Leading NFT marketplace OpenSea is set to start enforcing NFT royalties set by their creators from Tuesday, November 8th. However, the strict policy will only apply to new NFT collections for the time being.
The company will also release an on-chain royalty enforcement tool, described as a “simple code snippet”, which is aimed at helping creators restrict NFT sales to marketplaces that provide royalties.
OpenSea’s new policy seeks to rebalance the financial scales in the favor of NFT creators, as data shared on Twitter by NFT marketplace X2Y2 last month revealed that just 18% of NFT traders paid royalties out to creators.
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A month ago, around 75% of NFT buyers opted-in to paying royalties on x2y2, when given the choice.Now that number is around 18%The idea of "tip jar" royalties where buyers can opt-in or opt-out will likely prove to just be a 0-royalty policy over timeFree riding is too easy pic.twitter.com/BAG9VfI18q— NFTstatistics.eth (@punk9059) October 28, 2022
OpenSea’s decision to support creators contrasts with that of competitor Magic Eden, which earlier this month elected to make NFT royalties an optional feature for its Solana-based collections. Ethereum platforms X2Y2, LooksRare, and Blur have also adopted similar no-royalty approaches.
On the other hand, creators’ existing collections are likely to face an uphill battle in enforcing royalties, according to Finzer. The CEO clarified that the only means through which creators could secure fees on existing collections be with non-upgradeable smart contracts would be to shift the entire collection to a new smart contract.
“Creator fees are an important innovation of Web 3.0 that help creators monetize their work in a more effective way,” Finzer said.
On the Flipside
- OpenSea’s new tool, while benefiting creators, effectively blacklists NFT marketplaces that don’t pay creator royalties, somewhat limiting the pool of available marketplaces.
- Industry insiders worry that the move could merely serve to further centralize OpenSea’s dominance in the NFT space.
Why You Should Care
As the world’s biggest NFT marketplace, OpenSea’s decision to support creators’ rights to NFT royalties could help to attract the space’s best creators to the platform, while also depriving competitor platforms of valuable new collections. This, in turn, could force the hand of other marketplaces into backtracking on their currently held “no-royalties” stances in order to retain the most in-demand NFT collections.