Crypto Twitter split as another NFT platform moves to record royalties

by · October 16, 2022

Crypto Twitter split as another NFT platform moves to record royalties

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

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

In a 14 Oct mailthe 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 royalties for creators for some time.”

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 divided opinion from Twitter’s NFT community, with some seeing the move as positive for the long-term health of the industry, while others have branded skipping royalties “theft”.

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

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.”

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

“In the future, we will block anyone who has not 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 one grim prediction to their 108,000 followers, saying “I can see a scenario where Magic Eden goes 0% and loses market share to a marketplace that enforces royalties in an innovative way.”

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

Last month, the NFT marketplace attempted to produce a royalty enforcement tool called Meta Shield, with the aim of deterring NFT buyers who try to extort royalties from creators by giving creators a tool that can flag and blur NFTs that sold immediate royalties.

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Magic Eden noted in its latest post that: “Unfortunately, royalties cannot be enforced at the protocol level, so we have had to adapt to changing market dynamics.”

In August, NFT marketplace X2Y2 announced that it was introducing a similar option that allows buyers to set the royalty fee when purchasing an NFT.

The move does not appear to have affected the platform’s usage; according to data on NFTGo, over the past 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.