In the face of increasing competition from upstart rival Blur, leading NFT marketplace OpenSea announced today that it will temporarily eliminate the 2.5% tax on sales as well as slash royalty protections for creators as it tries to weather a rapidly changing market.
Along with removing its own marketplace fee on trades for a “limited time”, effectively cutting off its primary source of income, OpenSea tweeted that it will only enforce a mandatory 0.5% royalty fee on NFT trades for projects that do not have an on-chain enforcement method, although sellers may choose to pay a larger percentage. A creator royalty is typically a cut of 5% to 10% of the sale price, paid to the NFT creator. That is how NFT projects generate ongoing income after the initial sale of tokens.
OpenSea’s move comes after a big week for Blur, the emerging marketplace that launched last October. Obscurity the airdropped BLUR token to more than 100,000 NFT traders on Tuesday, and then on Wednesday advised NFT project creators to block OpenSea trades. Blur does not charge marketplace fees for traders.
Late last year, OpenSea made a number of changes to its creator royalties approach, and finally said that it would honor full royalty settings on all NFT projects created before a certain date in January 2023, but only enforce royalties going forward for new projects that used an on-chain enforcement tool.
OpenSea’s own enforcement tool blocks marketplaces that don’t fully enforce royalty settings for creators – including Blur. But Blur was apparently capable of it find a solution to that blocklist in January, and only helped it draw more and more users away in recent weeks. On-chain data points to one rapidly increasing number of users for Blurand exactly the opposite for OpenSea.
Along with today’s changes, OpenSea said its operator filter tool will no longer block marketplaces that take the same kind of approach it just unveiled.
“There has been a massive shift in the NFT ecosystem,” OpenSea tweeted. “In October, we started to see meaningful volume and users move to NFT marketplaces that do not fully enforce creator revenue. Today, that shift has accelerated dramatically despite our best efforts.”
On Wednesday, Blur recommended that NFT creators block secondary trades on OpenSea, saying it would only enforce full royalty settings for projects that banned OpenSea. Blur framed the move as a backlash to OpenSea’s own decisions late last year, while OpenSea has said it sought to protect creators as a result of actions by Blur and other rival platforms.
“We thought we could catalyze widespread enforcement of creator revenue, and we hoped others could come up with more robust solutions – this has not happened,” OpenSea tweeted today. “Recent events – including Blur’s decision to return revenue to the creator (even on filtered collections) and the false choice they are forcing creators to make between liquidity on Blur or OpenSea – prove that our efforts are not working.”
Open sea points to data on the chain shows that approximately 80% of NFT trading volume today is made without any kind of copyrights included. The marketplace indicated that it is trying to find a way forward that benefits both NFT creators and traders.
“This is the start of a new era for OpenSea,” it wrote. “We are excited to test this model and find the right balance of incentives and motivations for all ecosystem participants – creators, collectors and power buyers and sellers.”
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