Tag: Royalties

NFT Royalties Fall Short in Web3 Ecosystem

by Blockchain News

Nonfungible tokens, or NFTs, have become a popular gateway for users to enter the Web3 ecosystem, with artists and creators leveraging Web3 tools to enhance their work. However, recent data from eBit Labs and LiveArt marketplace suggests that the loss of creator royalties in the NFT space may be higher than previously estimated.

The emergence of the Blur marketplace in October 2022 has caused shortcomings in royalties for two of the leading NFT collections, Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC), with losses totaling around $20 million alone. This new data indicates that previous estimates of $35 million in royalty shortcomings may have been too conservative.

Creator royalties have been a hot topic of discussion in the NFT space. After briefly halting creator royalties and receiving severe backlash from the community, the OpenSea marketplace announced that it would enforce creator royalties on all listed collections.

In November 2022, the founders of BAYC proposed a new model for NFT creator royalties that would keep NFT transfers between wallets free. Meanwhile, MagicEden, another prominent NFT marketplace, has defended its own NFT royalty enforcement tool, which gives creators the ability to flag an NFT or blur the image if the listing or trade bypasses royalty rules.

Despite these efforts, Boris Pevzner, co-founder and CEO of LiveArt, says that the new data shows the Web3 ecosystem falling short of its promise to be a “creator-centric space.” Pevzner warns that if the current system continues to fail artists, it may cause them to lose interest in the industry, potentially causing the space to become more like the stock market.

Pevzner’s comments on “marketplace wars” primarily reference the entrance of the Blur marketplace onto the scene, which has targeted OpenSea’s market share. With NFTs continuing to gain popularity and more marketplaces vying for a piece of the pie, it remains to be seen how the issue of creator royalties will be resolved.

As the Web3 ecosystem evolves and matures, it is important to ensure that creators are fairly compensated for their work. The current system of enforcing creator royalties appears to be falling short, potentially hindering the growth and success of the NFT industry.

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OpenSea Creates Tool for NFT Creators to Enforce Royalties On-Chain

by Blockchain News

NFT marketplace, OpenSea has revealed its plan to create a tool to help creators on its platform enforce creator fee payments.

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It is probably not a new thing whether enforcing or not royalties which have been argued topics in the industry ever since it was introduced. While some platforms have already concluded their side of the argument, platforms such as OpenSea were yet to reveal their opinions.

OpenSea finally disclosed its thoughts and plans on enforcing royalties on-chain on Sunday. By kicking off with its plans, the platform stated, “With many marketplaces choosing to stop enforcing creator fees, to put it bluntly, the last few months haven’t felt WAGMI.”

Stating that It’s clear many creators want the ability to enforce fees on-chain, the platform believes that royalty enforcement should be the creators’ choice and not the decision marketplaces have to make for them.

“So we’re building tools we hope will balance the scales by putting more power in creators’ hands to control their business model,” OpenSea noted on Twitter. The platform would be launching a tool for the enforcement of royalties on-chain for new collections that would be launching on its platform. 

According to OpenSea, the on-chain tool is a simple code piece that creators can add to their NFT contracts, as well as their existing upgradeable contracts. The code restricts NFT sales to marketplaces that impose creator fees.

Starting on Tuesday, November 8, OpenSea will enforce creator fees only for new collections that use the on-chain enforcement tool. In the coming months, the platform will also introduce additional tools serving a similar purpose and solicit community feedback on the developments.

As for collections already existing on the platform, OpenSea stated it won’t make any changes until December 8. 

Overall, the platform is looking to consider different approaches to this topic, which include the proceedings of enforcing off-chain fees for some subsets of collections, permitting optional creator fees, or partnering on other on-chain enforcement options for creators. 

Notably, this news comes amid the controversy of royalties enforcement in the industry. Speaking of which, NFT marketplace Magic Eden recently settled to opt for an optional royalties method for its users, giving buyers the power to either choose to pay royalties or not when purchasing NFTs on its platform.

Image source: Shutterstock

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Recur raises $5 million for perpetual cross-platform NFT royalties

by Cointelegraph

Can a new non-fungible token (NFT) platform finally solve the problem of ecosystem-wide royalties?

NFT platform Recur announced on Thursday a $5 million seed round led by the DeFi Alliance, Delphi Digital, Ethereum co-founder Joe Lubin, and Gemini, among others.

The raise claims a number of notable superlatives, including the first seed investment in the NFT ecosystem from industry veteran Gary Vaynerch, as well as the largest seed round ever for a NFT project (Dapper Labs has raised many multiples more money over its three year fundraising history, but largely in Series A rounds).

Currently there are a number of platforms that allow NFTs to impart royalties to artists after every secondary market sale, including Foundation, Zora, and Euler Beats developer Treum. Recur’s key innovation will be a ERC token standard that will allow royalties to function regardless of platform.

“RECUR’s technical team is involved in the official process for Ethereum improvements (EIP), and our technology will be implemented at the blockchain layer,” said Recur CEO Zach Bruch. “By doing this it will allow the NFTs minted on our platform to move freely around the ecosystem while still generating recurring royalties for the owners and IP holders. Ultimately, our goal is to make NFTs chain-agnostic and keep NFTs and royalties decentralized.”

Bruch did not reference a specific EIP his team is working on. Similar proposals, such as EIP-2981, which adds standard royalty functionality to the ERC-721 NFT standard, are also in the works.

While the NFT space is growing increasingly crowded (and Recur’s royalties will presumably be applicable ecosystem wide) one other way to stand out is through headline-grabbing licensing and intellectual property acquisition. To that end, Recur is bringing some former media industry heft to the fore via former Disney executives Stephen Teglas and Chris Heatherly. Teglas in particular held a position with Disney’s Licensing department.

“RECUR is working with some of the largest brands in the world which will be announced in the coming months,” said Bruch. “We are exclusively working with Blue Chip brands to help them bring their IP to the largest audiences possible.”

The press release says the first Recur “brand experience” will be released in the summer of 2021.