Dating back to 2023, liquid crypto funds have been buying$MPLX, the native token of the Metaplex Protocol. After the announcement of the new token buy back mechanism in March, Metaplex's fundamentals and long-term potential began to attract investors' attention. It’s since been reported that Pantera, ParaFi, and others purchased a large portion of $MPLX that was previously held by the FTX estate. With the continuous expansion of Metaplex in the infrastructure field, its irreplaceable nature and growth potential in the Solana ecosystem have made $MPLX a severely undervalued asset in the eyes of institutions, and with the recent announcement of Aura Network, the price of $MPLX has also begun to gradually rise up.

Now, Metaplex is coming back to people's attention with new ecosystem development and excellent fundamental data. But this time, it wants to do more than just NFTs. During this year's Token2049 event, BlockBeats sat down with MetaplexFoundation director Stephen Hess for an in-depth interview to discuss his personal crypto career, Metaplex's past and current experiences and thinking, and the future ambitions of the new product, the Metaplex Aura Network.

Origin Story: Mt. Gox, Solana, Metaplex

Like many founders in the crypto industry, Stephen’s blockchain journey stems from an interest in information technology. While studying at Stanford University, Stephen began to understand the potential of Bitcoin and distributed ledgers. In his view, decentralized systems are the inevitable evolution of today’s digital technology. Future business and finance will definitely shift from centralized systems to peer-to-peer networks. In this process of transformation, these systems will ultimately empower individuals and promote the development of autonomy.

In 2013, Stephen bought his first Bitcoin at Mt.Gox. Soon after, he quit his job at a tech company, bought a one-way ticket to Puerto Rico. At that time, he was facing a major career choice: stay in the AI/healthcare industry, or go all in on cryptocurrency. Interestingly, because he paid great attention to product details, Stephen noticed serious problems with the platform soon after he started trading on Mt.Gox, and quickly transferred his funds, becoming one of the few investors who avoided the Mt.Gox crash.

In 2020, Stephen’s former colleague Raj Gokal, co-founder of Solana Labs, found him and invited him to join his team. This period was just before Solana’s underlying technology was proven and began to vigorously push for application developments. For Stephen, who loves product development, this was undoubtedly a dream job. In this way, he became the first product manager of Solana Labs as the head of the product. Later, Stephen helped found Metaplex and experienced the Solana summer and FTX crash. Looking back on his crypto career, Stephen's own summary is: "In a field as volatile as cryptocurrency, what looks like a disaster in front of you often becomes the biggest opportunity."

BlockBeats: Where did your crypto career begin?

Stephen: In the early stages of my career, I was struggling between whether to go full-time in crypto or pursue a career in healthcare with AI. Around 2014, I started emailing a lot of crypto founders asking if they needed designers, product managers, or engineers. Back then I was also very interested in the AI/healthcare route and that's ironically what led me back to crypto. My thought at the time was simple: if I found the right team to run with, I would definitely join them and be willing to do whatever was needed. It is like that for me at Solana Labs, I designed merch kits, ecosystem diagrams, worked on the first stake pools contracts, designed the first UI for Wormhole, helped author the first NFT and token standards and launched Metaplex etc.

I was mainly contacting big projects like Ripple and Stellar, but since I didn’t find the right position. So after I came back from South America, I went back to healthcare. I worked as a product designer at Stride Health building a health insurance marketplace, after that I joined Atomic Labs working on disease management software for breast cancer patients, and then I joined Omada Health. Through this job, I met Raj Gokal and Eric Williams, who later co-founded Solana.

During my time at the company, I worked for Raj and Eric Williams, who was then the company’s head of data science. When they left Omada to start Solana, Eric designed Solana’s token economics, and I joined Solana Labs as the first product manager and designer, later becoming Head of Product.

BlockBeats: How did Raj invite you to join the Solana team?

Stephen: We were helping companies build systems to train medical models, specifically machine learning models based on the data we generate. To ensure the quality of the training data, we needed to increase the diversity of the data, so we needed to have clinicians occasionally give some “random suggestions” like taking a walk or recommending a new recipe, which was difficult to achieve in the healthcare field because people were conservative at the time.

