The Rise of Tensor: Challenging the Status Quo in NFT Trading

In the rapidly evolving world of cryptocurrency and blockchain technology, few developments have been as exciting and potentially transformative as the rise of NFTs (Non-Fungible Tokens). At the forefront of this revolution is Tensor, an innovative NFT marketplace built on the Solana blockchain. Founded by Ilja Moisejevs and Richard Wu, Tensor has quickly emerged as a formidable challenger to established players like Magic Eden, despite having a significantly smaller team.

Tensor's journey began in March 2022 when Moisejevs and Wu joined forces to explore opportunities in the crypto space. Initially focused on developing an NFT pricing oracle, they soon pivoted to building an NFT trading platform after recognizing a gap in the market for sophisticated trading tools catering to professional traders and enthusiasts.

"We saw that there was an opportunity to appeal to the pros of our audience," explains Richard Wu. "We call them the pros. But realistically, there are no pros in the NFT space. We're all just a bunch of de-gens trying to flip NFTs and JPEGs for profit."

This insight led Tensor to develop a platform that combines the simplicity of traditional NFT marketplaces with the advanced features typically found on centralized exchanges. The result is a user interface that resembles a professional trading terminal, allowing users to execute bulk trades and employ sophisticated strategies with ease.

The Tensor Advantage: Speed, Efficiency, and Innovation

One of the key factors that sets Tensor apart from its competitors is its focus on speed and efficiency. By building on the Solana blockchain, Tensor can offer near-instantaneous transactions at a fraction of the cost associated with Ethereum-based NFT platforms. This advantage is particularly crucial for traders who engage in high-frequency trading or deal with large volumes of NFTs.

"What we envisioned with NFT trading was that people could trade these NFTs back and forth without having to worry about essentially a fixed cost that could amount to 10, 100 basis points, even 1,000 basis points for certain NFTs," Wu explains. "That was just not sustainable long term."

Tensor's innovative approach extends beyond just speed and cost-effectiveness. The platform has introduced several novel features, including an Automated Market Maker (AMM) for NFTs. This tool allows users to create liquidity pools for NFT collections, enabling more efficient price discovery and trading.

Compressed NFTs: The Next Frontier in Digital Asset Trading

Perhaps the most exciting development in Tensor's arsenal is its support for compressed NFTs. This revolutionary technology allows for the creation of NFTs at a fraction of the cost of traditional NFTs, potentially opening up the market to millions of new users.

"Compressed NFTs simple definition is the cheapest possible way in crypto to create an NFT," explains Moisejevs. "So cheap, in fact, that I think a billion of these, I think is about $10,000 to mint, which is like nothing. And that's like a billion. And if you scale down to millions, it's like a thousand or less."

The implications of this technology are profound. By dramatically reducing the cost barrier to entry, compressed NFTs could enable a wide range of new use cases for digital assets. From loyalty programs and digital collectibles to in-game items and digital identity solutions, the possibilities are virtually limitless.

Solana: The Blockchain of Choice for Next-Generation NFTs

Tensor's decision to build on Solana was not arbitrary. The team recognized early on that Solana's high-speed, low-cost infrastructure was ideally suited to the demands of NFT trading. While Ethereum remains the dominant platform for high-value NFT collections, Solana's technical advantages make it the perfect breeding ground for innovation in the space.

"We think that Solana and the low gas fees, well, not gas fees, but like low transaction fees, transactions confirming in less than a second, we think that is what the trading experience for NFTs should be long term," says Wu.

This belief in Solana's potential has remained steadfast, even in the face of market volatility and skepticism from some quarters of the crypto community. In fact, Tensor began its funding round on the very day that FTX collapsed, a testament to the team's conviction in their vision and the underlying technology.

The Path to Mass Adoption: Beyond Speculation

While NFTs have gained significant attention and value in recent years, much of the activity in the space has been driven by speculation. Tensor's founders recognize that for NFTs to achieve true mass adoption, they need to move beyond being purely speculative assets and provide tangible utility to users.

"What we need is to find a way to bring more users into the space to actually proliferate NFTs and the idea of digital assets, so that your relatives, the friends at Thanksgiving dinner, will actually be interested in NFTs beyond just like speculation," Wu emphasizes.

