6 months ago
Early traders of NFT marketplace Magic Eden's caller token ME had a batch to beryllium thankful for – if they could entree their airdrops, that is.
In the archetypal minutes of trading Tuesday, the token's afloat diluted valuation deed $15 billion. But arsenic much claimants managed to process their airdrops – and successful immoderate fortunate cases, merchantability – that valuation began to crater. It yet settled astatine an FDV astir $5 billion.
ME's rocky rollout stood successful crisp opposition to different caller token launches. Hyperliquid's HYPE <a href="https://www.coindesk.com/business/2024/11/29/hyper-liquids-native-token-debuts-at-fully-diluted-4-2-b-market-cap" target="_blank">token</a> instantly went parabolic aft launching successful precocious November. And Move's days-old <a href="https://www.coindesk.com/business/2024/12/09/movement-networks-move-will-be-listed-on-binance-upbit-and-bithumb-amid-airdrop" target="_blank">MOVE</a> token had a acold much unchangeable rollout – adjacent shooting up astatine times.
Some observers saw ME's down-only terms enactment arsenic comeuppance for a crypto task whose airdrop processing process was highly atypical, and, according to 3 manufacture insiders, threatened to breach information champion practices.
Magic Eden did not respond to CoinDesk's questions.
Traders who managed to assertion thousands of dollars-worth of ME publically <a href="https://x.com/SolJakey/status/1866492373259419778" target="_blank">shunned</a> anyone badmouthing their "free money." Others bemoaned <a href="https://x.com/DegenJhoLow/status/1866492283543335291" target="_blank">apparently</a> getting their wallets drained portion wading done Magic Eden's convoluted process.
It was a mixed time for Solana's best-known NFT trading platform, which has partially weathered the hollowing-out of crypto's integer collectibles system by supporting newer, flashier and much highly-traded NFTs connected the Bitcoin blockchain too.
Security concerns
The aforesaid wallet issues that analyzable ME's motorboat besides could endanger idiosyncratic privacy, according to 1 manufacture root who asked not to beryllium named.
Magic Eden earmarked ME tokens for NFT traders arsenic a reward for their past business. To get their airdrop, those traders had to either import the backstage keys from their qualifying wallets into Magic Eden's wallet app oregon make a caller wallet connected Magic Eden's app and nexus it to their aged ones. The second enactment perchance creates a privacy-busting nexus betwixt antecedently unaffiliated wallets.
Usually, crypto apps are contented to fto their users assertion airdrops wrong their wallet of preference. Of course, astir apps don't brace their token motorboat with an in-house wallet. The process doubtless boosted adoption of Magic Eden's caller wallet.
Nevertheless, CoinDesk recovered a fig of atypical information practices wrong the Magic Eden wallet. It keeps a backup of users' betterment phrases and backstage keys on-app with nary wide way to delete that information. While this makes the work much user-friendly, it besides goes against established norms successful wallet plan and security.
"It's a precise atrocious thought to store this stuff" anyplace digitally, beryllium it locally connected one's ain instrumentality oregon – adjacent worse – remotely connected a company's servers, said Ogle, a pseudonymous crypto-security sleuth. It's not wide precisely wherever Magic Eden is storing the wallet betterment information.
The process besides opened up airdrop claimants to onslaught from atrocious actors who mightiness unreal to beryllium Magic Eden.
Wallets created wrong Magic Eden's app cannot easy beryllium transferred to different wallet applications. CoinDesk attempted to retrieve a Magic Eden-created wallet connected Phantom by utilizing the Magic Eden-provided 12-word betterment phrase. This process resulted successful the power of a wholly antithetic address.
An manufacture root said it had to bash with Magic Eden's reliance connected a antithetic tech setup than different starring wallets. It tin beryllium flooded by importing the backstage key, which is nestled deeper successful Magic Eden's app settings.
Not-so-savvy users mightiness effort to determination their Magic Eden wallets to a antithetic app utilizing the 12 connection betterment operation alone.
"They are not going to beryllium uncovering immoderate wealth successful there," the insider said, predicting specified users would panic, and possibly incorrectly presume their wealth was gone for good.
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