Raj, Eric, and I were all working hard to push the development of artificial intelligence in this field, and we firmly believed that this was the trend of the future. Although Omada is now quite successful, we did experience a lot of setbacks at the time, so Raj and Eric began looking for a less restrictive field, and cryptocurrency happened to provide this creative freedom. So they left the company and co-founded Solana with Anatoly.

I remember Raj saying to me, "I don't have a job title for you right now, but we have a table, come and work with us." Solana was still in its early stages at the time, and it took me a while to officially join them. When I joined, they had been operating for a year or two. But I remember clearly that they started out with just a few folding tables above a mall in downtown San Francisco, and now Solana has grown into a global community.

The Solana office opened in New York City in May 2023, source from Decrypt

BlockBeats: What ultimately made you decide to join the Solana team?

Stephen: I see this as a "second chance" to work in the crypto space early in my career. I believe it is important for individuals to be able to conduct digital transactions and conduct business, and that business and finance will gradually move to peer-to-peer and decentralized. In my opinion, technology is definitely always improving. The key is you have to play the short game while pointed towards the long term vision and that's the difference between strategy and tactics.

BlockBeats: If you chose to stay in the medical industry at that time, would you consider entering the crypto industry that has grown and expanded today?

Stephen: Of course. I am a very patient person. I don't want to be too hasty about small improvements every year, but look to the future and think about the development in ten, twenty, or even a hundred years.

And to be clear, I definitely worry about small improvements year to year. It's just about understanding where you are in the technology adoption lifecycle and not trying to rush into the mainstream too quickly when the underlying infrastructure isn't there yet. That means finding more of the specialized use cases with high differentiation and then plotting a course towards the end vision.

As a part of this field, one of my important tasks is to help develop the protocol steadily in line with the pace of the market and avoid blind expansion. A common problem for many entrepreneurs is that they rush to invest too much money when the market is not ready, and the result often ends in failure. If they can be more patient, down-to-earth, and persevere, their chances of success will be much greater.

Looking back at history, whether it is Mt. Gox or BitFenix, many once-glorious trading platforms no longer exist. In the field of cryptocurrency, over-optimism and a quick-success mentality often lead to waste of resources and unrealistic expectations, which may ultimately hurt the team and the community.

For us, Metaplex was built for the long term, to build an indestructible long-term project. I advise every entrepreneur to have this long-term mindset: success requires focus, diligence, and patience, which is a huge advantage in itself.

BlockBeats: How did you later start Metaplex?

Stephen: When I first joined the Solana team, they had already proven the core foundation of the Solana Virtual Machine (SVM), which is still the most efficient execution environment for decentralized state machines. The SVM enables state transitions to be performed efficiently and at scale in a decentralized manner, thus opening up a new generation of application scenarios and use cases.

From the beginning, I focused on product design and development from beginning to end. In the early stages, I had the opportunity to participate in the development of Stake Pools, which later evolved into Liquid Staking, and now it has become a key component of the Solana ecosystem, and many excellent projects are centered around it. I also worked on governance, especially SPL governance, supporting tools like Realms and Squads. In addition, I participated in the development of Wormhole during the Solana Labs incubation phase.

I was also a member of the team that developed the first version of the NFT standard, which eventually evolved into Metaplex. I have been helping lead Metaplex for the past few years, while also contributing to the development of Solana and helping it become the preferred platform for Web3 developers. As a product developer, this is a perfect opportunity because this infrastructure innovation enables Solana to build new products and services in a variety of markets.

Solana's "Ecosystem Index": NFT, but more than NFT

After Metaplex evolved into its own standalone project, Stephen was called upon to lead the project as an early founder. At that time, it was the end of 2021, and Solana was at the climax of NFT summer. Metaplex, as the designer of the main NFT standard of Solana ecosystem, became the "behind-the-scenes creator" of NFT market, and its valuation rose with the ecosystem.

In January 2022, Metaplex received a strategic investment of US $46 million from institutions such as Multicoin, Jump and Alameda. But with the collapse of FTX, the Solana ecosystem suffered a serious setback, and the Metaplex team was also affected. At the end of the year, Stephen announced on Twitter that the project had to reduce its number of paid contributors. He wrote in the tweet: "While our financial situation was not directly affected by the collapse of FTX, the indirect impact on the market was significant, which requires us to take a more conservative approach moving forward."

