The NFT market is always busy, always providing developers and artists with a new way to profit and make real money based on the art. The market is unfortunately also a great place for scammers and con artists to make a quick large profit then get away scot-free. Projects that take the money and leave you high and dry are known as “rug-pulls” so aptly named for the exact feeling it leaves you with after you have been had. Rug-pulls are common on all blockchains and not just Solana.
Solana has been ravaged by multiple projects that have rugged various communities for large sums of cash. It is for this very reason that Magic Eden has decided to take steps to combat this exact issue.
On this past Saturday, Feb. 18, 2022, Magic Eden announced the relaunch of their launchpad service to the public. The service is a great way for new NFT collections to have their projects dropped directly on the marketplace. This is great for new projects as not only does it get their project into the eyes of many users but also provided an instant secondary market for those that want to immediately sell after.
Before the relaunch, there was a bit of a disaster as two weeks ago two high-profile projects, King of Chess, and Balloonsville, rug-pulled their communities right on Magic Eden. The rug pulls got away with hundreds of thousands of dollars. ME has taken steps by providing new safety procedures in order to prevent scams. Some of ME procedures may be seen as stringent but are meant to be for the betterment of the NFT community on Solana. The company has created a “Know Your Customer” requirement that is pretty intense. The creators are forced to privately dox themselves to the company.
Magic Eden has seen nothing but phenomenal growth since its inception in late September of last year. The site has well over 400K users and more than $700 million in trading volume. The fact that the website is doing so well shows why the team at ME is so dedicated and serious about addressing this issue.
Magic Eden went so far as to even replace the money of the victims. One of the rugged projects decided to continue to troll the victims before deleting their account, this was not met with happiness.
#Balloonsville just deleted their twitter.— Jack Lu (@0xLeoInRio) February 6, 2022
Hey buddy, we traced ur account to @FTX_Official and are working with law enforcement to share your ID to police and ICE investigators.
We have a lot to improve at ME, but you're an asshole. The Solana ecosystem don't need u here.
Balloonsville then went on to blame Magic Eden for lacking proper security measures in the first place.Balloonsville claims to have been teaching ME a lesson but still hasn’t returned any of the money and deleted their social accounts. The company then realized they are sacrificing quality for quantity and moving too fast. The buyers of Ballonsville have mostly all been reimbursed and plans for a DAO created by MagicEden.
🎈 Ok, I found a solution to turn Balloonsville into Balloonsville 2.0 and make it better than it was supposed to be initially.— ChartFuMonkey (@ChartFuMonkey) February 6, 2022
Officially announcing the DERUG of Balloonsville and start of @balloonsville_2 controlled by @TheMagicDAO
Goal: Original roadmap, BETTER! More 👇
Magic Eden supposedly implements more inter safety and project quality checks. Now project heads must at least be fully doxxed to Magic Eden and an actual contract must be signed. Doxxing yourself requires you to provide your name, face, and address as a sign of good faith to the buyers. Projects are also required to bring forth proof of what they promise the community. If there is a game promised there must be proof it is in the works or has some type of development actively going on. Whitelists and realistic roadmaps are required as well.
Crypto will also be held in escrow for up to 14 days to prove that a project is really in it for the long run. The minimum hold time will be 24 hours but 14 days proves a project is truly into what they promise. This also means that victims of a rug pull will only be reimbursed during the time of the escrow provided there was a rug pull.