Magic Eden "refocuses" on Solana NFTs, casino, and gachapon
SIDELINED ALPHA 87
MARKET TALK
“THE THESIS FOR DEGEN GAMING”
“The thesis for degen gaming” is a new piece by Ben (Cambria) that was dropped last week. It’s an insightful article on the design, behavioral science, future potential, and more behind financialized entertainment, a compelling bull case for degen gaming. There’s a ton of value in this article, so here are some of my highlights + takeaways:
On financialized entertainment:
”With financialized entertainment, there's no obligation to create any tangible value outside of the fun, especially since the underlying economics of these products are zero-sum, by technical nature (wHo iS ThE mArgINAL buYeR).”
I’ve been beating the drum that the crypto apps that make competing for money the most fun will win. That doesn’t necessarily mean the most rewarding, but the loops that make this competition engaging, repeatable, skillful, and socially meaningful
“Fading interest in one specific vertical of financialized entertainment often ends up as just being an early signal of the meteoric rise of another. Top Shot / Axie Infinity kicked off the first big bull market. Polymarket did $3B+ in election volume. “SOL shitcoin” is now in ur average normie’s vocabulary.”
Financialized entertainment keeps evolving because each new cycle creates a new playground where culture, skill, or information can be competed over. When a meta saturates (the edge disappears), attention often rotates to novelty, because that’s what restores the sense of opportunity
Common components of financialized entertainment:
“There are a few things common to almost all these products:
1 - Real Stakes - dopamine/acc2 - Fast Feedback Loops - perps, not spot. put ppl into flow state
3 - Perpetual Content Cycle / Metagame variation - often from PvP
4 - Asymmetric Upside - 1000x gain porn
5 - Skill / Luck Ambiguity - players need to believe they have edge
6 - Social Virality / Community / Identity - stakes create connections”
The importance of status:
”In these environments, those who take the biggest risks and survive gain the most status. This is why leaderboards in crypto products work so well. People want to create identities online, to be known and seen.”
“Social flexing” is status made visible and shareable. If you’re building in crypto, you want to enable this through leaderboards, PnL cards, and reward screens. But systems that support multiple forms of status are more powerful than financial success alone
What are degen games, and what makes them tick:
“What makes a good degen game. At the risk of leaking too much alpha:
1 - Risk-to-Earn - must deposit to play, outside of targeted promotions
2 - No Skillshots - stat or dice roll checks, not twitch gaming. bad players can beat good players, high skill has EV edge over time
3 - Incomplete Information - some perpetual mystery, often from pvp or from a changing metagame. should not be easily “solvable” / “bottable”
4 - Continuous Risk/Reward Decisions - this is the game
5 - Game Feel / Juice - you need to put people in the “zone”
6 - Adversarially Robust - anti sybil / agent / bot / exploit systems”“Degen games are interesting b/c they need to be designed from the ground up to be financialized entertainment. Adding real stakes to games is non-trivial, you can’t just slap a wager on and call it a day. It’s an incredibly exciting and relatively unexplored design space.”
To add a relevant takeaway from our conversation with Arto to this quote: “Open economies fundamentally change what players care about, so successful crypto games must be designed from the ground up around those incentives, not introduced as an afterthought”
The three key advantages of a degen game:
”The biggest structural advantage of a well-designed degen game is that the extraction problem is solvable in ways it simply isn't for perps/memes.”
“The second moat is content. Emergent PvP is perpetual content generation that no studio has to pay for. Guild conflicts, economic wars, legendary players, improbable comebacks - these stories write themselves and they market the game for free:”
Fableborne isn’t necessarily a “degen game”, yet it consistently proves to be a content machine. Strong (financialized) game loops that are engineered to capture momentum trigger a content flywheel (e.g., FDF). In deeper games like Cambria, this content layer becomes much more sophisticated
“The third moat is identity and retention. Stakes create investment - not just financial but psychological. Players who've built reputations, accumulated achievements / soulbound cosmetics / small advantages, and formed communities inside a game don't churn”
The degen gaming playbook:
“The playbook is simple.