But Metaplex did not stop moving forward. Things that seem like disasters often become the biggest opportunities. A year later, Solana was reborn and Metaplex returned to the stage, but this time, it wanted to do more than just NFTs. Now, Metaplex is becoming more and more like a Solana’s “ecosystem index”.

The creator behind the NFT summer

In May 2022, the Solana network crashed again. Subsequently, Metaplex posted an official tweet stating that the network crash was mainly due to the crawler of its Candy Machine program, and soon deployed a robot penalty program for the program to stabilize the network.

"Candy Machine” is a program launched by Metaplex that allows creators to flexibly mint tokens and distribute them to their communities. Its V3 version introduced an integrated program that allows people to mint NFTs through SOL, tokens, and burning. Metaplex subsequently launched Bubblegum, which provides solutions for "compressed NFTs" in order to mint assets at scale.

Looking back at 2021, Metaplex has single-handedly supported the golden age of Solana NFTs, from the early independent community to Magic Eden's popular NFT Launchpad. Metaplex is behind almost every NFT asset on Solana. Even Stephen bluntly stated that the NFT wave is of great significance to the growth of Metaplex. "That period of time was of great significance to us, especially in the Candy Machine era. The generation of thousands of PFP projects helped Solana build its own ecological social layer, which became the basis of the community scale we see today."

Comparison of Ethereum and Solana NFT market transaction volumes. Although the overall NFT market has declined significantly, Solana NFT has shown greater resilience; data source: Dune

BlockBeats: How did Metaplex explore and seize opportunities in the Solana ecosystem NFT market?

Stephen: It all started with the Ethereum NFT creators who contacted us. They were dissatisfied with the existing platforms. At that time, platforms such as Nifty Gateway were the main way to issue NFTs on Ethereum, but creators always faced delays, slow payments, and other problems that prevented them from bringing their projects to market quickly.

Metaplex was built on the idea that individual creators could connect directly with their fans and audiences. So our first product was an open source NFT store that anyone could deploy and host NFTs on their own, just like using WordPress. After that, we launched the Candy Machine program, which became our killer feature.

Candy Machine experienced the ideal situation that all early product development hopes to encounter as soon as it was launched: the demand for Candy Machine was huge after the launch, and we were racing against user demand almost every week to keep up with the evolution and demand of the market. We experienced a series of major launches such as Degen Ape and Aurory, and almost for a whole year, there were multiple multi-million dollar NFT projects released through Metaplex's Candy Machine every week.

BlockBeats: But at that time, most NFTs were released and promoted on Magic Eden, and Metaplex itself did not gain much recognition. Do you feel that you "gave" market share to Magic Eden at that time? If you had it to do again, would you consider launching Metaplex’s own NFT issuance platform?

Stephen：Magic Eden has built an incredible platform for creators and collectors, growing to become one of the most successful dApps in all of crypto. Their launchpad was also built using Metaplex’s Candy Machine technology. They used the same technology, branded it and integrated it into their marketplace platform and their early growth was instrumental to ours. I’m not a big fan of hypothetical questions because you never know exactly how things will turn out when you’re there, and we’re obviously very happy with where Metaplex is now and what we’ve achieved.

Ultimately, I think the answer is no, we would not build our own issuance platform for consumers. What has given us strength and momentum over the years has been our commitment to developers and creating value for applications built on our protocol. If applications built on Metaplex can generate value and profits far greater than our own, that’s the most strategic thing we can do for our long-term success. Their success is our success.

BlockBeats: Does the Metaplex protocol generate revenue through Magic Eden?

Stephen：Of course. The Metaplex protocol generates revenue by charging fees to applications, all of which are publicly disclosed. 50% of the protocol revenue is used to purchase $MPLX, which is then contributed to our DAO for community grants, and the other 50% is used to support the non-profit operations of the Metaplex Foundation. The foundation has no shareholders or investors, and its only goal is to promote the future development of the Metaplex ecosystem.

BlockBeats: After observing a round of NFT bull market, what do you think is the key to the success of NFT projects?

Stephen：I think at the end of the day, the key to the success of an NFT project is whether it can find a community that is connected by common values or interests. The measure of success should not only be market capitalization or trading volume, but also whether the project can cultivate a meaningful community around these common interests.

