Contents
1. Introduction
2. What is Metaplex?
a. Key Products of Metaplex
b. Key Statistics
c. History
3. Thesis
a. Dominance and Expansion into New Territories
b. Tokenomics and Buyback
4. Pair Trade Opportunity: Long $MPLX and Short $TNSR
5. Final Words
Figure 1 : Metaplex’s Hidden Dominance in the Solana Ecosystem
Source: imgflip, Presto Research
Summary
Metaplex is the backbone of the Solana ecosystem, responsible for the creation of over 99% of NFTs and 90% of fungible tokens on the network. With tools like Core and Bubblegum, Metaplex enables creators to mint and manage digital assets efficiently, positioning itself as the core infrastructure for digital assets on Solana.
$MPLX is undervalued given its market dominance and strong revenue generation. As Metaplex expands to new chains and broadens its support for fungible tokens, its influence and utility continue to grow, making it a compelling long-term investment. The ongoing buyback program further strengthens the token’s value.
A strategic long $MPLX/short $TNSR trade could capture upside from Metaplex’s dominance while hedging against risks in the NFT market. Despite trading at a lower FDV, Metaplex generates more fees than Tensor and faces no direct competition, unlike Tensor, which is contending with rivals like Magic Eden. This trade provides exposure to Metaplex’s growth while mitigating risk in a competitive landscape.
Introduction
What defines a great business? While there are many ways to approach this question, one clear marker is the ability to dominate in a growing market. In the Solana ecosystem, names like Jupiter or Pump.fun might come to mind, as they each have their respective strengths. However, Metaplex is the hidden giant. Despite flying under the radar, 90% of its tokens and 99% of all NFTs on Solana are created using Metaplex’s protocol. Most users are unaware that they’re interacting with Metaplex, even as they pay fees to the company that are then used to strategically buy back its native token, $MPLX. It’s time to recognize Metaplex as a critical player in the Solana ecosystem.
What is Metaplex
Metaplex Protocol is a decentralized platform built on Solana that powers the creation, sale, and management of digital assets. Offering tools and standards to developers, creators, and businesses, Metaplex supports a wide variety of digital assets, from NFTs and fungible tokens to real-world assets (RWAs) and gaming items. With over 550 million assets minted across 55 million unique wallets, Metaplex stands as one of the most widely utilized blockchain protocols and developer platforms.
Key Products of Metaplex
(1) Core
Core is the next-generation NFT standard on the Solana blockchain. This innovation uses a single-account design, drastically reducing minting costs and alleviating pressure on the Solana network compared to alternative protocols.
Features include cost efficiency, low compute power, advanced plugin support, and enforced royalties, setting a new benchmark for NFT standards.
(2) Bubblegum
Bubblegum is Metaplex’s program for creating and managing compressed NFTs (cNFTs). Compression technology enables creators to mint large quantities of NFTs at a fraction of the traditional cost, with 1 billion NFTs minted for just 500 SOL, offering unprecedented scalability and flexibility.
(3) Token Metadata
The Token Metadata program allows additional data to be attached to both fungible and non-fungible tokens on Solana. While NFTs are the primary use case, this program also supports semi-fungible and fungible assets. All tokens created on Pump.fun rely on Metaplex’s metadata service.
(4) Core/Candy Machine
Metaplex’s Candy Machine is the leading minting and distribution program for launching NFT collections fairly and efficiently. It’s become the go-to solution for creators launching NFTs on Solana, ensuring decentralized and transparent distribution.
Additional services include MPL-Hybrid, Fusion, Hydra, and Sugar, expanding the platform’s reach into various verticals of digital asset standards.
Figure 2 : Overview of Metaplex’s Programs and Tools
Source: Metaplex
In essence, Metaplex is the foundational infrastructure protocol that powers the creation of most NFTs and fungible tokens in the Solana ecosystem, serving as the standard for digital asset creation.
Key Statistics
Metaplex’s recent performance data shows its dominance within Solana, particularly in the past three months:
(1) August 2024:
10.2 million digital assets minted
382,000 fungible tokens created, representing 90% of all fungible tokens minted on Solana
393,000 unique wallets directly signed transactions with Metaplex
The total number of collectors reached 57 million unique wallets
(2) July 2024:
16.5 million digital assets minted
451,000 fungible tokens, accounting for 91% of Solana’s fungible tokens
530,000 unique wallets used the protocol
The total number of collectors reached 56 million wallets
(3) June 2024:
30 million digital assets minted
452,000 fungible tokens created
657,000 unique wallets interacted with Metaplex
The total number of collectors hit 55 million wallets
Cumulatively, Metaplex has overseen the creation of 257,000+ collections, 512 million NFTs, and $1.2 billion in creator revenue since its inception.
Metaplex Public Dashboard: Webpack App
History
Metaplex was originally incubated by Solana Labs, with Stephen Hess, former Head of Product at Solana Labs, leading the charge. Since 2021, the team has operated independently, building products that allow creators and brands to mint NFTs and launch decentralized applications. This strong foundation has attracted high-profile backers, giving Metaplex a reputation for technical innovation and industry leadership.
The recent notable news is as below:
In January 2022, Metaplex raised $46M from Multicoin Capital, Jump Crypto, with additional support from Solana Ventures, Alameda Research, and Animoca Brands.
In September 2024, Pantera Capital and ParaFi Capital acquired a large portion of $MPLX tokens from the FTX estate.
Notable investors include Modular Capital, Syncracy Capital, and Frictionless Capital.
Thesis
Dominance and Expansion into New Territories
Metaplex’s dominance within the Solana ecosystem is undeniable. It powers the creation of 99% of NFTs and 90% of fungible tokens minted on Solana, positioning itself as the undisputed infrastructure provider for digital assets. This level of market penetration makes it extremely difficult for any competitor to challenge Metaplex’s dominance in the near future.
