerhouses like ZepetoX choosing to build their metaverse on Solana,” said Anatoly Yakovenko, Co-Founder of Solana. “Projects like ZepetoX create new pathways for onboarding millions of users to web3.”

“Our global team brings a depth of crypto native experiences and our goal is to build on the foundation of ZEPETO to spearhead the adoption of blockchain among metaverse users, developers, and creators,” said co-CEO of ZepetoX, Chris Chang.

In the coming months, ZepetoX will launch its first land sale. The lands will be tradable on the ZepetoX marketplace, which will feature a variety of different NFTs as the open world project evolves. Further details on the sale will be available on the ZepetoX website in the coming weeks.

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About ZepetoX: ZepetoX (ZTX) is a web3 company building an immersive content-driven platform for users to create, trade digital assets and enjoy social interaction. Founded in 2022, ZepetoX is the blockchain initiative of ZEPETO, widely regarded as the largest Asia-based metaverse platform boasting over 320 million lifetime users with over 2.5 billion virtual fashion items sold.



News Via KISS PR Crypto Press Release Distribution Media Contact

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