The NFT space is on fire. Giant marketplaces OpenSea and Magic Eden are benefiting 0% creator fees trades – but what does it mean to the community?
This week, the Web3 space is seeing an unprecedented shift in its foundational values. After months of discussions, leading marketplaces are putting a deadline on their creator fees policies as we know them. What happens when NFT artists aren’t entitled to royalties from their sales?
- OpenSea, the world’s most popular NFT marketplace, will enforce creator fees only for new collections that use an on-chain enforcement tool;
- MagicEden also moved to optional royalties on their platform earlier in October;
- For the first time, the marketplace aggregator Blur registered more trades that paid creators 0% fees. Is this the end of a creator-centered NFT era?
The creator fees viability dilemma
Over the last few months, there were several discussions on whether paying NFT artists royalties for each trade was viable. And apparently, marketplaces seem to have decided it isn’t.
While collectors, traders, and creators debated the matter, marketplaces across chains made optional 0% royalties collections real.
But where’s this debate coming from?
Galaxy’s NFT Royalties report pointed out that $1.8 billion of royalties has been paid out to creators of Ethereum-based NFT collections.
According to Flipside’s data tables, Yuga Labs’ BAYC and Otherdeeds, as well as ArtBlocks, Azuki, and Doodles, are some of the collections that profited the most from their creator fees.
Raising thousands of dollars with small percentages of the value of each sale after the NFTs were minted, the NFT space had long doubted the sustainability of such a system.
However, while this happened, creator fees are also responsible for supporting many independent artists who entered the NFT space precisely because of the possibility of blockchain-backed rewards.
NFT Marketplaces and their new royalties policies
Since SudoSwap introduced royalty-free NFT trading to the community in July 2022, many Solana marketplaces followed the trend and started posing a threat to Magic Eden’s market share.
When Magic Eden announced that creators on the platform could choose whether they would allow royalties, the Solana NFT community went wild.
As explained in our October industry report, after the royalties announcement, Magic Eden’s market share increased to almost 90% of the Solana NFT market.
Fast forward to November, the wider Ethereum NFT community faced the same shock when OpenSea decided to apply its own new policy regarding creator fees.
Blur, a newly launched NFT marketplace aggregator, took hold of traders’ interest since its features and royalty-free policies made trading even more lucrative.
This week, PROOF Collective’s researcher NFTstatistics.eth put Blur under the spotlight after revealing that:
“This week, for the first time, there were more trades that paid creators 0% than trades that paid any royalty at all”.
DappRadar data shows that in the past 7 days, they increased their volume by 160% and climbed to the 2nd position on the ETH Marketplace Ranking.
That, of course, pushed OpenSea to share their creator fees update plans fast.
The marketplace announced on November 6 that they were launching a new tool for allowing creators to enforce fees on chain if they want to. That is, to enforce royalties on a Collection level, not on a marketplace level.
Is the NFT community as strong as we believed?
OpenSea’s announcement, however, did not face a positive response. NFT artists and celebrities took over Twitter to protest against 0% royalties trades, referring that this would take away creators’ power over their own work.
World of Women’s artist Yam Karkai also took her opinion to Twitter, addressing OpenSea directly supporting independent artists like herself.
Snoop Dogg, Joepegs, and other big names in the NFT landscape expressed discontent against 0% royalties. Hours later, after much discussion, the marketplace tweeted again about creator fees and reminded the community that no changes would be made until December 8.
Regardless of how collectors may have reacted to rumors about royalties, OpenSea’s official blog post explained that the marketplace’s goal isn’t to end creator fees once and for all but to get them on chain and controlled by the creators themselves.
“Creator fees are an important innovation of web3 that help creators monetize their work in a more effective way. But marketplaces should not enforce business models for creators, creators should have independent control. We hope that this is a first step in that direction.”
Are you benefiting from 0% creator fees?
Depending on your strategy in the NFT landscape, you may or may not be profiting from royalty-free trades.
While NFT collectors mainly wish to support creators, they don’t represent the entire community. Many people profit from trading NFTs, and fewer fees mean greater profit.
This is one of the key moments in the history of NFTs that has only now come to the discussion with OpenSea, but that represents a change in how the industry will behave in 2023.
DappRadar will continue to track this trend and keep you posted on how it evolves. Make sure to follow us on Twitter to stay on top of NFT news and explore our Rankings to do your own research.
The above does not constitute investment advice. The information given here is purely for informational purposes only. Please exercise due diligence and do your own research.