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Like marketplaces moved to stop (or potentially stop) enforcement of royalties on NFT sales late last year, the creators of Bored Ape Yacht Club made his position clear: they didn’t love it. With yesterday’s Sewer Pass NFT launch, Yuga Labs has taken direct action and blocked secondary trading on certain marketplaces.

The sewer pass was rolled out on Wednesday for owners of Bored Ape or Mutant Ape Yacht Club NFTs, and acts as an access card for the upcoming Dookey Dash online game. Only Ape NFT owners can mint a free pass, however Ethereum NFT passes can then be resold freely through secondary marketplaces.

Well, only certain marketplaces.

As traders quickly discovered yesterday, the Sewer Pass cannot be traded on some platforms that do not fully enforce creator royalties. A royalty is a fee – usually between 5% and 10% – taken from the selling price of the NFT and automatically paid to the project creator during each transaction.

OpenSea and X2Y2 have seen increasing activity, with over $19 million in total Sewer Pass trade since early Wednesday, per data from CryptoSlam. The NFTs start at 1.59 ETH (about $2400) apiece, when this is writtenwith “Tier 4” versions starting at nearly 4.9 ETH (about $7,550) each on OpenSea.

Marketplaces like Blur, LooksRare and NFTX – which don’t require traders to pay full royalties to the creator – are apparently unable to complete the pass. A representative from Yuga Labs confirmed that all three marketplaces are blocked in the sewer pass smart contractwhich has the code that drives it decentralized applications (dapps) and NFT projects.

“We’ve always been a creative company, and we believe that royalties to creators must be protected,” said a Yuga Labs representative Decryptpointing at November’s post from the founders on the matter. “The Sewer Pass free claim will only be traded on platforms that respect royalties.”

None of the blocked marketplaces has publicly commented on the matter at the time of writing. Obscurity lists drain passes, but they are all aggregated entries from OpenSea or X2Y2; sales do not take place directly through their own platform. LooksRare has Sewer Pass NFTs listed, but shows no record of them being sold. NFTX has no Sewer Pass NFT records.

The Yuga representative said that Sudoswap, a trading platform built around liquidity pools rather than traditional marketplace listings, are also blocked from trading Sewer Pass NFTs – along with Blur, LooksRare and NFTX. Sudoswap does not respect creators’ royalty settings.

However, Sudoswap can go beyond the smart contract, as it shows that the NFTs are regularly bought and sold the last day. Yuga did not comment on the specific detail when asked.

The debate about royalties

Yuga’s move to block certain marketplaces comes after the launch of OpenSea’s blocklist tool for the Operator Filter Registry, which the leading NFT marketplace rolled out in November as it went public. reconsider its stance on enforcing royalties.

OpenSea later promised to enforce royalties for new projects using the tool, as well as all older projects launched by a certain date. X2Y2, a rival NFT marketplace that had previously made royalties optional for traders, then said that it would use the tool and require full royalty fees for resellers of these projects.

Before OpenSea’s move was generative art project QQL-from Art Block’s Fidenza artist Tyler Hobbs and collaborator Dandelion Wist – created their own move to block marketplaces which did not automatically enforce royalties. That included X2Y2 at the time, and the platform alleged in a tweet thread that the move reduced NFT collectors’ ownership rights.

The debate about royalties consumed the NFT space last autumn as some marketplaces scrapped royalty claim in an attempt to take market share away from established operators. It’s a divisive topic, and moves to limit NFT holders’ ability to buy and sell as they please have similarly divided traders, with some arguing that it defies Web3 ethos of decentralization.

In November, when OpenSea faced backlash from the creator after stating that they were considering a model that did not enforce royalties for all projects, three of Yuga Labs’ co-founders railed against potential moves in a blog post.

“OpenSea made their position clear that they intend to move with the rest of the pack and remove royalties for legacy collections from their platform while keeping the trading fee the same across the board,” Yuga’s founders wrote, adding: “Not good .”

Yuga Labs proposed an “allow list” model that would allow NFT project creators to allow trading only on certain marketplaces that respect royalties, with list management handled by a community-led DAO, or decentralized autonomous organization. But OpenSea then said it would actually still paying out royalties on secondary trades for existing collections.

Bored Ape Yacht Club is one of the most popular NFT projects in the world, with associated collections tops $6 billion value of total trading volume to date. The Sewer Pass provides access to the Dookey Dash game, which can unlock future NFT rewards for top players. The impending exemption claim increased Bored Ape NFT sales during the last week.

Yuga Labs raised $450 million to a valuation of $4 billion by early 2022, and also bought the influential CryptoPunks projectwhich makes it one of the biggest players in the Web3 space.

The earlier pressures may have played a role in OpenSea’s decision-making around the enforcement of royalties. We’ll see if it does the same now with marketplaces missing out on Sewer Pass trades.