Average daily active users of Metaplex programs increased by 9% QoQ due to the dominance of the Token Metadata program and despite the roughly 50% decline in usage of Auction House and Candy Machine.
Metaplex launched programmable NFTs, enabling creators to enforce royalties on secondary sales.
Metaplex’s primary gross merchandise value (GMV) generated by Candy Machine programs decreased by 38% QoQ in SOL terms and 35% in USD terms, though it still leads in holding the largest share of GMV within Solana. The broader ecosystem (excluding Candy Machine) only saw primary GMV decrease by 30% QoQ in SOL and 28% in USD.
Over 993,000 new wallets started holding Metaplex NFTs in Q1’23; last quarter, ~1.5 million new wallets were added. Though still growing in the bear market, this 35% decrease in the rate of QoQ growth is a reflection of the depressed market conditions in the context of Metplex’s outperformance the previous quarter.
Primer on Metaplex
Metaplex is a decentralized protocol built on the Solana blockchain designed to simplify the creation, sale, and use of NFTs. By offering a suite of development tools, smart contracts, and open standards, Metaplex enables NFT communities to issue, manage, and own digital assets on-chain.
Metaplex continuously develops and maintains several programs and standards to enhance user experience and meet the evolving needs of its community.
Token Metadata — Attaches additional data and utility to define fungible or non-fungible tokens.
Candy Machine (V2/V3) — Used to launch generative and PFP collections. Candy Machine V3 now supports the minting of programmable NFTs.
Fixed-Price Sale — A program that enables creators to build/distribute membership NFTs at a fixed-price that grants holders access to exclusive content and events. It supports the restriction of sales to specific collection holders.
Creator Studio — No-code tools to create, sell, and manage NFTs on Solana.
Auction House — An escrow-less exchange protocol for NFT marketplaces.
Gumdrop — Enables massively scaled airdrops of NFTs and tokens.
Compression — A program for creating and interacting with compressed Metaplex NFTs. Compressed NFTs are secured on-chain using Merkle trees.
This program library is used by creators and developers for various purposes like design (Token Metadata), mint (Candy Machine), resale (Auction House), airdrop (Gumdrop), and more. While Metaplex offers tools to support secondary markets, it mostly focuses on primary sales and minting solutions for creators.
Key Metrics
Cooling Momentum
Throughout the past year, crypto speculation has taken a bearish turn in the face of crypto-related corporate fraud, predatory legislation, inflation, and more. Metaplex and the Solana ecosystem were impacted by the overall cooling market.
The primary GMV for Metaplex and other Solana protocols hit their lowest marks in five quarters, with Metaplex seeing a 38% QoQ decline and the ecosystem (excluding Metaplex) seeing only a 30% QoQ decline. Additionally, the price of SOL decreased by over 80% since last year, leading to even lower dollar values generated by Metaplex and Solana programs.
Regarding usage, the addition of new wallets holding Metaplex NFTs and the average daily NFTs minted and transferred hit their lowest levels in four quarters. Average daily active users are up 9% QoQ and down ~50% from Q1’22.
Within a broader bear market, active wallets on Solana fell by ~42% since the start of the year. Despite near-universal decreases in multiple metrics, Metaplex’s increase in active users highlights the potency of its Token Metadata program. As a Solana-based protocol, Metaplex is affected by Solana’s frequent network outages, like the recent ones in February 2023 and October 2022. It was also affected by how users reacted to FTX’s association with Solana.
Network Usage
Daily Active Users
Daily active users are measured as unique interactions with Metaplex’s three core programs: Token Metadata, Auction House, and Candy Machine.
Token Metadata consistently accounts for the most daily active users of the Metaplex protocol. Despite over 50% decreases for Auction House and Candy Machine, Token Metadata usage grew by 24% QoQ. Since Q2’22, daily active users of Auction House and Candy Machine have been declining. In addition to adverse market conditions, their decline could be due to the increase in use of other protocols like LMNFT (LaunchMyNFT).
