Magic Eden recently allowed optional royalties on its platform. This article discusses the reasons, community sentiment, and consequences of the move.
Et Tu, Magic Eden?
Magic Eden has long respected and promoted the protection of creator royalties. Employing optional royalties, he often acts as a key critic of the NFT marketplace. Then Magic Eden recently reversed course and adopted its own optional loyalty policy. why?
On September 13th, Solana’s leading NFT marketplace, Magic Eden, Launch of Metashieldis an NFT tool designed to protect creator royalties.
Features of Metashield including prevention Non-Fungible Token (NFT) Be listed in certain marketplaces (those that support voluntary royalties), modify NFT metadata, blur or watermark NFT images until royalties are paid, or even royalties. It even calculates the total debt accumulated by those who dodge ti payments.
Magic Eden stood by protecting creator royalties by saying:The Hardest Creators Get Punished in a Royalty-Free Marketplace”
On October 13th, Magic Eden announced a collaboration with Coral Cube, a marketplace and aggregator that allows optional royalties.
They made it clear in a tweet (later deleted) that they were “joining forces” with Coral Cube rather than adopting optional royalties.
However, Magic Eden doubled down by announcing a day later that it had decided to adopt an optional royalty policy.
🧵After difficult reflection and discussion with many creators, we have decided to move to optional royalties @Magic Eden.
Starting today, we will also launch a promotion to waive platform fees.
— Magical Eden 🪄 (@MagicEden) October 15, 2022
Explains why Magic Eden is adopting optional royalties
Magic Eden justifies changing its stance from respecting strict creator royalties as more users choose not to pay royalties on competing NFT marketplaces such as Sudoswap, Yawww, Solanart and Hadeswap has becomethe number of NFT Wallet Since July 2022, we have seen a significant increase in users opting for the optional Loyalty Marketplace.
It is currently not possible to enforce usage fees at the protocol level. Smart contracts may have royalties built into them, but the marketplace allows code to be used to avoid royalties. this is, Common recognition of blockchain technology; Smart contracts and transactions should be immutable. Ultimately, it is up to the market to enforce royalty payments.
If Magic Eden continues to enforce royalties, it will eventually lose the market for voluntary royalty offerings. A seller on such a marketplace does not have to pay his 7.5% to 10% surcharge on fees, so he can list his NFTs at a lower price than marketplaces where royalties are enforced. Buyers also prefer to buy from these marketplaces due to the low selling prices of NFTs.
Ultimately, traders benefit from option royalties, but creators suffer the consequences.
Reaction to Movement by Magical Eden
Pivot by Magic Eden has received mixed feedback from the NFT community. Creators, traders, and developers have complained about various issues. Common NFT communication channelsome chose to continue diplomacy.
Solana NFT Marketplace exchange art tweet“At an alarming rate, the platform is turning artists into [a Stock Keeping Unit] instead of people. There is a reason for the usage fee. Creators don’t have to worry about being published on sites that deny their rights. This is not and will not be tolerated. ”
Exchange Art has also developed an OPT-IN mechanism that prevents users from trading NFTs on other platforms. Therefore, creators are guaranteed to receive royalties.
pseudonymous co-founder of Deadfellaz, betty, tweet The move says it “empowers small creators to start on their own without the huge advantages that well-funded and well-connected people already have.”
A Washington, DC-based attorney who uses the Twitter handle RickiCryptoStix wrote the following Twitter thread: Likened to paying zero royalties for overfishing and pollutionHe explained that without central intervention, fishermen would overfish and manufacturers would use the cheapest and most environmentally harmful methods of production. Instead, he says, they have to be socially manipulated. It’s like avoiding tipping in the US or not wearing a mask in Japan is a social condemnation. He even suggests a way to enforce such social norms by using bots to identify royal detractors.
Industry heavyweight Beeple, creator of the NFT Everydays: the First 5000 Days, has chosen to remain diplomatic on the issue. He supports royalty, but said it is more sustainable. There is a buyer’s premium compared to the seller’s commissionThis is because buyers are more encouraged to pay a premium to participate in projects they believe in.
Consequences of Magical Eden’s Reign
To some extent, Magic Eden only accuses other NFT marketplaces of adopting optional royalties. For one, Magic Eden dominates the market, leaving little choice.
Also, in Magical Eden NFT projects with aggressively pitched bots Shrouded Playground, Degentown, Okay Bears, Kings of da Street, etc. This earned them a large amount of platform royalties. This made usage fees a scapegoat and made it seem like usage fees were an issue.
