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November 29, 2024
Crypto

Crypto Twitter split as another NFT platform moves to opt-in royalties

By akohad Oct17,2022

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Solana-based Magic Eden has become the latest NFT marketplace to shift to an optional royalties model, following in the footsteps of X2Y2 in August, albeit reluctantly. 

Under the optional royalties model, buyers are given the power to set the royalties they want to contribute to an NFT project, meaning there is a chance that some creators may not receive royalties when their artworks are sold.

In an Oct. 14 post, the NFT marketplace noted that the decision came after “difficult reflection and discussions with many creators” and came as the “market has been shifting towards optional creator royalties for awhile.”

The NFT marketplace shared a graph showing that the number of cumulative wallets using optional royalty marketplaces to buy or sell NFTs skyrocketed in late September.

However, the move has been met with split opinions from Twitter’s NFT community, with some seeing the move as positive for the long-term health of the industry, while others have labeled skipping royalties as akin to “theft.” 

Well-known NFT artist Mike “Beeple” Winkleman pointed out to his 700,000 followers on Oct. 15 that while he doesn’t love what Magic Eden and others are doing, the switch from a seller’s fee to a buyer’s premium could be better for the industry long term.

Another Twitter user named CaptainFuego, behind Fuego Labs told their nearly 10,000 followers that “Royalties are stupid and shouldn’t exist. Glad to see platforms taking this approach.”

Others were more critical of the change. Brocolli DAO argued that “royalties are needed in an immature ecosystem,” noting that as per their calculations, they’ve already lost as much as $27,000 in royalties due to 0% purchases on other marketplaces. 

“In future we will be blocking anyone who hasn’t paid royalties from accessing our Discord channels. Not paying royalties is theft. We will treat it as such,” they said. 

Cozy the Caller, a self-proclaimed analyst, made a grim prediction to their 108,000 followers, stating “I can see a scenario in which Magic Eden goes 0% and loses their market share to a marketplace enforcing royalties in an innovative way.”

Magic Eden said the change was not taken lightly, and they “have actively been trying to avoid this outcome and spent the last few weeks exploring different alternatives.”

Last month, the NFT marketplace attempted to bring forth a royalty enforcement tool called Meta Shield, aimed at deterring NFT buyers trying to skirt creator royalties by giving creators a tool that could flag and blur NFTs that sold bypassing royalties.

Magic Eden noted in its latest post that: “Unfortunately, royalties are not enforceable on a protocol level, so we have had to adapt to shifting market dynamics.”

In August, NFT marketplace X2Y2 announced they were introducing a similar option that allows buyers to set the royalty fee when buying an NFT.

The move doesn’t appear to have affected the platform’s usage; according to data on NFTGo, in the last three months, X2Y2’s trading volume is ranked first, surpassing OpenSea.

NFT marketplace trading volume data. Source: NFTGO

Cointelegraph has reached out to Magic Eden for further comment but has not received an immediate response at the time of publication.