It generally makes sense for protocols to own trading and minting programs — in theory, the protocol could extract a percentage of the monetary value flowing through each program. Token Metadata is different; it represents a standard — like ERC-721 — that defines NFTs without extracting monetary value. Given the lack of financial incentive for potential competitors, the program may continue to account for the largest share of daily active users for Metaplex.
NFT Transfers
Transfers account for all activity in which an NFT changes hands. They include peer-to-peer transfers and NFT trades.
Metaplex NFT transfers fell by 20% QoQ and increased 35% YoY. Despite OpenSea adding support for Solana NFTs in April 2022, it had a negligible impact on secondary transfers. Throughout the past five quarters, OpenSea only accounted for an average of ~0.4% of all secondary transfers on Solana.
NFT Mints
Metaplex has multiple NFT minting programs. Its most popular is Candy Machine, which Metaplex has iterated into separate versions by incrementally adding features. To complement Candy Machine, the Fixed Price Sale program enables users to mint NFTs with the same metadata (though with different edition numbers). This would allow for membership-based activities such as event tickets or art-focused editions.
Metaplex hit its lowest mark for NFT mints in Q1’23, falling under 1 million NFT mints for the first time in five quarters. Though Candy Machine V3 mints increased 171% QoQ, total Candy Machine mints fell by 33%. Meanwhile, Fixed Price Sale mints increased by 235% QoQ.
While Metaplex mints declined in Q2’22 and Q3’22, LMNFT mints increased dramatically (286% and 132%, respectively), allowing the protocol to take a large swath of the market share before it faced an ~81% QoQ decrease in Q4’22. Metaplex’s earlier declines could be attributed to the increase in LMNFT usage, while the most recent quarter follows the ecosystem-wide general decrease in NFTs minted on Solana.
NFT Mints by Protocol
Different protocols can use different programs to allow users to mint NFTs. Metaplex encompasses four programs (Candy Machine V1, V2, V3, and Fixed Price Sale), the Magic Eden Launchpad has two (Magic Eden Launchpad V1 and V2), LMNFT has one, and 15 different programs account for the others.
Since Q1’22, Candy Machine has been the primary minting program on Solana. At the start of the second quarter, LMNFT began to claim significant market share, accounting for 72% of Solana’s NFT mints by September 2022. LMNFT’s popularity is likely a result of it hosting low-priced and free NFT mints. In September 2022, LMNFT’s primary GMV only accounted for only ~14% of the total market, despite its significant market share.
The growing adoption of the newly launched Candy Machine V3 enabled Metaplex to take back its share of NFT mints in Q4’22. Other protocols continued to grow in popularity, and LMNFT regained its share in early Q1’23. Nevertheless, Metaplex ended the quarter with its Fixed Price Sale program driving ~24% of the NFT mints in March 2023 and Candy Machine capturing the other ~26%.
New NFT Holders
New NFT holders are defined as new wallets holding Metaplex NFTs (NFTs built with the Metaplex Token Metadata program). Over 993,000 new wallets held Metaplex NFTs in Q1’23. Last quarter, ~1.5 million new wallets were added. Though still growing in the bear market, this 35% decrease in the rate of QoQ growth reflects the depressed market conditions in the context of Metaplex’s outperformance in adding wallets the previous quarter.
Value Generated
Gross Merchandise Value
Gross merchandise value (GMV) refers to the total amount of value exchanged through the Metaplex infrastructure. In the case of Candy Machine, primary GMV refers to the primary sales to creators. For Auction House, secondary GMV refers to the value of NFTs sold.
Total GMV in SOL declined by 41% QoQ, with a 71% drop from Auction House and a 38% drop from Candy Machine. In Q1’23, both programs produced their lowest GMVs from over the past year. Auction House GMV accounted for only 4% of Metaplex’s total GMV. While Auction House’s success is a reflection of the popularity of marketplaces using it, Metaplex tends to focus development on primary minting infrastructure.
