Exclusive interview with Metaplex: More than just NFT, how does Metaplex become the cornerstone of Solana’s ecological development?

Since April this year, Pantera Capital and other crypto funds have begun to buy a large number of MPLX tokens from FTX-related asset-undertaking entity Wave Digital Assets, and before that, several institutions have publicly stated that they are purchasing MPLX tokens. After the announcement of the new protocol repurchase mechanism in March, Metaplex's fundamentals and long-term potential began to attract investors' attention. As Metaplex continues to expand in the infrastructure field, its irreplaceable nature and growth potential in the Solana ecosystem make $MPLX a severely undervalued asset in the eyes of institutions, and with the recent announcement of Aura Network, the price of $MPLX has also begun to rise gradually.

This Solana "eco-veteran" launched in 2021 is now returning to people's attention with its new ecological niche development and excellent fundamental data. But this time, it wants to do more than just NFT. During this year's Token2049 event, BlockBeats sat down with Stephen Hess, chairman of the Metaplex Foundation, for an in-depth interview to discuss his personal crypto career, Metaplex's past and current experiences and thinking, and the future ambitions of the new product Aura Network.

Origin Story: Mt. Gox, Solana, Metaplex

Like many founders in the crypto industry, Stephen's blockchain journey stems from an interest in information technology. While studying at Stanford University, Stephen began to understand the potential of Bitcoin and distributed ledgers. In his view, decentralized systems are the inevitable evolution of today's digital technology. Future business and finance will definitely shift from centralized systems to peer-to-peer networks. In this process of transformation, these systems will eventually empower individuals and promote the development of autonomy.

In 2013, Stephen bought his first Bitcoin at Mt. Gox. Soon after, he quit his job at a technology company and began to try day trading in the cryptocurrency field. But Stephen, who always pays attention to product development, does not intend to become a full-time crypto trader. At that time, he was facing the first major choice of his career: stay in the technology health industry to engage in AI research, or go all in the cryptocurrency industry. Interestingly, because he paid great attention to product details, Stephen noticed serious problems with the platform soon after Mt. Gox began trading and quickly transferred funds, becoming one of the few investors who avoided the Mentougou crash. However, because he did not have the "passive lock-up" buff, he sold a lot of Bitcoin to cover personal taxes and missed the subsequent huge gains.

In 2020, Stephen was approached by Raj Gokal, a former colleague in the tech health field and co-founder of Solana Labs, to join his team. This period was just before Solana's underlying technology was proven and began to be vigorously promoted and applied. For Stephen, who loves product development, this was undoubtedly a perfect job. In this way, he became the first product manager of Solana Labs as the head of the product department. Later, Stephen helped co-found Metaplex and experienced the Solana summer and FTX crash. Looking back on his crypto career, Stephen's own summary is: "In a volatile field like cryptocurrency, what looks like a disaster in front of you often becomes the biggest opportunity."

BlockBeats: Where did your crypto career begin?

Stephen：Early in my career, I was struggling with whether to go full-time in crypto or pursue a career in AI-focused healthcare. Around 2014, I started emailing a lot of crypto founders asking if they needed designers, product managers, or engineers. I was also very interested in the AI/healthcare career path at the time, and interestingly, this is what brought me back to crypto. My mindset was simple: if I found the right team, I would absolutely join and do whatever was needed. Working at Solana Labs was exactly that for me, where I designed the merchandise suite, the ecosystem diagram, worked on the first staking pool contract, designed the first UI for Wormhole, helped write the first NFT and token standard and launched Metaplex, etc.

At the time, I was mainly contacting big projects like Ripple and Stellar, but since I didn’t find the right position, I returned to the healthcare industry after returning from South America. I worked as a product designer at Stride Health building a health insurance marketplace, then I joined Atomic Labs building disease management software for breast cancer patients, and then I joined Omada Health.

While at Omada Health, I worked for Raj and Eric Williams was the company's head of data science. When they left Omada to start Solana, Eric designed Solana's token economics model, and I joined Solana Labs as a product leader shortly thereafter.

BlockBeats: How did Raj invite you to join the Solana team?

Stephen: We were helping companies build systems to train medical models, especially machine learning models based on the data we generate. To ensure the quality of the training data, we needed to increase the diversity of the data, so we needed to have clinicians occasionally give some "random suggestions" like taking a walk or recommending a new recipe, but this was difficult to achieve in the healthcare field because people were conservative at the time.