In fact, one of the best things an NFT project can do is to get rid of the excessive focus on price. Instead, the focus should be on finding and screening individuals who are truly aligned with the community's goals. The mistake many NFT projects make is to rely too much on whale investors, which can have a negative impact. When the market declines, you may lose core members who really care about the project's mission. Therefore, building around a strong and actively engaged community is the key to long-term success.

BlockBeats: Do you think NFT is over? If not, where is its future?

Stephen: I think avatar NFT (PFP) is the first real breakthrough in decentralized social networks. Many people ask when decentralized social networks will come. I believe it has already been realized through NFT. For example, projects like MadLads, Solana Monkey Business and Cyber Frogz are real communities with teams developing products and holding events every day to provide social opportunities for crypto users.

So far, these communities have been very successful in attracting users who work full-time in the crypto industry. The next big challenge is whether they can break through the limitations of the crypto industry and expand outward. NFTs have strong organizational capabilities within the crypto industry, but the success rate of creating communities outside the industry is not high. I think this is the next key challenge for such NFT projects.

On the other hand, meme coins are actually a continuation of this trend - in our view, they are also on-chain communities. We recently launched a framework called MPL-404, designed for hybrid NFT projects (picture-to-coin conversion, such as DeGods, Dune404 or Mutantmon). This standard combines the advantages of meme coins and NFT images. Meme coins provide a wider distribution channel through trading platforms, making it easier for users to obtain liquidity and capital, while NFTs provide unique value through online experiences or offline activities.

I believe this trend will continue to be an important theme. I would like to emphasize in particular that decentralized social networks have arrived - it has been built on Solana and Metaplex, and we believe this will become the social foundation that drives the next generation of applications.

「Ecosystem Index」

On September 9, according to The Block, several crypto funds including Pantera and ParaFi purchased a large number of $MPLX tokens from Wave Digital Assets. These tokens were originally held by FTX estate. In the past five months, 65.1 million of the 72.6 million MPLX held by FTX have been sold, with 7.5 million remaining. As of September 19, 2024, the entire initial distribution of MPLX is fully vested and unlocked.

After a year of laying a solid foundation, Metaplex has returned to the market with a new position, and has once again become a hot commodity in the eyes of institutions given its strong fundamentals and deep ecosystem of applications building on top of the protocol.

A few days ago, Metaplex Foundation director Stephen posted a tweet on X, showing the economic activities and benefits that Metaplex, as a protocol, has created for the Solana ecosystem. Since its launch in 2021, Metaplex has cumulatively promoted more than $5.5 billion in on-chain economic activities, covering tens of millions of wallet addresses in the ecosystem. During the meme craze at the beginning of the year, Metaplex generated $12 million in protocol revenue through applications such as Pump.fun and others.

On the other hand, according to the existing repurchase policy, Metaplex has been able to purchase MPLX worth about 10,000 SOL every month since June 2024. As of September 2024, the total value of purchased MPLX has reached about 40,000 SOL. In total, there’s 16.9 million MPLX been purchased, accounting for 1.7% of the total supply. The buyback mechanism is becoming an important and stable force in redirecting the circulating supply to the DAO.

This means whenever a Solana application breaks out in the market, Metaplex often contributes to and participates in its success, making MPLX more like a Solana ecosystem index.

All of this stems from Stephen and his team's vision for Metaplex. In their view, Metaplex is not just an NFT development package, it’s the technical backbone to Solana and the SVM.

BlockBeats: If we compare it to the industrial niche of the traditional Internet, can we understand Metaplex as the technical database of the Solana ecosystem?

Stephen: I think one of the core components of the Metaplex protocol is the digital asset standard and the ability to create and manage digital assets. Its importance is indeed similar to database technology. But our goal is not limited to this. We are focused on building a fully integrated full-stack tool for developers, which allows them to not only deploy digital asset protocols, but also develop complete end-to-end applications.

BlockBeats: Metaplex has generated about $12 million in revenue through applications such as Pump.fun and others in the past few months. Can you talk about how this partnership started?

Stephen: We don’t actually have a formal partnership with them. They have built a fascinating product by using our development tools. Pump.fun mainly uses Metaplex’s token metadata program and some SDKs. Every time a user creates a meme coin through Pump.fun, they are actually using Metaplex’s token infrastructure.