1- Use spectacle + meta games to hook players, Mr. Beast style
2- Make high risk gameplay socially acceptable via MMO wrapper.
3- Limited P2E, through Guilds as mass activations into the competitive loop
4- TL Takeover: streamers, YouTube side hustlers, TikTok edits
5- Profit p*rn: “X earned 20 ETH in 1 week from PvP.”
Overall, a great read for anyone building in crypto consumer from someone who’s building on the edge of it. Personally, I continue to be bullish on this category and look forward to how it develops in 2026
MAGIC SHUTS DOWN MARKETPLACES + PIVOTS
Magic Eden (ME) announced it is “refocusing” on Solana, Packs (gacha), and DiceyHQ, and will sunset its EVM and BTC marketplaces + will let go of the ME wallet
From Jack, the co-founder and CEO of ME: “The 80/20 rule has become our reality: 80% of our cost are tied to products generating only 20% of our revenue”
It was funny to see how they tried to control the narrative of this pivot through paid KOLs. Jonah Blake called it “softened blow exposure” lol. Of course, this strategy created backlash, because as soon as there’s money involved, people see that the “real” opinions get blurry
Ico, who got paid to promote the pivot, said in his 2nd Tweet: “I would have FUDed the death of NFTs for free, but thankful that Magic Eden was willing to sponsor my thoughts on the topic/announcement”
On the topic of paid partnerships, it’s been clear that Twitter has been pushing for more transparency. The “paid partnership tag” is live now (and yes, crypto products can still be promoted)
Back to ME, and why they are winding down the EVM and BTC marketplaces. The products simply don’t generate enough revenue to justify their existence, not only because of a lack of volume from the majority of them (esp. ABS, BERA, MON, AVAX, ARB, etc.), but also a lack of a sustainable revenue model (~$65K revenue on Ordinals volume in the last 30 days)
Daily NFT trading volume on OpenSea (OS) isn’t looking great either. According to this Dune Dashboard, the majority of the volume (and revenue) is coming from token trading now. OS started its transition from NFT marketplace to “the place to trade anything onchain” last year
To double-tap on token trading, we have to address ME’s acquisition of Slingshot of last year. Slingshot was a mobile-first trading app (very similar to fomo). The app was shut down earlier this year as a standalone app, and it ther were plans for it to be merged into ME 2.0, but it seems like they fumbled that opportunity…
From Jonah, who worked on it: “They fumbled what would be fomo today if they weren’t so bad with decision making”
Moving on, let’s talk about Packs (gacha) briefly. ME introduced this feature to its platform in October 2025. A very similar experience to any other Pokémon Pack opening platform
In the first week of the launch, packs generated $13M in volume, and margins for these businesses can vary between ~12% and 30% net. However, this one week also accounted for 54% of the revenue for the whole of 2025 for ME
Furthermore, the company is betting on DiceyHQ, a crypto casino and sports betting platform focused on “new games, new social primitives, new financial protocols”. During its closed beta with ~200 users, around $15M was wagered (of course, this data is not representative of anything at scale)
Again, to quote Jonah, who’s quite opinionated about the whole thing: “You aren’t adding anything new. Nobody cares if you add a new game these are data companies they’ll make new games if they see a new and loss of retention”
ME’s token launched in December 2024, opening at ~$11. Today, the token is trading at $0.11, around -99%. This means the token would need a 9,900% gain to get back to its price at launch. I.e, the token is in absolute shambles
$ME will remain the central token of ME and Dicey. More clarity on how it will integrate with the casino is TBA, but whether it can be saved is something I highly doubt
One of the peak examples of poor token distribution. They gave away too many (free) tokens to the community in a market where holding isn’t rewarded
The new ME consists of a Solana NFT marketplace, crypto casino, and gachapon. Do they have a moat or edge in any of these markets? Maybe Solana NFTs, but it doesn’t seem so for the other two
So, the “dead weight” they’re shedding looks like a good decision, but whether the refocus is the right decision remains questionable
ON THE RISE
Disclaimer: None of this information should be taken as financial advice. My writings only represent my personal opinions. DYOR. I will hold some of the assets mentioned in this newsletter.