Candy Machine consists of ~59% of Solana’s entire primary GMV and has hovered around this number for the past four quarters. Despite LMFNT claiming market share of mints at various times, its share of GMV in September 2022 — when it accounted for ~72% of Solana NFT mints — was only 14%. Instead of using platforms focused on cheap mints like LMNFT, renowned Solana NFT projects like Claynosaurz and y00ts tend to mint with Candy Machine.
While the price of SOL largely stagnated throughout the quarter, GMV measured in USD followed nearly the same path as GMV in SOL QoQ. Nominally, this took the form of a ~$6.1 million decrease, with Auction House only accounting for ~$974,000 of the total.
While Candy Machine’s primary GMV in USD decreased 35% QoQ, the broader ecosystem (excluding Candy Machine) only saw primary GMV in USD decrease by 28% QoQ. This general decrease in Solana’s primary GMV is likely a result of the negative market conditions cooling general NFT activity. However, once Metaplex’s Creator Studio is completely open, Candy Machine mints and GMV may see an uptick in future quarters.
Token Dynamics
Liquid Supply
Liquid supply curves help determine when exactly an increase in sell pressure may occur for certain assets (or, when tokens may potentially get dumped onto unsuspecting retail buyers). Specifically, they show when tokens unlock and to whom.
Since launch, MPLX tokens have yet to unlock for insiders outside of the Metaplex Foundation and Metaplex DAO, including founding partners, founding advisors, Everstake, and strategic round participants. In general, projects delay insider unlocks for a year to assure retail holders that tokens will not be sold en masse by privileged actors immediately after issuance. However, after September 19, 2023, most insider allocations without liquid MPLX will be eligible for the first unlock since issuance, which could lead to potential sell pressure.
FDV
The changes in fully diluted valuation (FDV) reflect an asset’s price. FDV is observed as opposed to just price because it complements price volatility with a sense of scale for the asset’s significance.
MPLX’s FDV was worth over $400 million to start off Q4’22 and ended at ~$40 million for a ~90% decrease in price and value. The initial and subsequent drop at the end of October 2022 occurred while the price of SOL was also falling. Around that time, Solana had experienced a network outage, and the value of the broader crypto market was in the midst of a decline, which began to accelerate in November 2022.
During that time, Metaplex DAO saw some additional activity in its community. Upon the DAO launching at the end of September 2022, MPLX holders voted to reallocate 40 million MPLX from the DAO’s then-200 million MPLX treasury to community airdrops. Since then, Metaplex DAO has been largely inactive. Despite gloomy market conditions and a low value-add for holding the asset, MPLX FDV grew by nearly 25% in Q1’23.
Users holding the MPLX token can vote on proposals in the Metaplex DAO. MPLX neither guarantees holders a share of the value generated by Metaplex, nor does the DAO have direct influence over what gets implemented on the Metaplex protocol.
Qualitative Analysis
In Q1’23, Metaplex launched programmable NFTs with royalties enforcement. This new asset class on Solana allows creators to enforce royalties on secondary NFT sales through certain rulesets. Metaplex also expanded access to its Creator Studio, a no-code interface for creating/managing NFTs.
The Metaplex protocol continues to develop novel tools to innovate NFT infrastructure on Solana. Below, the aforementioned topics will be explored in more detail.
Programmable NFTs
Programmable NFTs were deployed to the Solana mainnet in January 2023. Creators could start using this asset class in February 2023, allowing users to upgrade existing NFT collections to programmable NFTs with royalty enforcement. Popular Solana-based applications like Phantom, Magic Eden, Tensor, and more have updated their protocols to add compatibility with the new asset class. In March 2023, Metaplex announced support for the minting of programmable NFTs in its Candy Machine V3 program.
Programmable NFTs and their widespread support by the most used applications in the Solana ecosystem show the significance of a protocol like Metaplex. Even while daily active users dropped QoQ from Metaplex’s top programs like Auction House and Candy Machine, programmable NFTs may have contributed to the increase in the usage of its Token Metadata program.
NFT creators in any ecosystem are primarily concerned with secondary sales. Because programmable NFTs introduce a royalty enforcement mechanism, they might attract NFT artists from other ecosystems, especially those that seek to determine which programs can interact with their collections.