Raj, Eric and I were all working hard to promote the development of artificial intelligence in this field, and we firmly believed that this was the trend of the future. Although Omada has achieved considerable success today, we did experience a lot of setbacks at the time, so Raj and Eric began to look for a less restricted field, and cryptocurrency happened to provide this creative freedom. So they left the company and co-founded Solana with Anatoly.

I remember Raj saying to me at the time: "I don't have a job title for you now, but we have a table, come and work with us." It was still early days for Solana, and it took me a while to officially join them. When I joined, they had been operating for a year or two. But I remember clearly that they started out with a few folding tables above a mall in downtown San Francisco, and now Solana has grown into a global community. Solana offices opened in New York City in May 2023, source: Decrypt BlockBeats: What ultimately made you decide to join the Solana team? Stephen: I saw this as a "second chance" for me to work in the crypto space early in my career, and I believed that it was important for individuals to be able to conduct digital transactions and conduct business, and that commerce and finance would gradually move to peer-to-peer and decentralized. In my opinion, technology is definitely improving all the time. The key is that you have to play a short-term offensive while focusing on the long-term vision. This is the difference between strategy and tactics.

BlockBeats: If you had chosen to stay in the healthcare industry, would you consider entering the crypto industry today?

Stephen: Of course. I am a very patient person. I will not be too anxious about small improvements every year, but look to the future and think about the development in ten, twenty, or even a hundred years. As a part of this field, one of my important tasks is to develop the business steadily at the pace of the market and avoid blind expansion. A common mistake many entrepreneurs make is to rush to invest too much money before the market is ready, and the result often ends in failure. If they can be more patient, down-to-earth, and persistent, their chances of success will be much greater.

To be clear, I care a lot about small improvements every year. It's just about understanding where you are in the technology adoption life cycle, and not rushing into the mainstream when the underlying infrastructure has not yet been formed. This means finding more highly differentiated professional use cases and then planning a route to achieve the ultimate vision.

Looking back at history, whether it is Mt. Gox or BitFenix, many once-glorious trading platforms no longer exist today. In the field of cryptocurrency, over-optimism and a quick-win mentality often lead to waste of resources and unrealistic expectations, which may ultimately hurt the team and the community.

For us, Metaplex was built for the long term, to build an indestructible long-term project. I recommend that every entrepreneur have this long-term mentality: success requires focus, diligence, and patience, which is a huge advantage in itself.

BlockBeats: How did you later start Metaplex?

Stephen: When I first joined the Solana team, they had already proven the core foundation of the Solana Virtual Machine (SVM), which is still the most efficient execution environment in decentralized state machines. SVM enables state transitions to be done efficiently and at scale in a decentralized manner, opening up a new generation of application scenarios and use cases.

From the beginning, I have focused on product design and development from start to finish. In the early stages, I had the opportunity to participate in the development of Stake Pools, which later evolved into Liquid Staking, and now it has become a key component of the Solana ecosystem, with many excellent projects revolving around it. I am also involved in governance work, especially SPL governance, which provides support for tools like Realms and Squads. In addition, I participated in the development of Wormhole during the Solana Labs incubation stage.

I was also a member of the team that worked on the first version of the NFT standard, which eventually became Metaplex. I have been helping lead Metaplex over the past few years while also contributing to the development of Solana and helping it become the platform of choice for Web3 developers. As a product developer, this is a perfect opportunity because this infrastructure innovation enables Solana to build new products and services in a variety of markets.

Solana's "Ecosystem Index": NFT, but more than NFT

Metaplex was founded at the end of 2021, and Solana was at the height of the NFT summer. As the designer of the main NFT standard for the Solana ecosystem, Metaplex became the "behind-the-scenes creator" of the NFT market, and its valuation rose with the ecosystem.

In January 2022, Metaplex received a strategic investment of $46 million from institutions such as Multicoin, Jump, and Alameda. But with the collapse of FTX, the Solana ecosystem was severely frustrated, and the Metaplex team was also hit. At the end of the year, Stephen announced the company's decision to lay off employees on Twitter. He wrote in the tweet: "While our financial situation has not been directly affected by the collapse of FTX, the indirect impact on the market is significant, which requires us to take a more conservative approach moving forward."

