Quick Summary
- OpenSea, a marketplace of Non-fungible tokens (NFTs), linked this weekend with the debate of an ongoing NFT royalty.
- It happened through a blog post announcing its 1st royalty enforcement tool.
The tool aims to produce creator fees, also called royalties, enforceable on-chain & will relate to new collections listed on the platform set up on November 8th, 2022. This main NFT trading platform claimed that the royalty payment rate decreased below 20% in marketplaces with voluntary fees.
While in a few marketplaces, the creator charges are not always paid. Although, as OpenSea CEO Devin Finzer stated that the choice needs to be theirs [developers] to create, it must not be a choice made for them through marketplaces.
There’s been a lot of discussion over the past few months about business models for NFT creators & whether creator fees (“royalties”) are viable.
— OpenSea (@opensea) November 6, 2022
Given our role in the ecosystem, we want to take a thoughtful, principled approach to this topic & to lead w/ solutions. 🧵
Opensea: the NFT royalties
For that reason, OpenSea instigates a new tool to let the creators provide “on-chain enforcement” for their royalties. It is an easy code snippet that helps enforce royalties on Non-fungible token smart contracts. This code will also limit the sales of NFT to those marketplaces that implement developer fees.
Simultaneously, creators don’t need to use the solution if they are unwilling and less concerned about the royalty fees. Apart from that, they are not restricted in their choices for solutions, so if available, creators will use other on-chain tools. At least there would not be any changes to current collections until December 8th, 2022, Finzer stated in his blog post.
Currently, OpenSea would only enforce royalties for new collections. While using it to current NFT collections on un-upgradeable smart contracts is quite challenging. Hence, if creators try to get royalty fees from their prior artwork, they need to explore new monetization types. And also, the alternative ways of motivating sellers & buyers to pay creator fees.
Following December 8th, 2022, the royalty payments considerations will incorporate current off-chain fees for a few NFT subsets, established optional creator charges & trying to find collaborations with some other NFT marketplaces on operating on-chain enforcement options.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
