Solana-based Magic Eden has become the latest NFT marketplace to switch to an optional royalty model, following in the footsteps of X2Y2 in August, albeit reluctantly.
Under the optional royalty model, buyers have the power to set the royalties they wish to contribute to an NFT project, meaning there is a chance that some creators may not receive royalties when their artwork is sold.
On an October 14 mailthe NFT market noted that the decision was made after “difficult reflections and discussions with many creators” and came as “the market has been shifting towards optional creator royalties for a while now.”
The NFT marketplace shared a chart showing that the number of amassed wallets using optional royalty markets to buy or sell NFTs skyrocketed in late September.
4/ The market has been moving towards optional creator royalties for a while. These charts show the accumulated portfolios that have used optional royalty markets to buy or sell NFTs. pic.twitter.com/wxiU800l2P
– The Magical Eden (@MagicEden) October 15, 2022
However, the move has received mixed opinions from Twitter’s NFT community, with some seeing it as positive for the long-term health of the industry, while others have called the royalty omission akin to “theft.”
Well-known NFT artist Mike “Beeple” Winkleman noted to his 700,000 followers on Oct. 15 that while he doesn’t love what Magic Eden and others are doing, the switch from a seller fee to a buyer premium might be better. for the industry in the long term.
while obviously I’m all for royalties and I don’t love what @MagicEden and others are doing it, I think there’s a key change they made…change from a seller’s FEE to a buyer’s PREMIUM. I think this is actually much more sustainable in the long run…
– beep (@beeple) October 15, 2022
Another Twitter user named CaptainFuego, behind Fuego Labs saying his nearly 10,000 followers that “royalties are stupid and shouldn’t exist. I’m glad to see platforms take this approach.”
Others were more critical of the change. broccoli DAO plot that “royalties are needed in an immature ecosystem,” noting that by their calculations they have already lost up to $27,000 in royalties due to 0% purchases from other markets.
Following Magic Eden’s announcement that they will be making royalties optional, we have taken proactive steps to protect the integrity of our project.
We perform analysis and determine how much we have lost in royalties for 0% purchases in other markets:
— Broccoli DAO (@Broccoli_DAO) October 15, 2022
“Going forward, we will block access to our Discord channels to anyone who hasn’t paid royalties. Not paying royalties is theft. We will treat it as such,” they said.
Cozy the Caller, a self-proclaimed analyst, made a severe prediction to his 108,000 followers, stating, “I can see a scenario where Magic Eden gets 0% and loses its market share to a market that imposes royalties in an innovative way.”
Honestly unreal, I don’t know who’s advising Magic Eden, but imagine groping a man from a billion dollar company.
I can see a scenario where Magic Eden goes to 0% and loses its market share to a market that imposes royalties in an innovative way.
such a clumsy unreal man
— Cozy ⓣhe Caller (@cozypront) October 15, 2022
Magic Eden said the change was not taken lightly and that “they have been actively trying to avoid this outcome and have spent the last few weeks exploring different alternatives.”
Last month, the NFT marketplace attempted to introduce a royalty enforcement tool called Meta Shield, with the aim of deterring NFT buyers trying to circumvent creator royalties by giving them a tool that could mark and blur NFTs they they were sold without passing royalties.
Magic Eden noted in their latest post that: “Unfortunately, royalties are not enforceable at the protocol level, so we’ve had to adapt to changing market dynamics.”
In August, the X2Y2 NFT marketplace announced that they were introducing a similar option that allows buyers to set the royalty rate when purchasing an NFT.
The move does not seem to have affected the use of the platform; According to data from NFTGo, in the past three months, X2Y2’s transaction volume ranks first, overtaking OpenSea.
NFT market trading volume data. Source: NFTGO
Cointelegraph has reached out to Magic Eden for further comment but has not received an immediate response at press time.
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