This vision for the future of NFTs aligns closely with Solana's capabilities. The blockchain's ability to handle high transaction volumes at low costs makes it ideal for supporting a wide range of consumer applications that incorporate NFTs. From gaming and social media to e-commerce and digital identity, the potential use cases are vast and varied.

Building for the Future: Tensor's Roadmap and Vision

As Tensor continues to grow and evolve, the team remains focused on building products that cater to both professional traders and retail users. While the platform initially gained traction among more sophisticated traders, there's a clear recognition of the need to expand its appeal to a broader audience.

"We don't think you can do that today," Moisejevs says, referring to the idea of becoming a pure developer platform or liquidity layer. "Maybe when crypto is like 10 exercises today, then yeah, but not today."

Instead, Tensor is concentrating on building a consumer product that people "love and can't live without." This approach involves continual iteration and improvement of the platform's features, always with an eye towards user experience and market demand.

The Importance of Community: Tensorians and Beyond

Recognizing the importance of community in the crypto space, Tensor has announced plans to launch its own NFT project called Tensorians. This initiative is not aimed at generating revenue but rather at fostering a sense of belonging among Tensor users and supporters.

"It's not because of the money, because the mint cost will be dirt cheap, like it'll be like inconsequential and in fact, we'll probably lose money based on all of our expenses going into this NFT project," Wu explains. "It's really about giving, building a tangible community that we can talk to people at conferences, and say, hey, do you hold a Tensorian? If you do a chat, let's chat about what you're working on."

This community-centric approach reflects a broader understanding of the social dynamics that drive adoption and engagement in the crypto space. By creating a tangible representation of membership in the Tensor ecosystem, the team hopes to strengthen user loyalty and facilitate meaningful connections within the community.

Challenges and Opportunities in the NFT Space

Despite the excitement surrounding NFTs and compressed NFTs, the space is not without its challenges. Issues of spam, scalability, and user education remain significant hurdles to overcome. However, the Tensor team views these challenges as opportunities for innovation and growth.

"I think spam is going to be a very real issue," Wu acknowledges when discussing the potential downsides of extremely low-cost NFT minting. "People will be getting thousands, tens of thousands of these compressed NFTs. It's going to make the jobs of wallet providers, of RPC providers, of us, like a marketplace, indexing all of this data and surfacing them to the user, like, efficiently enough, and also, like, trying to hide the spam. That's going to be very difficult, or it's going to take some time, some thought into thinking about how we handle this stuff."

Addressing these challenges will require collaboration across the entire ecosystem, from developers and platform providers to users and regulators. Tensor's approach of maintaining close relationships with infrastructure providers like Helius demonstrates the kind of cooperative effort that will be necessary to unlock the full potential of NFTs and compressed NFTs.

The Future of NFTs: Beyond PFPs and Collectibles

While profile picture (PFP) NFTs and digital collectibles have dominated the NFT narrative to date, both Moisejevs and Wu see a future where NFTs become an integral part of everyday digital interactions. This vision extends far beyond the current speculative market for digital art and into realms like identity verification, access control, and digital rights management.

"I think we'll see it essentially be used in almost everything that touches the blockchain," Wu predicts. "So think about just crypto as a whole, any consumer app, any infrastructure, we'll use NFT in some form. But the thing is like these NFTs won't be traded and that's fine for us. These NFTs may be sold down, they might not even move change hands, but it's such, it's a more natural way of encapsulating essentially almost like a backpack or like a luggage, like a crate of stuff that is non-fungible."

This perspective aligns with the broader trend of tokenization in the crypto space, where real-world assets and digital rights are increasingly being represented on-chain. Compressed NFTs, with their low cost and high scalability, could be the key to unlocking this potential on a massive scale.

Lessons in Startup Growth and Innovation

Throughout their journey building Tensor, Moisejevs and Wu have gained valuable insights into the challenges and opportunities of running a startup in the fast-paced world of crypto. Their experiences offer valuable lessons for other entrepreneurs looking to make their mark in the space.

One key insight is the importance of being able to navigate what they call the "idea maze" quickly and efficiently. In a space where large, well-funded competitors can outspend you on user acquisition and engineering talent, the ability to make rapid, well-informed decisions becomes a crucial competitive advantage.

