Marketplace giant OpenSea laid out the first of a suite of tools for its users this weekend, allowing creators of new non-fungible token (NFT) collections to enforce royalties on-chain. Debuting on November 8, the company said it wants to “take a thoughtful, principled approach to this topic,” following a long-drawn-out debate among players in the market about the correct course of action on enforcing payments to creators. The code to which it is giving creators access restricts NFT sales to marketplaces that enforce creator fees.
Royalties are the fees that NFT artists earn every time their work changes hands. This means that creators are paid for their art, even on secondary sales. For artists, this is hugely important and gives them more financial freedom to create and produce more art.
“It’s clear that many creators want the ability to enforce fees on-chain & we believe that choice should be theirs–not a marketplace’s–to make,” the company wrote on Twitter. “So we’re building tools we hope will balance the scales by putting more power in creators’ hands to control their business model.”
2/ It’s clear that many creators want the ability to enforce fees on-chain & we believe that choice should be theirs–not a marketplace’s–to make.
So we’re building tools we hope will balance the scales by putting more power in creators’ hands to control their business model.
— OpenSea (@opensea) November 6, 2022
In the coming months, the company will produce additional tools serving a similar purpose and solicit community feedback on the developments.
4/ This tool is our first version of on-chain enforcement, and in the coming months we’ll launch additional tools and improvements for on-chain enforcement of new collections, and we’ll engage with the community to get feedback on them along the way.
— OpenSea (@opensea) November 6, 2022
OpenSea said that it is still considering what to do about existing NFT projects and that it will garner additional community feedback ahead of a self-imposed December 8 deadline. After that date, the marketplace will make a decision which could ultimately include making royalty fee payments optional for traders, as some other marketplaces have done.
The company is considering a range of approaches. These may include continuing to enforce off-chain fees for some subsets of collections, allowing optional creator fees or collaborating on other on-chain enforcement options for creators. The smart contracts of some existing collections may already allow OpenSea’s upgrade, which would enforce royalties on-chain, while other contracts will be a bigger challenge to change, Finzer said in a blog post.
In recent months, many upstart and rival marketplaces have attempted to claw away market share by offering zero-royalty trading or making them optional. Nearly the entire Solana NFT market now operates with those models, after Magic Eden made royalties optional for traders, and Ethereum platforms like X2Y2, LooksRare, and Blur have followed suit.