Despite fluctuations in the broader NFT market, Metaplex’s role as a critical piece of infrastructure has allowed it to expand into the fungible token space, proving that its utility goes far beyond NFTs. Platforms like Pump.fun have increasingly adopted Metaplex’s Token Metadata program, ensuring that 90% of tokens minted in the last three months on Solana are tied to Metaplex. This broadens its use case, establishing it as a cornerstone of both fungible and non-fungible token creation.
Figure 3: Growing Influence of Metaplex on Fungible Tokens (FT)
Source: Metaplex Public Dashboard
Looking ahead, Metaplex is preparing to expand its reach into Sonic and Eclipse, two highly anticipated networks. Sonic, Solana’s first Layer 2 solution designed for sovereign gaming, offers a particularly compelling opportunity for growth. As gaming and blockchain continue to merge, NFTs will play a critical role in in-game assets, and Metaplex is well-positioned to power this new wave of digital asset creation.
With the NFT market arguably at a low point, Metaplex stands to benefit from a potential resurgence, and its expanding role in fungible token creation further reduces its reliance on NFT market cycles. As new layers and use cases develop within Solana, Metaplex’s role as the foundational infrastructure provider only becomes more indispensable.
Tokenomics and Buyback
A significant appeal of Metaplex lies in its tokenomics and strategic buyback program. In May 2023, Metaplex introduced small fees to sustain long-term ecosystem development, particularly for programs like Core and Token Metadata. As of today, the total revenue since inception is 128,347 SOL.
Figure 4: Breakdown of Protocol Fees by Program
Source: Metaplex
In March 2024, Metaplex committed to allocating 50% of all protocol fees to buying back $MPLX and transferring the purchased tokens to the Metaplex DAO. This allocation includes both historical and future fees, ensuring a continuous accumulation of $MPLX in the DAO treasury. The remaining 50% of fees is reserved for the ongoing development of the Metaplex Foundation.
Since June 2023, Metaplex has been buying back 10,000 SOL worth of MPLX monthly, with purchases totaling 13,437,215 MPLX (roughly 30,000 SOL) by August 2023. As SOL’s price increases, the value of these buybacks will rise accordingly. 10,000 SOL currently equates to approximately $1.4 million USD, representing over 1% of Metaplex’s market cap, a substantial and steady force in reducing circulating supply.
Figure 5: Total Revenue and $MPLX Buyback Over the Last Three Months
Source: Metaplex Public Dashboard
Pair Trade Opportunity: Long $MPLX and Short $TNSR
Figure 6: Metaplex Performance Over a One-Year Horizon
Source: Coinmarketcap
One way to capture the upside of $MPLX while hedging against risks in the broader NFT market could be through a pair trade, specifically long $MPLX and short $TNSR (Tensor). This is based on the premise that $MPLX is undervalued relative to $TNSR, for the following three reasons.
1. Higher Fees vs. Tensor: Over the last three months, Metaplex has generated similar or more fees than Tensor, fueled by its growing dominance in both NFTs and fungible tokens. Despite this, $TNSR trades at an FDV of $350 million, significantly higher than $MPLX. This discrepancy suggests that $MPLX is undervalued relative to its revenue-generating potential, especially with the strong backing of its ongoing buyback program.
Last 3M average Tensor’s monthly fees: $777,273
Last 3M average Metaplex’s monthly fees: 7,956 SOL (~$1,034,323 using a conservative estimate of SOL at $130).
Figure 7: Comparison of Metaplex Fees vs. Tensor Fees
Source: Metaplex Public Dashboard, Dune Analytics
2. No Direct Competition: While Tensor is facing increased competition from Magic Eden, which is planning to launch its own token and potentially steal market share, Metaplex has no direct rival in the infrastructure space. This lack of competition strengthens its position as the backbone of Solana’s digital asset ecosystem, further supporting its long-term value.
3. Hedge Against NFT Market Volatility: For those cautious about NFT market volatility, $MPLX offers a more diversified opportunity. Metaplex’s influence now extends beyond NFTs into fungible tokens, providing exposure to a broader range of assets and reducing its reliance on the NFT market alone.
This underappreciation is likely due to Metaplex’s role as a behind-the-scenes infrastructure provider—unlike more consumer-facing platforms like Tensor or Pump.fun, most users interact with Metaplex’s products without realizing it. As a result, the token has stayed out of the spotlight despite its significant influence on the Solana ecosystem. However, this perception may shift as Metaplex’s growing contribution to the ecosystem becomes more visible and market awareness increases.
Final Words
Metaplex has quietly become the cornerstone of the Solana ecosystem, powering over 99% of NFTs and 90% of fungible tokens on the platform. Despite its critical role, it remains underappreciated, operating behind the scenes while users unknowingly interact with its infrastructure. This hidden dominance, combined with strong tokenomics and a robust buyback strategy, positions $MPLX as an undervalued asset. The protocol’s consistent revenue growth, driven by increased fees from both NFTs and fungible tokens, allows for continuous buybacks, which enhance its value over time. As Metaplex continues to expand its reach, supporting new use cases and solidifying its market position, the upside potential for $MPLX grows. For those seeking long-term exposure to the Solana ecosystem’s infrastructure, Metaplex offers a unique opportunity to invest in a project with proven dominance, sustained growth, and significant untapped potential.
Disclaimer: Presto is not an investor in Metaplex, nor has it received any grants, funding, or financial incentives from Metaplex or its associated entities. The views expressed in this report are based on independent research and analysis, and are not influenced by any direct relationship with the Metaplex project.