But Metaplex did not stop moving forward. Things that seem to be disasters often become the biggest opportunities. A year later, Solana Nirvana, Metaplex returned to the stage, but this time, it has to do more than just NFT.

The behind-the-scenes creator of NFT summer

In May 2022, the Solana network was down again. Subsequently, the Metaplex team issued a statement through the official Twitter that the network downtime was mainly due to the crawler of its Candy Machine program, and soon deployed a robot penalty program for the program to stabilize the network.

"Candy Machines" is a set of development programs launched by Metaplex that allow creators to flexibly mint tokens and distribute them to their communities. Its V3 version introduced an integrated program that allows people to mint NFTs through SOL, tokens, and burning. The subsequent launch of Bubblegum is an extension of this program, mainly providing a solution for "compressing NFTs."

Looking back on 2021, Metaplex can be said to have single-handedly supported the golden age of Solana NFT. From the early independent community to Magic Eden's popular NFT Launchpad, Metaplex is behind almost every NFT asset. Even Stephen bluntly stated that the NFT wave was of great significance to the growth of Metaplex. "That period of time was of great significance to us, especially in the Candy Machine era, when the generation of thousands of PFP projects helped Solana build its own ecological social layer, which became the basis of the community scale we see today."

Comparing the transaction volume of Ethereum and Solana NFT markets, although the overall NFT market has declined significantly, Solana NFT has shown stronger resilience; data source: Dune

BlockBeats: How did Metaplex explore and seize the opportunities in the Solana ecosystem NFT market?

Stephen：It all started with Ethereum NFT creators who contacted us. They were dissatisfied with the existing platforms. At that time, platforms such as Nifty Gateway were the main way to issue NFTs on Ethereum, but creators always faced delays, slow payments, and other problems that prevented them from bringing their projects to market quickly.

The starting point of Metaplex is that individual creators can connect directly with their fans and audiences. So our first product was an open source NFT store that anyone could deploy and host NFTs by themselves just like using WordPress. After that, we launched the Candy Machine program, which became our killer feature.

Once Candy Machine was launched, it experienced the ideal situation that all early product development hopes to encounter: after the launch, Candy Machine had huge demand, and we were racing with user demand almost every week, trying to keep up with the evolution and demand of the market. We’ve had a steady stream of major launches like Degen Ape, Aurory, and more, and for almost a full year, there have been multiple multi-million dollar NFT projects launching through Metaplex’s Candy Machine every week.

BlockBeats: But at that time, most NFTs were released and promoted on Magic Eden, and Metaplex itself did not gain much recognition. Do you feel that you "gave" market share to Magic Eden at that time? If you had to do it again, would you consider launching Metaplex's own NFT issuance platform?

Stephen: Magic Eden built an incredible platform for creators and collectors, and gradually grew into one of the most successful dApps in the entire cryptocurrency space. In fact, Magic Eden's launchpad was also built using Metaplex's Candy Machine technology. They used the same technology, just branded it and integrated it into their market platform, and their early growth played an important role in our growth. I don't like hypothetical questions too much, because you never know exactly how things will develop when you are there, and we are obviously very happy with where Metaplex is now and what we have achieved.

Ultimately, I think the answer is no, we will not build our own distribution platform. What has given us strength and momentum over the years is our commitment to developers and creating value for applications built on our protocol. If applications built on Metaplex can generate value and profits far beyond our own, that is the most strategic thing we can do for long-term success. Developers’ success is our success.

BlockBeats: Does the Metaplex protocol generate revenue through Magic Eden?

Stephen: Absolutely. The Metaplex protocol generates revenue by charging fees to applications, all of which is publicly disclosed. 50% of the protocol revenue is used to purchase $MPLX, which is then contributed to our DAO for community grants, and the other 50% is used to support the non-profit operations of the foundation. The foundation has no shareholders or investors, and its only goal is to drive the future development of the DAO and the Metaplex protocol.

BlockBeats: After observing a round of NFT bull market, what do you think is the key to the success of NFT projects?

Stephen：I think at the end of the day, the key to the success of an NFT project is whether it can find a community that is connected by common values or interests. The measure of success should not only be market capitalization or trading volume, but also whether the project can cultivate a meaningful community around these common interests.