In both the Magic Eden Launchpad and Pump.fun cases, the application will charge a small fee every time a new NFT or FT is created using our protocol, which is where the Metaplex protocol’s revenue comes from. Our philosophy is to charge a small fee when an asset is created, and use these protocol fees to incentivize development of tools and on-chain programs that support and promote these standards.

Our goal is to support hundreds or even thousands of applications built with our tools. Our tool design is open source, and anyone can build with our SDK and development tools. We also provide detailed documentation and have community development team support in Discord. We encourage developers in the Chinese community to join us. If you have any questions, you can always participate in the discussion.

BlockBeats: What is the fee ratio of Metaplex?

Stephen: For each new token created, we charge a fee of 0.01 SOL for Token Metadata mints and 0.0015 SOL for Core mints. Half of this fee is used to purchase MPLX tokens and then contribute to the DAO. This makes us one of the few protocols with a lasting and sustainable revenue model that is directly linked to the DAO.

Metaplex Library (MPL) fee standard, source: Metaplex

BlockBeats: In your opinion, is Pump.fun the best application built on Metaplex? What other "Metaplex applications" do you think are interesting?

Stephen: This is a very outstanding product. It's really addictive and they did a great job on user experience. However, many products built on Metaplex are great, so it's hard to pick a favorite.

From the infrastructure level, we have mainstream wallets like Phantom, Solflare, and Backpack, as well as markets like Tensor and Magic Eden. In the gaming space, there are great projects like Star Atlas. Nyan Heroes is also a really fun game that utilizes Metaplex, and we have been working with them for several years. Games take a long time to develop, but the quality of this project is very high.

There are also some great NFT communities like Mad Lads and Solana Monkey Business. In addition to this, there are projects like Baxus in the RWA space, which is a company that tokenizes alcohol, and we think it will be one of the pioneers of many real-world and commercial assets on the chain.

There are also projects like Jupiter, Raydium and Orca that are using Metaplex - whether for token metadata or to tokenize LP positions. Almost all Solana projects that use FTs or NFTs are built on Metaplex. With so many great teams and companies, it's hard to pick just one as a highlight.

BlockBeats: Unlike Ethereum's EIP and ERC, the Metaplex protocol and the standards it provides are not part of Solana's native L1, but the vast majority of Solana applications need to be developed based on Metaplex. From an economic perspective, what do you think the development relationship between Metaplex and Solana L1 is like?

Stephen: In general, Metaplex has become a protocol that practically must be involved in building applications on the Solana Virtual Machine (SVM). We found that any chain based on the SVM requires the Metaplex library in order to run programs that are interoperable with the Solana mainnet. As such, we’ve partnered with Eclipse and Sonic, among others, to deploy the MPL, and look forward to scaling it as the SVM ecosystem grows.

As for the economic model, you’re right, it’s different from Ethereum, and I think that’s why Metaplex is hard to understand. There’s no direct analog on Ethereum, but I think Metaplex has played a central role in accelerating application development and driving overall growth for the Solana ecosystem. We have direct incentives to drive growth, adoption, and success for digital asset-related products and services, which Metaplex’s economic model supports.

This incentive structure allows us to provide tremendous value through the wide range of projects in the Metaplex library, such as the Candy Machine, NFT composition tools (Fusion), and on-chain royalty enforcement hybrid DeFi solutions (MPL-404). Overall, this incentive design has allowed Metaplex to thrive and has been key to Solana’s growth and competitiveness over the past few years.

BlockBeats: If there is a competitor to Metaplex in the market in the future, where do you think it will come from?

Stephen：I see the current centralized services - existing commercial, financial, and social networking infrastructure - as real competition. The real competition is, do people invest their online social life in the on-chain community, or continue to use platforms like Instagram or TikTok? Or play games like Star Atlas or traditional games like Fortnite? That's what we focus on.

This is also why we chose this space in the long run. I think the crypto industry sometimes does itself a disservice by being too closed. While Solana is a permissionless network where anyone can deploy their own digital asset standards, what makes Metaplex different is our integration. We are supported by every wallet, every exchange, every DeFi product, and every service in the Solana ecosystem. This breadth of distribution makes us unique and difficult to replicate.