"That's the only advantage you have against a large incumbent," Wu explains. "Like they can out, out user acquisition you, they can out, engineer bandwidth you, they can out hire you by 10 fold, 100 fold. But one thing that they don't have is being able to move quickly and shift the entire company, shift the entire product towards a direction that you as a founder have a really good hunch on, just because you're grinding it out, you're in the trenches every single day talking to users."

Another critical lesson is the importance of distribution over product perfection. While building a great product is essential, the ability to get that product in front of the right users can often be the difference between success and failure.

"Probably the thing that is super obvious to me now that wasn't obvious back then is how much distribution matters versus product," Moisejevs reflects. "I think there's the saying that first-hand founder thinks about products, second-hand founder thinks about distribution and I just couldn't agree more because ultimately everything is about whether you can put the thing that you build in front of the right eyes and whether they can get excited."

The Role of Venture Capital in Crypto Innovation

Tensor's journey has been supported by venture capital, with the team raising funds from notable investors like Placeholder. This backing has allowed the team to focus on building and iterating their product without the immediate pressure of generating revenue.

However, the founders are quick to point out that having a large war chest isn't always an advantage in the fast-moving world of crypto. "Having a lot of capital can make you lazy," Moisejevs notes. "And right now the market is such that it's actually not obvious how you deploy that amount of capital."

Instead, the team has focused on maintaining a lean, agile structure that allows them to respond quickly to market changes and user feedback. This approach has enabled Tensor to punch above its weight, competing effectively with much larger and better-funded competitors.

The Importance of User Experience in Crypto Adoption

One of the recurring themes in Tensor's approach to building their platform is the emphasis on user experience. In a space often criticized for its complexity and lack of user-friendliness, Tensor has made it a priority to create an interface that combines powerful functionality with intuitive design.

"Ultimately the only thing that matters is the UX for the user," Moisejevs emphasizes. "If these doesn't give a shit what delivers it, you need to build whatever you have to build as a developer and then hide it away behind a beautiful UI and just make you work for the user."

This focus on user experience extends beyond just the interface design. It also influences how Tensor approaches feature development and product strategy. By maintaining close relationships with their users and actively seeking feedback, the team can quickly identify and address pain points, leading to a product that truly meets the needs of its target audience.

The Potential of Compressed NFTs in Gaming and Social Media

While the full potential of compressed NFTs is still being explored, one area where they could have a significant impact is in gaming and social media. The ability to create and distribute large numbers of unique digital assets at a minimal cost opens up exciting possibilities for in-game items, social tokens, and digital collectibles.

"Think about like any consumer app in Web2, that's remotely useful, that has some notion of like something that you could perhaps own, something that you could perhaps collect and show off. I think all of these will eventually use NFTs," Wu predicts. "And I think it only makes sense for them to use compressed NFTs because of the cost."

This could lead to a new paradigm in how we think about digital ownership and interaction in online spaces. From customizable avatars and virtual real estate to tokenized reputation systems and social currencies, compressed NFTs could be the building blocks of a more vibrant and engaging digital world.

The Role of Solana in Enabling Next-Generation NFTs

Throughout the discussion, it becomes clear that Solana's unique capabilities play a crucial role in enabling the innovations that Tensor and others are bringing to the NFT space. The blockchain's high throughput and low transaction costs create an environment where developers can experiment with new ideas and business models that would be prohibitively expensive on other networks.

"Solana right now is the only place where you can do that," Moisejevs states, referring to the ability to create and distribute large numbers of NFTs at minimal cost. This technological advantage positions Solana as a potential leader in the next wave of NFT adoption, particularly as the focus shifts from high-value collectibles to more utilitarian and widely accessible digital assets.

Challenges and Opportunities in Scaling NFT Technology

As the NFT space continues to evolve, scalability remains a key challenge. While compressed NFTs offer a solution to the cost and efficiency issues associated with traditional NFTs, they also introduce new complexities, particularly when it comes to data indexing and retrieval.

"It really requires a very close cooperation between the RPC provider, in this case, Helius and the app maker, in this case, Tensor," Moisejevs explains. "Like constantly going back and forth and resolving issues, because this technology sort of spans the infrastructure stack as much as it spans the app stack."

Addressing these challenges will be crucial for the widespread adoption of compressed NFTs and the realization of their full potential. It will require ongoing collaboration between developers, infrastructure providers, and end-users to create solutions that are both technologically robust and user-friendly.

