After losing market share to competitors who didn’t pay royalties, top Solana NFT marketplace Magic Eden made creator royalties optional last week. Metaplex, the company that made Solana’s NFT standard, says it is working on a new standard to enforce royalty payments around the world.
Metaplex said Thursday night that it is “building a new asset class that will allow creators to enforce royalties at the protocol level.” This came during the creator royalties debate.
Markets can ignore the royalty rates set by artists and creators through project smart contracts, the code that powers autonomous, decentralized apps. Thus, NFT traders avoid 5%–10% sale fees. The current Solana standard does not enforce NFT royalties, which has upset project creators who rely on them.
The business said that over 99% of Solana NFTs use Metaplex. Metaplex said it can create enforceable royalties by expanding its token metadata program. This program lets NFT creators add data and information that makes NFTs—blockchain tokens that represent ownership of an item—unique.
Metaplex’s Twitter thread suggests that it will support multiple NFT asset standards, giving creators more options for future projects. Metaplex technology, which is supported by marketplaces and wallets, might be good for these kinds of changes, which could affect the entire Solana creator community.
Metaplex wrote that token metadata gives the ecosystem the interoperability and stability it needs to move forward without fragmentation.
When Metaplex proposed the Digital Asset Standard framework in July, CEO Stephen Hess tweeted that it couldn’t get a “critical mass” of builders to enforce protocol-level royalties and add asset classes. He wrote it down.
Metaplex promised more ways for Web3 creators to make money at the Solana Breakpoint conference in Lisbon next month. The uncertainty about whether platforms will pay royalties has made NFT creators and builders look for other ways to make money.
Yawww was the first Solana market to get rid of creator royalties this summer, supposedly to get traders to stop going to Magic Eden. Hadeswap, an NFT trading platform based on a liquidity pool, made Magic Eden lose market share.
Last week, Magic Eden said that it would keep creator royalties on its platform and work with NFT aggregator and marketplace Coral Cube to allow trading without royalties. Magic Eden gave in to rivals’ pressure last Friday and made creator royalties optional.
Frank, the creator of DeGods and y00ts, suggested a way to handle creator royalties outside of Metaplex.
Frank proposes an ecosystem-wide standard. He wants to set a standard that requires trade royalties, blacklists marketplaces and platforms that don’t pay them, and lets community members vote on a fixed royalty rate for all projects. He thinks that existing projects can switch to the new standard.
Frank wrote, “We can either accept royalties going to zero as ‘the tragedy of the commons,’ or we can rally together as a community to solve the problem.”
This ecosystem is powered by social consensus. We can get royalties if we agree. No problem. Our ecosystem controls our fate.”
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