Aura Network and the Future

Recently, the Metaplex Foundation officially released the Aura Network, a decentralized indexing and data availability network designed for Solana and SVM, providing efficient digital asset data indexing to help applications easily read blockchain status without relying on centralized infrastructure.

The three core functions of the Aura network include: data availability of digital assets, multi-program consistent indexing, and elastic state management. The former provides decentralized data storage and retrieval services for applications, and the latter two provide indexing and asset conversion across Solana and SVM respectively.

Currently, dApps face great challenges in competing with centralized opponents because Solana's process of reading and displaying blockchain state data is expensive and slow. Aura solves these problems by complementing SVM and the Metaplex Program Library (MPL) with a decentralized Aura node network.

It is worth noting that after the launch of Aura Network, in addition to being the governance token for the Metaplex DAO, $MPLX will be the token that powers the Aura network. This will be a new consumption scenario for $MPLX in addition to the repurchase demand of 50% of the Metaplex protocol revenue. In a recent research report published by Sistine Research, MPLX was compared with other existing data availability solutions, and an optimistic outlook for the future of Metaplex was given, believing that $MPLX was underestimated by 3 to 10 times.

Related reading: "Sistine Research: Why we are optimistic about Metaplex (MPLX)"

Left: MPLX token circulation and FDV comparison, right: MPLX token repurchase; source: Sistine Research

BlockBeats: Many Solana developers have reported that they encounter many headaches when dealing with data indexes? Aura is mainly designed to solve this ecological pain point, right?

Stephen: That's right. One of the biggest challenges facing developers today is how to read the accurate on-chain status. SVM and Solana excel at performing state transitions—when state changes, it efficiently executes and verifies interactions. The challenge, however, is getting those state changes updated, replicated, and made available to developers, ensuring their applications are in sync with the latest state.

This latency makes it difficult for dApps to compete with centralized applications, as end users have very limited patience for waiting for applications to load or update. Even if Solana’s validators have verified the state change, applications still need to wait for the supporting infrastructure to update before they can read that state.

The solution provided by Aura Network helps solve these problems through performance, decentralized indexing, and data availability.

BlockBeats: What strategic significance do you see for Aura Network?

Stephen: From a strategic perspective, our goal is to provide a comprehensive developer platform that reduces complexity for developers. Today, building an application requires piecing together a variety of services and technologies. Part of the reason for this expansion is to simplify this technology stack.

With Aura, we will have SVM as the fastest engine for performing state transitions + MPL as the smart contract layer and digital asset standard, with broad integration across the ecosystem, along with the decentralized data and read layer provided by Aura.

BlockBeats: What’s next for Metaplex?

Stephen: Aura is another major product release for the Metaplex protocol, following compressed NFTs and on-chain royalty enforcement. Building a global network of Aura nodes with asset data secured and decentralized with MPLX is our focus. We will see this release as the first step and continue to improve and expand it in the future.

For Metaplex, I continue to see it as a critical infrastructure for decentralized commerce, just like Serum was in the DeFi space at the time.

We have achieved initial success in early application scenarios such as digital artists, on-chain communities, and crypto games, bringing their economic systems to the chain, but I think this is just the early stages of a larger change - all future commerce, whether physical or digital, will operate through decentralized systems. Now that real-world assets (RWAs) have begun to be tokenized, I see no reason why platforms like Amazon or Alibaba can’t operate in a peer-to-peer decentralized manner.

Metaplex is not just an NFT platform, it’s also the standard for NFTs and FTs on Solana. Metaplex has been used to create over 3 million FTs and over 500 million NFTs, supporting a variety of projects from DeFi applications to on-chain games. I think both FTs and NFTs are the infrastructure needed for peer-to-peer commerce.

A similar situation can be seen in the early development of database technology. In the early days of computer development, operating systems appeared first, followed by the birth of database technology, which enabled applications to create and manage data more efficiently. A large ecosystem of services is built on these databases to help developers create various types of applications. Today, thousands of devices and applications rely on database technology, although ordinary users may not realize that it is the core engine that drives everything.

Similarly, digital asset protocols are the fundamental building blocks of Web3 decentralized computing, just as database technology is the foundation of traditional computing.

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