Metaplex Creator Studio
In the next quarter, Metaplex plans to continue expanding access to Creator Studio, which is powered by Candy Machine. This tool is a no-code interface enabling users to easily create, sell, and manage Solana NFTs. Users can create personalized mint pages on desktop and mobile. Metaplex told Messari that, throughout Q1’23, it let ~3,400 creators off the waitlist, expanding access to the tool.
A large barrier to entry within crypto generally is underdeveloped user interfaces (UIs). Even savants like Vitalik have struggled with Metamask, one of the most used applications in the digital asset space. By creating a simple NFT management interface, Metaplex is spearheading user experience. Enabling creators to build smooth UIs for NFT mints may lead to more adoption of Solana NFTs and, additionally, wider use of the Metaplex protocol.
Metaplex DAO
Since launching MPLX, the Metaplex DAO has been largely inactive; it has not seen a vote with broad participation since September 2022. Only one vote occurred since then, garnering just three participants in March 2023. Although the whitepaper (pg. 14) expressed that MPLX holders would govern issues ranging from protocol upgrades/deployment to resolving emergencies, this has yet to become reality. Thus far, the most far-reaching proposal executed by the Metaplex DAO was the reallocation of 40 million MPLX tokens from its then-200 million MPLX token treasury, which now holds 160 million MPLX (~$6 million USD).
An active and fully functioning Metaplex DAO would be akin to a token-based governance existing for ERC-721 NFTs on Ethereum. This would empower non-technical stakeholders to have a larger input over what details get implemented within the NFT infrastructure. Assuming a healthy Metaplex DAO that governs the operations specified in the whitepaper, MPLX holders could impact the direction of NFTs on Solana.
Furthermore, if Metaplex builds a robust on-chain governance system where all updates fall under the full authority of the DAO, then the protocol may provide a novel example for governance of NFT infrastructure and standards. Metaplex told Messari that the Metaplex Foundation plans to more actively involve the Metaplex DAO in the governance of the Metaplex protocol going forward.
Compression
The Metaplex team was one of the primary contributors to compressed NFTs, a new way to store data on the Solana blockchain that greatly reduces costs. For example, state compression would reduce the cost of minting NFTs by ~2,400–24,000x. To add context, it would cost ~$250,000 to mint 1 million uncompressed NFTs on Solana; minting 1 million compressed NFTs would only cost ~$110. With such a drastic reduction in costs, Metaplex NFTs mints may see an increase, especially by creators planning large projects.
Closing Summary
Momentum cooled, prices stagnated, and usage slumped — but Metaplex continued to build. Despite following the market to its lowest performing quarter for GMV, adding new holders, and NFTs minted in the past year, Metaplex delivered programmable NFTs and expanded access to the Creator Studio tool. In Q1’23, Metaplex added almost 1 million new wallets while its Token Metadata program saw a 24% QoQ increase in average daily active users. This increase alone was enough to drive a total increase in Metaplex’s usage to 9% despite a shrinking user base for other programs.
Metaplex has shown commitment to Solana’s NFT community through its shipment of open-source programs. It has also constantly hosted Twitter spaces for NFT creators and worked with other Solana-based protocols to ensure smooth adoption of its products. That said, Metaplex has yet to address the shortcomings of its DAO. Without an active DAO to enact material change, the MPLX token has little utility. If Metaplex confronts this with an effective plan that would encourage participation, it could become an even greater model for what decentralized NFT protocols should strive for.
This report was commissioned by Metaplex Studios, Inc. All content was produced independently by the author(s) and does not necessarily reflect the opinions of Messari, Inc. or the organization that requested the report. The commissioning organization may have input on the content of the report, but Messari maintains editorial control over the final report to retain data accuracy and objectivity. Author(s) may hold cryptocurrencies named in this report. This report is meant for informational purposes only. It is not meant to serve as investment advice. You should conduct your own research and consult an independent financial, tax, or legal advisor before making any investment decisions. Past performance of any asset is not indicative of future results. Please see our Terms of Service for more information.
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