Rug Pulls Force Solana NFT Marketplace Magic Eden To Invoke Creator Doxing Policy
Magic Eden, the largest NFT market on Solana in volume, announced on Saturday the relaunch of its “white glove typing and marketing service” called Launchpad.
The service allows NFT creators to deposit their collections directly into Solana’s most popular marketplace, but the company halted the service two weeks ago after two high profile rugs took out hundreds of thousands of dollars from fraudulent investors. Now, Magic Eden has implemented new security procedures to help prevent future scams, including strict know your customer (KYC) the requirements placed on creators that force them to “private dox” to the company.
A carpet pull is a type of exit scam in which developers, who usually remain anonymous, abruptly leave a project and run off with investors’ money. This type of scam is all too common in the NFT space both on Ethereumthe first block chain network for NFT commerce, and Solana.
Solana’s first marketplace only launched last September and has already racked up 411,425 users and over $704 million in trading volume since its launch, according to the analytics website. DappRadar. But it was recently forced to rethink the way it conducts business following rug draws on its Launchpad platform by the NFT King of Chess and Balloonsville projects.
🧵 We are excited to bring back Launchpad tmr. Did your heart just skip a beat with excitement + anxiety? Do not worry.
King of Chess was an NFT collection that claimed to be an NFT chess game but instead stole 645 SOL ($58,000 at the time) from investors. Balloonsville did much more damage, ripping off its investors out of 5,000 SOL, worth nearly $600,000 at the time.
“With these two projects, we have reimbursed the coin operators [the buyers]because we felt like they didn’t even get a chance to finish the mint and they were stuck in those positions,” Magic Eden said. Tiffany Huang Recount Decrypt at ETH Denver.
But while most rug pulling is done in silence, the team behind Balloonsville instead relentlessly tracked its investors and Magic Eden after the scam. “All it took was a few paid actors, and boom. We did it again,” the team said in a since-deleted tweet. Balloonsville claimed to be part of a team that had previously performed mat pulls on Solana.
The Balloonsville account also said his actions were intended to prove a point and expose a loophole in Magic Eden’s policies. He claimed that Magic Eden had already instituted a policy of doxing that required teams behind NFT projects using the Launchpad to identify themselves to the company. Balloonsville refused to provide identification, but Magic Eden allowed the project to use Launchpad anyway, he claimed.
Following these events, Magic Eden had a “come to Jesus moment,” Huang said, as the company realized it was moving too fast and quality in the market was suffering.
“We want to be better,” Huang said. “Now we’re focusing on a lot fewer launches per week, with higher quality projects.” In addition to reimbursing Balloonsville buyers, Magic Eden also “rolled out” the project by taking it over and redirecting royalties from Balloonsville purchases to a new community. wallet.
🎈 Ok, I found a solution to turn Balloonsville into Balloonsville 2.0 and make it better than it should be initially.
According to Huang, Magic Eden is now implementing more stringent security and project quality checks for NFT collections.
“So according to the security criteria,” Huang said, “every project will have to sign a partnership agreement, like a real contract. public doctrines.”
Doxing is the revealing of private information about a person or group, which usually takes the form of revealing the person’s name, face, or address that was previously unknown. And while providing a basic credential is the norm in traditional businesses, it’s a thorny point of contention in crypto and Web3. News Feed recently drew the ire of the crypto community when the outlet revealed the identities of two founders behind the Bored Ape Yacht Club, one of the most valuable NFT collections of the moment.
According to Huang, the new quality standards implemented by Magic Eden include the requirement to prove that projects using its Launchpad have experience running an NFT project with real social engagement. For projects that claim to be developing a game or service that involves token distribution, they must also provide a “realistic” whitepaper and roadmap.
Additionally, projects that use the Magic Eden Launchpad will now have their funds blocked for at least 24 hours. They also have the option to increase the escrow period to 14 days, which Huang said projects can opt into to prove they’re in for real.
Huang also clarified that in the future, Magic Eden will only reimburse victims of a rug draw if the scam occurs during the escrow period.
“We think we’ve made everything much stricter, but ultimately we can never guarantee against mats as a platform,” she said. “So people should always do their own research.”