The Future of NFT Marketplaces and Trading Platforms

As the NFT space matures, the role of marketplaces and trading platforms like Tensor is likely to evolve. While current platforms focus primarily on facilitating buying and selling, future iterations may offer a wider range of services, from asset management and analytics to integration with other DeFi protocols.

"We're starting to realize that owning the user touchpoints is super important," Wu notes. This suggests that successful platforms in the future will likely be those that can offer a comprehensive suite of services, creating a seamless user experience across various aspects of the NFT ecosystem.

The Importance of Community in Crypto Adoption

One of the key strengths of the crypto space, and particularly the NFT community, is the passionate and engaged user base. Tensor's approach to community building, as exemplified by their Tensorians NFT project, highlights the importance of fostering a sense of belonging and shared purpose among users.

"We wanna listen to them, because they chose to align with us, they chose to be part of the answer," Moisejevs explains. This community-centric approach not only helps to build loyalty but also creates a valuable feedback loop that can drive product development and innovation.

The Role of Education in Expanding the NFT Market

As NFTs and compressed NFTs move towards mainstream adoption, education will play a crucial role in onboarding new users and expanding the market. Both Moisejevs and Wu emphasize the importance of helping people understand the value and potential of NFTs beyond just speculation.

This educational effort will need to address not only the technical aspects of NFTs but also their practical applications and potential impact on various industries. As the technology evolves and new use cases emerge, ongoing education and outreach will be essential to drive adoption and unlock the full potential of NFTs.

Balancing Innovation and Pragmatism in Blockchain Development

Throughout the discussion, a recurring theme is the need to balance innovative thinking with practical considerations. While decentralization and trustlessness are core principles of blockchain technology, the Tensor team recognizes that some degree of centralization may be necessary or even beneficial in certain contexts.

"I don't think anyone cares about centralization when it comes to NFTs," Wu provocatively states. "I think people are totally fine if they're Boredape, if they're DeGods, if they're Madlads, if they're Clanos, has a ton of centralization around it, as long as they can so trade them back and forth, as long as they can so rep them on their Twitter profile picture."

This pragmatic approach allows for the development of user-friendly solutions that can drive adoption while still maintaining the core benefits of blockchain technology. It's a delicate balance, but one that may be necessary to bridge the gap between the current crypto ecosystem and mainstream adoption.

The Potential for NFTs to Revolutionize Digital Ownership

As the conversation progresses, it becomes clear that both Moisejevs and Wu see NFTs as more than just a new asset class. They envision a future where NFTs fundamentally change how we think about and interact with digital assets.

"We'll get to this point where somebody calling themselves an NFT marketplace or an NFT project won't make any sense," Moisejevs predicts. "The same way that calling yourself a dot com today doesn't make any sense. They'll be like, yeah, of course you're an NFT project 'cause it's the superior way to do something like it just makes sense, right?"

This vision suggests a future where the concept of digital ownership is as natural and intuitive as physical ownership is today. NFTs could become the standard way of representing and transferring rights to any unique digital asset, from social media posts and digital artwork to in-game items and virtual real estate.

The Importance of Speed and Agility in Crypto Startups

One of the key lessons that emerges from Tensor's journey is the critical importance of speed and agility in the fast-paced world of crypto startups. Both Moisejevs and Wu emphasize that the ability to make quick decisions and pivot rapidly in response to market conditions is often more valuable than having a large team or substantial funding.

"As a founder, your job is actually not to make the best decisions," Moisejevs explains. "As a founder, your job is to make the best possible decisions under a shit ton of pressure, fast." This approach allows Tensor to stay ahead of the curve, rapidly iterating on their product and responding to user needs in real-time.

The Future of Work in the Crypto Space

The discussion also touches on the nature of work in the crypto industry, particularly in startups. Wu's controversial tweet about GitHub activity sparked a debate about work-life balance and the level of dedication expected in the space.

While acknowledging the need for balance, especially for those with family commitments, the Tensor team emphasizes the importance of passion and dedication in building successful products in the crypto space. They seek team members who view their work as a craft, going beyond mere job responsibilities to contribute innovative ideas and solutions.