Since Hadeswap and Solanart adopted a 0% platform fee and 0% creator royalty fee, they tweeted to Magic Eden, “Give all your fees back to the people,” and “Now you choose the fair one.” Please,” and so on.
rewards for creators
Magic Eden started down the path of optional royalties, but after extensive reflection, we have come to this difficult decision.
In order to continue supporting creators, they Million Dollar Creator Monetization Hackathon. This hackathon aims to endorse loyalty and develop alternative monetization tools.
First, when paying royalties on Magic Eden’s platform, instead of the typical creator’s fee that applies to users who sell NFTs, this fee is passed on to the buyer, who chooses whether or not to pay it. You have options. Also, the default option is to pay the royalty in full.
One of the monetization tools for creators devised by Magic Eden is Boots, NFT Upgrade ServiceCreators can use Boots to charge buyers commissions and add new traits to existing NFTs.
But can this method of monetization (charging for trait upgrades) fully compensate for the lack of royalties? It’s a free feature used. The NFT owner will not want to pay to upgrade the NFT’s properties after he purchases the NFT.
Blur.io, a fledgling NFT marketplace, also offers optional loyalty to traders. However, they have a system that incentivizes traders to respect their loyalty. Offers bigger and rarer airdrops.
Why we need creator royalties
Frank, founder of Solana NFT DeGods, said NFT royalties are not a moral privilege, but the best economic way to benefit both creators and owners.
NFT usage fees are the “right thing to do” and shouldn’t exist.
This is the best alignment of incentives between founders and owners (for now).
If you want to remove royalties, that’s fine. Don’t get upset when mints get more expensive and more projects lag.
— Frank (@frankdegods) August 14, 2022
Dccockfoster, co-founder of Nifty Gateway, said: Comparing Royalty Payments and Tax Paymentsin a tweet, said, “Given the choice, most people would opt out of paying taxes. Same with royalties. It’s human nature.”
Imagine the chaos that would occur if citizens could choose whether or not to pay taxes. Governments do not have enough money to build critical infrastructure such as roads, hospitals, schools and other facilities.
Similarly, without royalties, creators have no incentive and funding to continue building their projects after they are created. Creators just want to sell more NFTs through Mint. It also doesn’t make sense for creators to find ways to raise the minimum price post-mint. The project team has already “raised money” after the NFT is issued, so why would they want to stick to and maintain it at the grassroots level of the Discord community? you will see
Loyalty drives everything we love about NFTs: free mints, airdrops, derags, low mint prices, and a vibrant community with constant interaction with the project team. Without royalties, all these “freebies” would cease to exist, and you could even expect to pay more when minted.
Royalties are a big part of the income of creative industries such as music, movies, comics, art, books, audio, and podcasts.
What about alternative sources of income?
Proponents of zero royalties will argue that creators can look for other sources of income instead of relying on royalties. But would an alternative revenue stream drive the creator to provide the same value to her NFT project that royalties are set to today?
Besides royalties, the current “primary source of income” for most NFT projects is the Mint. Project Mint is like a kickstart project fundraiser to continue building the project.
Alternate revenue streams may not be shared with NFT owners. Also, creators cannot be incentivized to increase the minimum NFT price. This does not bode well for NFT traders, for whom the biggest reason for joining NFT projects is to sell their NFTs at a higher price.
Additionally, advocating for alternative revenue streams and monetization tools like Magic Eden’s Boots only justifies zero royalties.
Conclusion
While we understand the importance of royalties and how essential they are to the ongoing development of the NFT project, we would like to avoid paying royalties if traders are given a choice, rather than a marketplace. We live in a selfish world where we want a bigger share of trading volume. Furthermore, there is no way to technically enforce royalties in smart contracts, so it seems inevitable that we will be on the road to zero royalties.
NFT stakeholders should keep an open mind and find other possible avenues for success in future NFT projects. Ultimately, you may no longer see free mints or airdrop proven metas. Yet it is also an opportunity for projects to explore new ways and utilities to get people to invest.
The NFT industry is developing at a dizzying pace. Project teams either move with the times or get left behind. How it was profitable for traders a year ago NFT project whitelist no longer works.
Even if the NFT project fails, the experience the team gained will be invaluable in building the next project. Profitable Blockchain dAppEarly adopters and pioneers can learn from their mistakes and be a valuable source of knowledge for others looking to enter the Web3 space.
