In recent weeks, many NFT platforms have steered away from recognizing creator-set royalties, but top marketplace OpenSea has remained silent on the subject, presumably weighing its options. On Saturday night, the $13.3 billion venture finally revealed its strategy—but many prominent Web3 creators aren't happy with it.

The platform shared a thoughtful, principled approach in a Twitter thread, such as the rollout of a system that would allow creators of new projects to blacklist specific marketplaces that don't require traders to pay royalties. The new system goes into effect on November 8.

OpenSea stated that it is still debating what to do with existing projects and that it will solicit additional community feedback before a self-imposed December 8 deadline. Following that date, the marketplace will make a decision that could include making royalty fee payments alternative for traders, similar to what other marketplaces have done.

Co-founder and CEO Devin Finzer detailed the company's history of commemorating royalties—typically a 5% to 10% fee given by the creator and paid by the seller on any secondary market sale—in an accompanying blog post. Although these royalty standards are not fully enforceable on-chain, the largest marketplaces have traditionally honored them.

Many new and competing marketplaces have attempted to capture market share in recent months by providing zero-royalty trading or making it optional. After Magic Eden made royalties unnecessary for traders and Ethereum platforms like X2Y2, LooksRare, and Blur followed suit, nearly the entire Solana market now uses those models.

Many traders choose not to pay creator royalties when they are not required. Data from X2Y2 shared by the anonymous Proof Director of Research Punk9059 in late October revealed that only 18% of traders opted to pay any royalty amount. "Free riding is far too simple," they complained.

However, OpenSea's overall message isn't reverberating as strongly as that single comment, with many founders raising concerns on social media about what they perceive to be confusing comments or uncertain intentions regarding the marketplace's righteous path forward.

Rivals Are Being Blacklisted

OpenSea's new enforcement system includes code that Ethereum creators can insert into their recently introduced smart contracts to point to a blacklist that prevents those NFTs from being auctioned at any listed zero-royalty or royalties-optional marketplaces. Smart contracts involve the code that powers

 projects and decentralized autonomous apps (dapps).

It's a similar approach to what famed conceptual artist Tyler Hobbs recently took for his new QQL project. Hobbs and collaborator Dandelion Wist created a similar blacklist that prevents NFTs from being traded on platforms that do not honor creator royalties. X2Y2, in particular, voiced concerns about being blacklisted, claiming that it jeopardized the rights of NFT owners.

Fellow creators overwhelmingly supported Hobbs and Wist's project-centric blacklist. However, in the case of OpenSea, they included a who's who of direct competitors. According to some NFT traders and creators, the firm's advice for innovators to block those marketplaces appears anti-competitive.

Misleading Messaging

The bigger question, undoubtedly, is what their plans mean for existing NFT project creators. The company stated that it may make royalties optional for traders but that it may also impose them for some subsets of collections or use other potential enforcement methods in the future. To use such methods, creators may have to change their projects and deploy new contracts.

For the time being, everything is unclear, and Finzer's pledge to honor royalties provides little comfort to some creators and traders. After all, top Solana marketplace Magic Eden supported royalties and said it would continue to keep them—only to backtrack a few days later as competitors nibbled away at its market share. OpenSea has been accused of using similar deception tactics.

With a one-month deadline, the platform is taking a more deliberate and public approach to determining royalties than many of its rivals. Still, some artists are suspicious of OpenSea's goals, and they're attempting to rally the NFT community to help spread the word.

What are your thoughts on OpenSea’s new royalties policy? Let us know your comments by sharing this article on social media.

Posted 
Nov 6, 2022
 in 
Crypto News
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