About two years since Magic Eden's token issuance, how has the market changed? Honestly, my straightforward impression is that the gap between expectations and reality is quite large.

Initially, Magic Eden held overwhelming dominance in the Solana and Bitcoin ecosystems. It accounted for over 80% of the share in Bitcoin Ordinals and the Runescape NFT market, and its transaction fee revenue was also at the industry top level, reaching $2.8 million per month. But looking now, the ME token price has plummeted from $3 to $0.12. The circulating market cap is $62.26 million, and the fully diluted market cap is $121.11 million, indicating a significant contraction.

The underlying reason for this decline is not just the overall market downturn, but a more fundamental issue. While Magic Eden is certainly strong in the Solana and Bitcoin domains, it still remains a secondary player in the massive Ethereum market. It struggles to attract Ethereum users due to the entrenched position of a major NFT marketplace and the low-fee strategies of another platform.

The token economics design is also, frankly, not very innovative. Of the total supply of 1 billion ME tokens, only 12.5% was released initially, with community rewards at 37.7%, contributors at 26.2%, and strategic partners at 23.6%, leaving a mountain of future unlocks. Once these are released in the medium term, significant selling pressure could hit the market. If this happens during a period of weak market demand like now, prices are likely to be pushed even lower.

For Magic Eden to survive, merely improving the transaction fee model won't be enough. With the enthusiasm for Bitcoin Ordinals cooling down, it needs to create new permanent projects and increase user stickiness. Strengthening competitiveness on Ethereum is also urgent. Currently, Magic Eden is indeed strong in the Solana and Bitcoin domains, but that alone no longer guarantees market dominance.

It's understandable that cautious views are spreading among investors. A PER of 50 is still considered high relative to the past year's revenue of $60 million. Until the market gains confidence in Magic Eden's long-term profitability, a token price recovery may be difficult.