NFT Creators Seeking Royalties Face Difficult Odds


Creators of non-fungible tokens attempting to monetize royalties have had a tough time due to broad, evolving market rules.

According to a recent research report from Galaxy Digital, this is unlikely to change until yet another set of guidelines for corresponding smart contracts that perform NFT transactions is implemented.

This month, OpenSea revised its royalties policy once again. Prior to that, the platform demanded that any projects published after November 8 employ an open-source smart contract that bans the trade of digital collectables between OpenSea and competing for NFT market makers that do not receive royalties. Any transactions involving addresses belonging to smart contracts were blocked.

“OpenSea is essentially imposing fees on its marketplace at the smart contract level by limiting their ecosystem to royalty-supporting firms,” Galaxy analysts stated in a study published on Friday.

First, OpenSea modified its policy in an attempt to soothe public outrage. Now, beginning in the new year, Galaxy reports that “projects on OpenSea will have the ability to opt out of employing the royalty enforcing smart contract and will be able to establish alternative fees for collectors to comply with.”

Open Creator Protocol is an open-source royalty enforcement mechanism built on top of Solana’s SPL token standard. Previously, Magic Eden operated a royalty-optional protocol (OCP). The protocol is intended to further enforce royalty payments by prohibiting transactions using smart contracts connected with zero-percent royalty platforms.

Zero royalty payments in the NFT arena have expanded in popularity and use this year, with at least three new markets, including X2Y2, Yawww, and SudoSwap, entering the market.

Galaxy discovered in a separate analysis at the time that NFT inventors made more than $1.8 billion from the practice between its launch and October. According to Galaxy, the system has produced highly focused results despite the large quantity. Just 428 volumes accounted for an astounding 80 percent of total revenues at that time.

According to Galaxy, a bigger industry effort will be necessary if creators want to maintain royalty payments.

“The problem will not be resolved until the NFT community creates a new standard for enforcing smart-contract royalties that does not rely on blacklisting contract addresses,” the research said.

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