OpenSea launches on-chain tool to enforce NFT royalties

by · November 6, 2022

OpenSea launches on-chain tool to enforce NFT royalties

Nonfungible (NFT) marketplace OpenSea appears to have taken a stand in the NFT royalty debate – launching a new “on-chain” tool to help creators enforce royalties.

The NFT marketplace, which according to CoinGecko has 66% of the market share in NFT marketplaces, has been relatively quiet on the issue of royalties and enforcement, while others in the space have implemented their own strategies in recent months.

In a November 6 blog post, OpenSea CEO Devin Finzer noted that in marketplaces where fees are optional, they’ve “seen payment rates for voluntary creator fees drop to less than 20%,” while in other marketplaces, creator fees are “simply not paid in at all.”

The OpenSea CEO announced that the marketplace has launched a new tool that will allow creators to deliver “on-chain enforcement” of royalties.

Finzer described the tool as a “simple piece of code”, which allows creators to enforce royalties on new and future smart contracts for NFT collections, and existing upgradable smart contracts. The code will also limit NFT sales to only marketplaces that enforce creator fees.

“It’s clear that many creators want the ability to enforce fees on-chain; and fundamentally, we believe that the choice should be theirs to make — it shouldn’t be a decision made for them by marketplaces,” Finzer said.

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Finzer also said that OpenSea will enforce royalties for new collections using an on-chain enforcement tool, but will not do so for new collections that do not sign up.

Finzer explained in an accompanying Twitter Spaces that OpenSea “doesn’t require people to use our specific solution,” creators can use “whatever solution you want and implement it anyway.”

“We provide a template GitHub repo that helps you use a solution that basically blocks list marketplaces that don’t support creator fees, you don’t have to use that solution; the requirement is that if you want creator fees, you have to enforce them on-chain.”

Also, the tool will not be rolled out for existing NFT collections at this time due to implementation challenges.

“As far as we know, the only way to achieve on-chain fees for existing collections of non-upgradable smart contracts is to take drastic measures with their communities, such as moving the canonical collection to a new smart contract,” Finzer said.

“In our view, the far better option is for existing creators to explore new forms of monetization and alternative ways to encourage buyers and sellers to pay creator fees, and to ensure that future collections enforce creator fees on-chain,” he added.

According to Finzer, this could include options such as continuing to enforce off-chain fees for some subsets of collections, allowing optional fees for creators, and collaborating on other on-chain enforcement options for creators.

Related: OpenSea is revising the NFT rarity ranking protocol following community feedback

Reactions among the NFT creator and the Twitter community have been mixed. Wab.eth, founder of the Sappy Seals NFT collection and co-founder of The Pixlverse and Pixl Labs, told his nearly 60,000 followers that while “I fundamentally disagree with the removal of royalties, I appreciate this execution.”

Other users had questions they felt were not answered. Betty, the pseudonym for one of the creators of the Deadfellaz NFT collection, told her 89,000 followers, “it feels like there is no plan and no clear answers were given regarding existing collections and artist royalties.”

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Although it later noted, “I look forward to reading more concrete communications from them soon regarding proposed strategies.”