blockworks.co
The NFT marketplace Magic Eden is building out a user rewards program based around the so-called diamonds it rolled out in 2023. The platform said it would retroactively disburse diamonds to “Solana OGs” on Feb. 2.
Magic Eden announced its decision to open-source its protocol code and grant governance rights to the newly-formed Non-Fungible DAO, to which it contributes. This move is yet another example of a project using non-trading “points” to motivate user behavior amidst increased regulatory scrutiny in the crypto industry.
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Magic Eden debuted diamonds in March 2023, offering users rewards like lower fees and access to whitelists via the tokens. Now, Magic Eden users can earn diamonds by buying, selling or making offers to an entire collection of NFTs. Users can boost their rewards by relying exclusively on Magic Eden for their NFT trading.
Some have expressed frustration at the ambiguity surrounding the usefulness of diamonds, which are not apparently tradable.
The scheme resonates with a larger movement in crypto toward systems where users accumulate non-trading points, as opposed to tokens, for their participation in a project. The SocialFi upstart friend.tech employed a points program to incentivize usage, and the Solana-based exchange Drift announced Drift Points this week.
Points tend to be winkingly thought of as a placeholder for a future token while projects iron out a spotty relationship between crypto and US regulators.
“God bless all the crypto founders trying points. It’s the box regulators have put us in, and we are just dealing with it and trying to figure out how to innovate with our hands tied behind our back,” Unstoppable Domains founder Matthew Gould wrote on X this week.
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Magic Eden did not immediately return a request for comment on how it conceptualizes diamonds relative to points. In a post on X, the platform wrote: “This isn’t just another points campaign. It’s a meticulously crafted plan to give back to Magic Eden’s OGs, collectors, creators and degens alike.”
Concurrently with the diamonds airdrop, the just-announced Non-Fungible DAO, which now owns and governs the smart contracts behind Magic Eden, has announced a token. The DAO implied that community members will be able to accrue the future token by interacting with Magic Eden.
Details on the new DAO are sparse, but a press release reviewed by Blockworks said Magic Eden had “pledged to contribute” to the DAO to “further support industry growth.”