The Potential for Solana to Lead in Daily Active Users

Despite the challenges and competition in the blockchain space, both Moisejevs and Wu express strong optimism about Solana's future. They believe that Solana's technical advantages make it uniquely positioned to support the next wave of consumer-facing crypto applications.

"I think there will be more daily active users on Solana than any other chain because consumer apps in the near term would just be, it's more obvious for them to be building on Solana than an L2, then on a three or a mainnet, then on, let's say, the next L1," Wu predicts. This bold claim underscores their belief in Solana's potential to drive mainstream adoption of blockchain technology.

The Need for More Consumer-Focused Apps in the Crypto Space

While much of the crypto industry has focused on financial applications and speculation, both Moisejevs and Wu emphasize the need for more consumer-focused apps that provide value beyond trading and investment. They see this as a crucial step in driving mainstream adoption of blockchain technology.

"I think one thing that is sorely missing in this ecosystem are apps that consumers or retail people want to use outside of just speculation," Wu notes. This observation highlights a significant opportunity for developers and entrepreneurs to create applications that leverage blockchain technology to solve real-world problems and enhance everyday digital experiences.

The Evolving Narrative of NFTs

As the NFT space matures, the narrative around these digital assets is likely to evolve. While early adoption was driven largely by speculation and the novelty of digital collectibles, the future of NFTs lies in their utility and integration into everyday digital experiences.

"We think that the next meta of NFTs will be the polar opposite of that. It'll be about involving as many people as possible," Moisejevs explains, contrasting this with the initial focus on scarcity and exclusivity. This shift in focus from scarcity to accessibility could be the key to unlocking the true potential of NFTs and driving widespread adoption.

The Importance of First Principles Thinking in Crypto Innovation

Throughout the discussion, both Moisejevs and Wu emphasize the importance of clear, first principles thinking in navigating the complex and rapidly evolving crypto landscape. They value the ability to see through hype and make objective decisions based on fundamental truths about technology and markets.

"Ultimately, like one thing I learned when I moved from banking into product is that the quality of your decisions actually matters more than how many of those decisions you make or how fast you can execute on them," Moisejevs reflects. This approach has allowed Tensor to make bold bets on emerging technologies like compressed NFTs, positioning them at the forefront of innovation in the space.

The Role of Crypto in Reshaping Digital Interactions

As the conversation concludes, it becomes clear that both Moisejevs and Wu see crypto, and particularly NFTs, as a transformative force that will reshape how we interact with digital content and assets. They envision a future where blockchain technology underpins a wide range of everyday digital experiences, from social media and gaming to e-commerce and digital identity.

This vision of the future is not just about creating new financial instruments or investment opportunities, but about fundamentally changing the nature of digital ownership and interaction. As compressed NFTs and other innovations make it increasingly feasible to tokenize a wide range of digital assets and experiences, we may be on the cusp of a new era in how we create, share, and value digital content.

In conclusion, the story of Tensor and their work with compressed NFTs on Solana offers a compelling glimpse into the future of digital assets and blockchain technology. By focusing on user experience, embracing innovation, and maintaining a pragmatic approach to development, Tensor is helping to pave the way for the next wave of crypto adoption. As the space continues to evolve, it will be exciting to see how their vision of accessible, utility-focused NFTs shapes the future of the digital economy.

Facts + Figures

• Tensor was founded in March 2022 by Ilja Moisejevs and Richard Wu.
• The platform initially focused on developing an NFT pricing oracle before pivoting to an NFT trading platform.
• Tensor's user interface resembles a professional trading terminal, allowing for bulk trades and sophisticated strategies.
• Compressed NFTs can be minted at a significantly lower cost compared to traditional NFTs - approximately $10,000 for a billion NFTs.
• Tensor began its funding round on the same day that FTX collapsed, demonstrating their conviction in their vision and Solana's potential.
• The platform introduced an Automated Market Maker (AMM) for NFTs, enabling more efficient price discovery and trading.
• Tensor plans to launch its own NFT project called Tensorians to foster community engagement.
• The founders predict that in the future, NFTs will be used in almost everything that touches the blockchain, beyond just traded assets.
• Tensor's approach emphasizes speed and agility in decision-making, which they see as a key advantage over larger, more established competitors.
• The team believes that Solana could potentially have more daily active users than any other blockchain due to its suitability for consumer applications.
• Tensor's founders argue that the next wave of crypto products will look significantly different from what we've seen in previous cycles.
• The team emphasizes the importance of distribution over product perfection in the early stages of a startup.
• Compressed NFTs are seen as a potential solution to enable mass adoption of NFTs by dramatically reducing minting and transaction costs.
• The founders predict that the distinction between "NFT projects" and other digital projects will become meaningless as NFTs become the standard way of representing digital assets.
• Tensor's team consists of three developers, significantly smaller than their main competitor Magic Eden, which has over 120 employees.

