Today (February 17, 2023), the world’s largest NFT marketplace, OpenSea, made big waves on Web3. Without warning, they revealed significant changes to their creators’ royalty and fee structure, changes that will have a dramatic impact on both collectors and creators using the platform.
Just moments ago, the company published a Twitter thread in your diet. In it, they stated that the 2.5 percent fee that is added to every transaction on OpenSea would be reduced to zero for a limited time. But the announcements did not end there. Following a controversial plan the company unveiled in November, the marketplace said it will move projects that don’t use on-chain compliance tools, which is basically all projects created before 2023, to optional royalties.
In other words, buyers are now free to decide whether or not to honor a creator’s royalty preferences. This is a serious problem for many project creators, as royalties from sales are how most generate income after their initial token sale.
Finally, OpenSea stated that markets with similar policies would not be blocked by the platform’s operator filter.
Collectors vs creators
These announcements may come as a surprise. However, this move is part of a larger change in Web3, one that favors NFT collectors at the expense of creators.
But why have markets moved in this direction? According to OpenSea, the numbers tell a simple story. In its thread, the company stated that Dune’s analytics reports reveal that 80 percent of total NFT trading volume It is attributed to the zero fee platforms. Buyers don’t want to pay royalties and markets want buyers. So if one must go, markets will opt to remove royalties from the creator.
Ultimately, the announcement comes just days after the NFT Blur marketplace, one of OpenSea’s main competitors in the space, published a blog post telling users to block OpenSea.
However, by some accounts, OpenSea was the one who started this war. OpenSea’s policies were framed in a way that did not allow creators to earn full royalties on Blur and OpenSea simultaneously. Instead, users had to choose a platform to earn full royalties. This happens because OpenSea automatically sets royalties to optional when it detects transactions on royalty-optional marketplaces like Blur.
However, it seems that Blur found a solution to circumvent that list blocked in January, helping the market further drive users away from OpenSea.
In their thread, OpenSea openly acknowledged the role Blur played in their decision. “There has been a massive change in the NFT ecosystem. In October, we begin to see significant volume and users move to NFT markets that do not fully tax creator earnings. Today, that change has accelerated dramatically despite our best efforts… Recent events, including Blur’s decision to cut creator earnings (even on leaked collections) and the false choice they’re forcing creators into to do between liquidity on Blur or OpenSea, prove that our attempts are not working,” they wrote.
Writing on the wall?
The creators’ response was quick and harsh. Chris Torres, the 36-year-old digital artist behind Nyan Cat, posted a tweet that implied that OpenSea was exploiting artists for its own gain. Meanwhile digital artist and 3D animator NessGraphics called the movement to the “pathetic” optional creator royalties.
Others, however, pointed out that the announcement was only logical. Leonidas, a self-described NFT historian, noted that if crypto markets are any apt comparison, this is where the NFT space will inevitably end. “People may or may not like this, but, at the end of the day, once the non-fungible market matures, it will land at the same 0.25% fee that the full-scale fungible token market has had. a decade to mature. ” he wrote.
Frank, a leading member of the Web3 community and the DeGods team, apparently echoed these sentiments. “The harsh reality: all NFT markets are trying to maximize market share so they can generate bigger vc rounds and the best way to gain market share is to have the lowest fees for high frequency trading.” he wrote.
And so while it remains to be seen which NFT market will win the day, it is becoming increasingly clear that creators will not win the royalty war.
This story was a breaking story that was updated.