In fact, one of the best things an NFT project can do is to get rid of the excessive focus on price. Instead, the focus should be on finding and screening individuals who truly align with the community's goals. The mistake many NFT projects make is to rely too much on whale investors, which can have a negative impact. When the market declines, you may lose core members who really care about the project's mission. Therefore, building around a strong and actively engaged community is the key to long-term success.

BlockBeats: Do you think NFT is over? If not, what is its future?

Stephen：I think avatar NFTs (PFPs) are the first real breakthrough in decentralized social networks. Many people ask when decentralized social networks will arrive. I believe it has already been achieved through NFTs. For example, projects like MadLads, Solana Monkey Business, and Cyber Frogz are real communities with teams developing products and hosting events every day to provide social opportunities for crypto users.

So far, these communities have been very successful in attracting users who work full-time in the crypto industry. The next big challenge is whether they can break through the limitations of the crypto industry and expand outward. NFTs have strong organizational capabilities within the crypto industry, but the success rate of creating communities outside the industry is not high. I think this is the next key challenge for such NFT projects.

On the other hand, meme coins are actually a continuation of this trend - in our view, they are also on-chain communities. We recently launched a framework called MPL-404, designed for hybrid NFT projects (picture-to-coin conversions, such as DeGods and Mutantmon). This standard combines the advantages of meme coins and NFT images. Meme coins provide wider distribution channels through trading platforms, making it easier for users to obtain liquidity and capital, while NFTs provide unique value through online experiences or offline activities.

I believe this trend will continue to be an important theme. I want to emphasize in particular that decentralized social networks are already here - it has been built on Solana and Metaplex, and we believe this will become the social foundation that drives the next generation of applications.

「Eco Index」

On September 9, The Block reported that several crypto funds including Pantera and ParaFi purchased a large number of $MPLX tokens from Wave Digital Assets. These tokens were originally held by FTX estate. In the past five months, 65.1 million of the 72.6 million MPLX held by FTX have been sold, leaving 7.5 million. As of September 19, 2024, all initial allocations of MPLX have been vested and unlocked.

The over-the-counter redistribution of a large number of MPLX token shares marks the end of the stable development under the influence of FTX. After a year of laying a solid foundation, Metaplex has returned to the market with a new attitude, and has once again become a hot commodity in the eyes of institutions as it increasingly values profitability and application scenarios.

A few days ago, Stephen, chairman of the Metaplex Foundation, tweeted on X, showing the economic activities and benefits that Metaplex, as a protocol, has created for the Solana ecosystem. Since its launch in 2021, Metaplex has cumulatively facilitated more than $5.5 billion in on-chain economic activities, covering tens of millions of wallet addresses in the ecosystem. During the meme craze at the beginning of the year, Metaplex generated $12 million in protocol revenue through Pump.fun.

On the other hand, according to the existing repurchase policy, Metaplex has been able to repurchase MPLX worth approximately 10,000 SOL every month since June 2024. As of August 2024, the total value of repurchased MPLX has reached approximately 30,000 SOL, accounting for more than 3% of Metaplex's market value, becoming an important and stable force in reshaping the circulating supply.

All of this stems from Stephen and his team’s conception of Metaplex. In their view, Metaplex is more than just an NFT development package. What it has to do is to be the technical cornerstone of the development of the Solana ecosystem.

Related reading: "Quietly dominating the Solana ecosystem cash flow, why is $MPLX undervalued? "

Cumulative economic activity and fees generated by the Metaplex protocol, source: Stephen (@meta_hess)

BlockBeats: If we compare it to the industrial niche of the traditional Internet, can we understand Metaplex as the technical database of the Solana ecosystem?

Stephen: I think one of the core components of the Metaplex protocol is the digital asset standard and the ability to create and manage digital assets. Its importance is indeed similar to database technology. However, our goal is not limited to this. We are focused on building a fully integrated full-stack tool for developers, which not only allows them to deploy digital asset protocols, but also develop complete end-to-end applications.

BlockBeats: Metaplex has generated approximately $12 million in revenue through Pump.fun in the past few months. Can you talk about how this cooperation started?

