Pantera Capital Partner: A Detailed Explanation of Solana NFT Aggregator Hyperspace

Author: Paul Veradittakit, Partner at Pantera Capital

Original Title: 《NFT Aggregation》

Translation by: Biscuit, Chain Catcher

Abstract: In mid-February, the Solana-based NFT trading aggregation platform Hyperspace announced the completion of a $4.5 million funding round, led by Dragonfly and Pantera Capital, with participation from Jump Capital, Solana Capital, NFX, Galaxy Digital, Shima Capital, and Coinbase Ventures.

Currently, the Solana NFT market ecosystem is fragmented and inefficient. Hyperspace addresses this issue by allowing users to trade on the Hyperspace market or other Solana NFT markets without additional fees. Pantera Capital believes that as the variety and number of NFTs on Solana continue to grow, Hyperspace will become the preferred platform for both new and existing users.

A strong and reliable trading market is the pillar of the blockchain NFT ecosystem, enhancing the economic scale of NFT projects. OpenSea is the leading NFT trading platform on Ethereum, with an average daily trading volume of approximately $169 million. Since February, the platform has sold nearly 2 million NFTs, renowned for its ease of use, beautiful layout, and intuitive user experience. In contrast, other public chains lack well-designed and high-performance NFT markets, preventing users from enjoying a seamless UX and UI experience. However, the lower transaction costs and higher efficiency on Solana have driven the development of NFT platforms, creating a demand for NFT trading markets.

Due to network congestion, trading NFTs on Ethereum presents structural issues, such as high gas fees and slow transaction speeds. Nevertheless, many NFT projects still prefer to launch on Ethereum, as it is currently the most trusted public chain with a large user base, which aids in the financial returns of projects. To date, most successful NFT projects have launched on Ethereum, creating an island effect where NFT project teams and users are locked into Ethereum. Apart from Ethereum, no high-quality NFT projects have emerged on other public chains.

This trend is rapidly changing, as Solana is known for its low gas fees and fast transactions, leading more artists to launch NFT projects on Solana. Due to these characteristics, NFT trading platforms and analytics platforms on Solana are easier to scale and more conducive to rapid community development. Solana has achieved higher liquidity and trading volume, which holds immense potential. Solana has also lowered the entry barriers for emerging artists, collectors, or NFT enthusiasts, providing users with greater inclusivity compared to Ethereum. The high costs on Ethereum may hinder NFT artworks, facilitating the emergence of more stunning artworks on the Solana chain. The shift has already begun: total NFT sales on Solana exceeded $1 billion in January.

The still nascent Solana NFT ecosystem. Source: Hyperspace

Although the NFT market on Solana has rapidly developed through the above use cases, a beautiful NFT platform is still needed to help artists and collectors buy and sell works, which is the vision of Hyperspace (formerly known as Solanalysis).

Hyperspace addresses the issue of market fragmentation by integrating the NFT buying and selling market, first aggregating NFT data, and then launching an aggregation trading tool that allows users to trade directly on the main NFT markets of Solana through the Hyperspace website. By consolidating market information, Hyperspace will become the preferred protocol for advanced users to purchase low-priced NFTs.

The platform will also allow artists to list all information about NFTs directly on Hyperspace. According to Hyperspace, no single market holds more than 50% market share for NFTs for sale on Solana, which sharply contrasts with the Ethereum ecosystem. Users interested in purchasing NFTs may be discouraged due to the vast number of remaining NFTs and uncertainty about whether they are getting the best price.

Compared to Ethereum, the NFT trading market on Solana is more decentralized, making this tool very useful for Solana users who wish to compare prices and trade across multiple platforms. Hyperspace's powerful aggregation mechanism will enhance the overall efficiency of the NFT market. As the Hyperspace team builds a high-performance NFT market on Solana, Pantera is pleased to co-lead Hyperspace's $4.5 million seed round financing with Dragonfly.

Popular NFT projects on Solana. Source: Hyperspace

Current Market Status

Magic Eden is currently the most popular NFT trading platform on Solana, followed by Solsea, Solanart, and DigitalEyes. Magic Eden does not charge listing fees for NFT creators but takes a 2% transaction fee for each sale. According to Mafoud, there are currently no additional fees for trading on Hyperspace. Therefore, the user base may grow rapidly, as purchasing or browsing NFTs on Hyperspace will save costs.

When users compare or purchase potential assets across platforms, they will be incentivized to use Hyperspace due to the breadth of NFT quantities. This makes the protocol an attractive data aggregator and trading facilitator. Currently, Hyperspace supports direct trading on major NFT markets such as Magic Eden, Solanart, Fractal, and Solana Monkey Business, with plans to integrate more platforms.

Product

Hyperspace is compatible with crypto wallets like Phantom, Sollet, and Slope. By visiting the website, users can browse the most popular collections on the platform. After selecting a project, they can view detailed information about the artwork, such as the number listed, total supply, daily transaction volume, and floor price. Users can set a price range for NFTs and filter by collection attributes, which are typically used to determine rarity. The fast transaction execution and low costs of the Solana public chain, combined with Hyperspace's beautiful and high-performance UX, will attract more new and existing users to join the Solana NFT ecosystem.

MonkeLabs Collection. Source: Hyperspace

Mechanism

According to co-founder Kamil Mafoud, Hyperspace directly connects to each NFT platform, acting as an "intermediary" between buyers and sellers. The smart contracts of the Hyperspace trading market are designed for composability, aiming to enable artists to "create their own web3 stores and retain users by obtaining liquidity from [Hyperspace]." Hyperspace hopes to become the NFT Shopify for Solana, attracting artists to set up their own web3 markets on the protocol. In turn, artists will gain better market exposure and higher earnings, while Hyperspace will benefit from increased user momentum.

As artists will be able to list NFT works directly on Hyperspace, this will attract a wider variety of NFT works and more buyers. As more users switch to Hyperspace, sellers will default to listing and trading NFTs here rather than on other markets. With the rapid expansion of Solana's NFT ecosystem, many markets often crash due to their fragile infrastructure's inability to handle transaction volumes, and Hyperspace serves as an additional front end for user load within the ecosystem.

Team

The leaders behind Hyperspace are Kamil Mafoud, Santhosh Narayan, and Johnny Tan. Mafoud studied at MIT with Narayan and has served as the General Manager of Future Foods and Cloud Kitchen, as well as a fintech analyst at Morgan Stanley. He also founded a graphic design marketplace for small businesses called Dealtorch.

Narayan was the Head of User Growth at Future Foods and has worked at Morgan Stanley and Balyasny Asset Management. He is also the founder of the sports betting platform Live Sports Markets.

Tan is a software engineer at Amazon, responsible for developing the machine learning-supported BI service QuickSight Q, and has a solid software engineering background from Moody's Analytics Accelerator.

The team's technical expertise and entrepreneurial experience are well-suited for building Hyperspace on Solana, bringing innovation to the NFT trading market.

The Future of NFTs on Solana

As users turn to trading NFTs on Solana for low costs and fast transactions, the team expects Hyperspace to become very popular. While many NFT projects will continue to launch on Ethereum, the team anticipates capturing a significant market share as more artists and collectors enter the space.

The characteristics of blockchain are expected to attract more digital artists to launch incredible works at low costs, allowing more artworks to flow into the blockchain ecosystem. Additionally, Hyperspace will build a strong community around collectors and help users shape their NFT identities. The protocol will be fully owned by the community, adopting a decentralized governance model, and Hyperspace will increasingly gain the trust of users.