Can Magic Eden Revive the NFT Market with Its Upcoming Token Launch?

The much-anticipated “airdrop feast” is almost upon us, as Magic Eden Foundation has announced the details of its native ME token economy. The platform’s new tokenomics reveals that 12.5% of the total supply will be allocated for airdrops, with the entire amount unlocking at the token generation event (TGE). Magic Eden’s co-founder and CEO, Jack Lu, shared on X that ME tokens will launch in the coming weeks, introducing community-first features that reward loyal users, allowing them to earn ME tokens through everyday use of Magic Eden’s platform.

Following the announcement of the ME tokenomics, the pre-market trading data from Whales Market shows a 150% increase in ME’s price, reaching 2.5 USDT, with over $200,000 in 24-hour trading volume. Some heavy hitters in the Magic Eden community have expressed satisfaction with the pre-market performance, with speculation that ME could reach $3–$4 at launch.

However, Magic Tickets briefly saw a price spike to 0.24 SOL this morning before quickly retracting, now sitting at 0.179 SOL, a level that aligns with the price before the ME tokenomics announcement. So, with ME’s tokenomics now unveiled, how will Magic Eden’s token launch impact the broader NFT market?

What is Magic Eden?

Magic Eden is a cross-chain NFT marketplace that has rapidly become a leader in the space. The platform integrates ME tokens and Magic Eden Wallet to provide a unified market experience and a more robust business model.

Magic Eden co-founder Zedd recently shared in a blog post: “At Magic Eden, our core focus is on user engagement, not just trading volume, which can be easily influenced by incentives. We pay more attention to active users and actual revenue, because these are the metrics that truly reflect the platform’s health.”

According to official data, Magic Eden’s total trading volume for cross-chain NFTs and tokens has reached $600 million, with the newly launched Magic Eden Wallet hitting 300,000 monthly active addresses. Magic Eden has solidified its place as the top DEX in the Bitcoin ecosystem, accounting for over 80% of Rune and Inscription transaction volumes. In the broader NFT ecosystem, it holds the highest income and user share, commanding 60% of revenue and 29% of users.

ME Token Economics: A Closer Look

Magic Eden’s native token, ME, has a total supply of 1 billion tokens, with distribution occurring over four years. The majority of the tokens—more than half—will be allocated to the community. The distribution breakdown is as follows:

• Initial Airdrop: 12.5% of total supply, or 125 million tokens, will be distributed as airdrops to users across Bitcoin, Solana, and EVM ecosystems. These tokens will unlock fully at TGE and be distributed via Magic Eden’s mobile dApp. Any unclaimed tokens will be returned to the community for future rewards.
• Community & Ecosystem: 37.7% of the supply, or 377 million tokens, will be used for rewarding active users and supporting ecosystem growth, including promoting passionate advocates and creators.
• Contributors: 26.2% of the supply, or 262 million tokens, will be allocated to contractors, advisors, and company employees. Over 60% of these tokens will be locked for at least 18 months post-TGE, with linear unlocking afterward.
• Strategic Partners: 23.6% of the supply, or 236 million tokens, will go to strategic participants who played a key role in developing the ME protocol. These tokens will also be locked for at least 12 months post-TGE, with subsequent linear unlocking.

Over the course of four years, the ME token will be gradually released, with most of it distributed to the community. Additionally, to safeguard the community and protocol, Magic Eden has appointed a five-member security committee to oversee multi-signature wallets, capable of executing both emergency and non-emergency actions.

Diamond Points and Token Conversion Speculation

While the ME airdrop accounts for 12.5% of the total token supply, a major topic of interest for many “airdrop hunters” is the conversion rate between the accumulated Diamond points and ME tokens. The total supply of Diamonds is capped at 17 billion. If these Diamonds are fully circulated, the exchange rate would be 136 Diamonds to 1 ME token.

However, according to feedback from the official Discord channel, the total number of Diamonds accumulated by users is still far from the target of 17 billion. Therefore, many speculate that the conversion ratio could be closer to 100:1, meaning an account with 10,000 Diamond points could redeem roughly 100 ME tokens. At the current off-chain price of $2.5 per token, this airdrop could be worth approximately $250.

Preparing for the ME Token Airdrop

With the ME tokenomics now in the open, the airdrop is imminent. Here are the key points users should be aware of to ensure they successfully claim their ME tokens when the time comes:

1. Eligibility Check: Before TGE, users can check their eligibility via a qualification checker, allowing them to link their wallets and prepare for the airdrop. This process is similar to the TestME airdrop process.
2. Claiming and Staking: During TGE and the subsequent claim period, eligible users can claim and stake their ME tokens. To participate, users will need to install the Magic Eden official wallet on their mobile device.
3. TestME Participation: In previous airdrops, Magic Eden conducted a TestME phase to ensure users’ wallets were correctly linked, preparing them for the official ME token claim. Over 250,000 wallets participated in the TestME phase.

Additionally, the ME tokenomics outline that 37.7% of the tokens will be allocated to the community, likely supporting future point-earning activities or airdrop rewards. Even if users miss the initial airdrop, they may still have opportunities to earn ME tokens in future rounds.

Final Thoughts

Magic Eden has established itself as the leading NFT marketplace in terms of revenue and user share, surpassing competitors like Blur and OpenSea (which will launch its v2 in December). Despite this, the release of its tokenomics and the upcoming token launch could spark renewed interest in Magic Eden and the broader NFT space. However, given the current “meme coin frenzy,” sustaining long-term liquidity and attention in the NFT market remains a challenge.

For Magic Eden to reignite the NFT market through its token launch and continued incentives, it faces a tough battle. The market’s interest in NFTs has waned significantly, and within communities, “NFT” has almost become a meme in itself, with user enthusiasm cooling off. Similar to how Blur’s token launch sparked discussions on the financialization of NFTs, Magic Eden must confront the question: Can NFTs continue to thrive as a speculative asset, or will the industry’s financialization lead to its decline? The future of NFTs may not just be a question for marketplace platforms but for the entire ecosystem.