Stephen：We don't actually have a formal partnership with them, they've built a fascinating product using our development tools. Pump.fun is primarily using Metaplex's token metadata program and some SDKs, and every time a user creates a meme coin through Pump.fun, they're actually using Metaplex's token infrastructure.

In both the Magic Eden Launchpad and Pump.fun cases, applications charge a small fee every time they create a new NFT or FT using our protocol, and that's where the Metaplex protocol earns its revenue. Our philosophy is to charge a small fee when an asset is created, and use those protocol fees to develop development tools and on-chain programs that support and promote these standards.

Our goal is to support hundreds or even thousands of applications built using our tools, and our tool design is open source, so anyone can build with our SDK and development tools. We also provide detailed documentation and have community development team support in Discord. We encourage developers in the Chinese community to join us. If you have any questions, you can always participate in the discussion.

BlockBeats: What is the fee ratio of Metaplex?

Stephen：For every new token created, we charge 0.01 SOL for the token metadata mint and 0.0015 SOL for the Core mint. Half of this fee is used to purchase MPLX tokens, which are then contributed to the DAO. This makes us one of the few protocols with a durable and sustainable revenue model that is directly tied to the DAO.

Metaplex Library (MPL) fee standard, source: Metaplex

BlockBeats: In your opinion, is Pump.fun the best application built on Metaplex? What other "Metaplex applications" do you think are interesting?

Stephen：This is a very outstanding product. I personally haven’t made much money in meme, but it’s really addictive and they’ve done a great job with the user experience. A lot of the products built on Metaplex are great though, so it’s hard to pick a favorite.

From an infrastructure level, we have major wallets like Phantom, Solflare, and Backpack, and marketplaces like Tensor and Magic Eden. In the gaming space, there are great projects like Star Atlas. Even Nyan Heroes is a game built on Metaplex, and we’ve been working with them for several years, and games take a long time to develop, but the quality of the project is very high.

There are also some really great NFT communities like Mad Lads and Solana Monkey Business. Beyond that, there are projects in the RWA space like Baxus, a company that tokenizes alcohol, and we think it will be one of many pioneers in bringing real-world and business assets to the blockchain.

There are also projects like Radium and Orca that are using Metaplex - whether for token metadata or to tokenize LPs. Almost all Solana projects that use FTs or NFTs are built on Metaplex. With so many great teams and companies, it’s hard to pick just one as a highlight.

BlockBeats: Unlike Ethereum’s EIPs and ERCs, the Metaplex protocol and the standards it provides are not part of Solana’s native L1, yet the vast majority of Solana applications will need to be developed on Metaplex. From an economic point of view, what is the relationship between Metaplex and Solana L1?

Stephen: In general, Metaplex has become a protocol that must be involved in building applications on the Solana Virtual Machine (SVM). We have found that any chain based on the SVM requires the Metaplex library in order to run programs that are interoperable with the Solana mainnet. Therefore, we have worked with Eclipse and Sonic, etc. to deploy the MPL, and look forward to expanding it as the SVM ecosystem develops.

As for the economic model, you are right, it is different from Ethereum, and I think this is also why people have difficulty understanding Metaplex. There is no direct analogue on Ethereum, but I see Metaplex as playing a central role in accelerating application development and driving overall growth in the Solana ecosystem. We have direct incentives to drive growth, adoption, and success for digital asset-related products and services, which cannot be achieved through community-driven standards alone.

This incentive structure allows us to provide tremendous value through the wide range of projects in the Metaplex library, such as compressed NFTs (Candy Machine), NFT combination tools (Fusion), and on-chain tax environment and hybrid DeFi solutions (MPL-404). Overall, this incentive design has allowed Metaplex to thrive and has been critical to Solana's growth and competitiveness over the past few years.

BlockBeats: If there is a competitor to Metaplex in the market in the future, where do you think it will come from?

Stephen: I view current centralized services - existing commercial, financial, and community building infrastructure - as real competitors. The real competition is whether people will invest their online social life in the on-chain community or continue to use platforms like Instagram or TikTok? Or play games like Star Atlas or traditional games like Fortnite? This is what we focus on.

This is why we chose this space in the long run. I think the crypto industry sometimes does itself a disservice by being too closed. While Solana is a permissionless network where anyone can deploy their own digital asset standards, what makes Metaplex different is our integration. We are supported by every wallet, every exchange, every DeFi product, and every service in the Solana ecosystem. This breadth of distribution makes us unique and difficult to replicate.