Questions Answered

What is Tensor and how does it differ from other NFT marketplaces?

Tensor is an innovative NFT marketplace built on the Solana blockchain that caters to professional traders and enthusiasts. It differs from other marketplaces by offering a user interface similar to professional trading terminals, allowing for bulk trades and sophisticated strategies. Tensor also introduced features like an Automated Market Maker (AMM) for NFTs, enabling more efficient price discovery and trading.

Why did Tensor choose to build on Solana?

Tensor chose to build on Solana due to its high-speed, low-cost infrastructure which is ideally suited for NFT trading. The founders believe that Solana's ability to handle transactions quickly and cheaply is essential for the long-term sustainability of NFT trading, especially for high-frequency traders or those dealing with large volumes of NFTs.

What are compressed NFTs and why are they important?

Compressed NFTs are a new type of NFT that can be created at a fraction of the cost of traditional NFTs. They are important because they dramatically reduce the barrier to entry for creating and distributing NFTs, potentially enabling a wide range of new use cases and applications. The low cost of compressed NFTs could allow for mass adoption of NFT technology in various industries beyond just digital art and collectibles.

How does Tensor plan to compete with larger, established NFT marketplaces?

Tensor plans to compete with larger marketplaces by focusing on speed, agility, and innovation. The team emphasizes their ability to make quick decisions and pivot rapidly in response to market conditions. They also focus on building features that cater to professional traders while maintaining a user-friendly interface. Additionally, Tensor is at the forefront of supporting new technologies like compressed NFTs, which they believe will be crucial for the next wave of NFT adoption.

What is Tensor's vision for the future of NFTs?

Tensor envisions a future where NFTs are used in almost everything that touches the blockchain, beyond just traded assets. They believe NFTs will become the standard way of representing and transferring rights to any unique digital asset, from social media posts and digital artwork to in-game items and virtual real estate. The team sees compressed NFTs as a key technology in enabling this vision by making NFT creation and distribution accessible to a much wider audience.

How does Tensor approach community building?

Tensor approaches community building through initiatives like their planned Tensorians NFT project. This project aims to give users a tangible representation of their membership in the Tensor ecosystem, fostering a sense of belonging and facilitating connections within the community. The team also emphasizes the importance of listening to their community and incorporating user feedback into their product development process.

What lessons have the Tensor founders learned about building a startup in the crypto space?

The Tensor founders have learned several key lessons about building a crypto startup. These include the importance of being able to navigate the "idea maze" quickly and efficiently, the critical role of distribution in addition to product development, and the need to make fast decisions under pressure. They also emphasize the value of maintaining a lean, agile structure that allows for rapid iteration and response to market changes.

How does Tensor view the balance between decentralization and user experience in crypto?

Tensor takes a pragmatic approach to the balance between decentralization and user experience. While they recognize the importance of blockchain principles like decentralization, they also acknowledge that some degree of centralization may be necessary or beneficial in certain contexts to create user-friendly solutions. Their focus is on building products that can drive adoption while still maintaining the core benefits of blockchain technology.

What role does Tensor see for NFTs in driving mainstream adoption of crypto?

Tensor sees NFTs, particularly compressed NFTs, as a potential key to driving mainstream adoption of crypto. By enabling the creation of low-cost, easily distributable digital assets, NFTs could become integrated into a wide range of everyday digital experiences. This could help introduce blockchain technology to a much wider audience through practical applications beyond just financial speculation.

How does Tensor plan to address challenges like spam in the compressed NFT space?

While acknowledging the potential for spam and other challenges in the compressed NFT space, Tensor views these as opportunities for innovation. The team recognizes the need for collaborative efforts across the ecosystem to develop solutions for issues like data indexing, efficient surfacing of relevant NFTs, and spam filtering. They are actively working on addressing these challenges as part of their ongoing product development efforts.