Too many rug pulls: NFT marketplace now forces ‘doxing’ of NFT creators
Solana-powered NFT marketplace Magic Eden is relaunching its minting and marketing service, Launchpad. It now demands NFT creators “dox” themselves to admins before they can raise funds and sell tokens.
Magic Eden paused the service in response to rug pulls that stole hundreds of thousands of dollars worth of crypto from NFT investors.
The project’s Launchpad resembles crowdfunding platforms like Kickstarter, in that creators can raise funds for projects that don’t yet exist but totally will one day.
Due to Magic Eden’s poor design of its Launchpad system, NFT issuers could raise funds during its mint process — but also run off with crypto before NFTs were distributed.
- Magic Eden’s upgraded Launchpad now requires more stringent Know-Your-Customer checks for team members listing NFT collections.
- It also requires whitepapers, roadmaps, and proof of previous experience with NFTs.
- Magic Eden will slow listings of new collections to allow for better quality assurance.
One NFT collection, Balloonsville, stole 5,000 SOL ($600,000 then, $450,000 now) earlier this month, noted Decrypt.
Balloonsville even taunted its buyers on its now-deleted Twitter account, bragging about conducting exit scams on Solana before.
Magic Eden DAO to ‘de-rug’ NFT buyers
Magic Eden has refunded NFT buyers in both projects. However, moving forward, Magic Eden will only issue refunds if a rug pull occurs during the escrow period before new projects launch.
Magic Eden chief exec Jack Lu says his team traced Balloonsville’s heist to crypto exchange FTX. The marketplace is now supposedly working with law enforcement over the matter.
Insiders also expressed interest in taking over the Balloonsville project via its decentralized autonomous organization (DAO), MagicDAO. The platform redirected royalties to a new wallet.
It would use funds in the wallet to refund Balloonsville holders who want to burn their NFTs. Leftover cash is said to be used to power a spin-off project, “Balloonsville 2.0.”
Magic Eden team member Tiffany Huang reiterated that NFT buyers should do their own research when purchasing NFTs. Although, that speaks very little of Magic Eden’s vetting process and borders on victim blaming.
Read more: [All my apes gone: Twitter users revel in $2.2M Bored Ape NFT theft]
In any case, Magic Eden launched last September. It quickly grew to over 400,000 users and more than $700 million in trading volume.
According to DappRadar, daily active users at Magic Eden dropped nearly 90%, from over 40,000 prior to the string of mid-February rug pulls to about 5,330 on February 20.
Trading volume dropped proportionally and now nears all-time lows. Magic Eden no doubt hopes that decline will taper now that Launchpad has been revamped.
Still, Magic Eden’s move to enforce identity checks comes just weeks after NFT fans were confronted with the realities of journalism.
Buzzfeed News reported identities of two Bored Apes founders, which it had discovered by simply looking up public business registration documents.
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