Aura Network and the Future

Recently, the Metaplex Foundation officially launched Aura Network, a decentralized indexing and data availability network designed specifically for Solana and SVM, providing efficient digital asset data indexing to help applications easily read blockchain status without relying on centralized infrastructure.

The three core functions of the Aura network include: data availability of digital assets, multi-program consistent indexing, and elastic state management. The former provides decentralized data storage and retrieval services for applications, and the latter two provide indexing and asset conversion across Solana and SVM respectively.

Currently, dApps face great challenges in competing with centralized opponents because Solana is expensive and slow to read and display blockchain state data. Aura solves these problems by complementing SVM and Metaplex Program Library (MPL) with a decentralized Aura node network.

It is worth noting that after the launch of Aura Network, $MPLX will become the incentive token for Aura nodes and the gas token for the network. This will be a new consumption scenario for $MPLX in addition to the repurchase demand of 50% of Metaplex protocol revenue. In a recent research report published by Sistine Research, MPLX was compared with other existing data availability solutions, and an optimistic outlook was given for the future of Metaplex, believing that $MPLX was underestimated by 3 to 10 times.

Related reading: "Sistine Research: Why We Are Bullish on Metaplex (MPLX)"

Left: MPLX token circulation and FDV comparison, right: MPLX token repurchase; source: Sistine Research

BlockBeats: Many Solana developers have reported that they encounter many headaches when dealing with data indexing? Aura is mainly designed to solve this ecological pain point, right?

Stephen: That's right. One of the biggest challenges facing developers today is how to read accurate on-chain status. SVM and Solana perform well in performing state transitions - when the state changes, it can efficiently execute and verify interactions. But the challenge is how to update these state changes, replicate them, and let developers get them, ensuring that their applications can be synchronized with the latest state.

This delay makes it difficult for dApps to compete with centralized applications because end users have very limited patience for waiting for applications to load or update. Even if Solana's validators have verified the state change, the application still needs to wait for the infrastructure to be updated before it can read the state.

The solution provided by Aura Network helps solve these problems through performance, decentralized indexing, and data availability.

BlockBeats: In your opinion, what is the strategic significance of Aura Network?

Stephen: From a strategic perspective, our goal is to provide a comprehensive developer platform that reduces complexity for developers. Right now, building an application requires piecing together a variety of services and technologies. Part of the reason for this expansion is to simplify this technology stack.

With Aura, we will have SVM as the fastest engine for executing state transitions + MPL as the smart contract layer and digital asset standard, and it will be widely integrated throughout the ecosystem, as well as the decentralized indexing, data availability, and content distribution services provided by Aura.

BlockBeats: What’s next for Metaplex?

Stephen: Aura is another major product release for the Metaplex protocol following compressed NFTs and on-chain royalty execution. Our focus is on building a global network of Aura nodes and securing and decentralizing the asset database with $MPLX. We view this release as a first step and will continue to improve and expand it in the future.

For Metaplex, I still see it as a critical infrastructure for decentralized commerce, just as Serum was in the DeFi space at the time.

We have had initial success in early application scenarios such as digital artists, on-chain communities, and crypto games, bringing their economic systems to the chain, but I think this is just the early stages of a larger change - all future commercial activities, whether physical or digital, will operate through decentralized systems. Now that real-world assets (RWA) have begun to be tokenized, I see no reason why platforms like Amazon or Alibaba cannot operate through peer-to-peer decentralized methods.

Metaplex is not just an NFT platform, it is also the standard for NFTs and FTs on Solana. Metaplex has been used to create more than 3 million FTs and more than 500 million NFTs, supporting a variety of projects from DeFi applications to on-chain games. I think both FTs and NFTs are the infrastructure needed for peer-to-peer commerce.

A similar situation can be seen in the early development of database technology. In the early days of computer development, operating systems appeared first, followed by database technology, which enabled applications to create and manage data more efficiently. A large ecosystem of services is built on these databases to help developers create various types of applications. Today, thousands of devices and applications rely on database technology, although ordinary users may not realize that it is the core engine that drives everything.

Similarly, digital asset protocols are the foundational building blocks of Web3 decentralized computing, just as database technology is the foundation of traditional computing.