Quick take:
- DeGods announced 0% royalties as an experiment.
- This move sparked a debate on royalties and whether the decision is sustainable.
- Some say this will force the project to brainstorm other sources of revenue while others say it’s financial suicide.
DeGods announced on Sunday that it is updating all NFT Projects in its ecosystem, including t00bs and y00ts to 0% royalties as its next experiment. The DeGods NFTs used to carry a 9.99% royalty fee and the new update was being implemented to the collection as the announcement was made.
Our next experiment. pic.twitter.com/VmoDfXvcyu
— DeGods (@DeGodsNFT) October 9, 2022
While DeGods didn’t offer an explanation for why it made the decision, the controversial move sparked debate in the NFT community around the necessity of royalty fees and how it would impact the NFT ecosystem in general. While some welcomed the idea, saying that it would “force” the project to come up with other revenue streams, others called it “financial suicide.”
Proof’s director of research, @punk9059, shared her thoughts on DeGods’ move to 0% royalties, saying that some blue-chip projects such as Yuga, World of Women, CoolCats, Tyler Hobbs made the majority of their revenue on follow-on mints/projects, but DeGods has “many other possible revenue streams” though she did not mention what they are.
In her Twitter thread, she also mentioned that 0% royalties isn’t an entirely new concept as other successful NFT collections such as CryptoPunks, Nouns, and Bored Ape Kennel Club have had no royalties for over a year.
Many believe that the decision is not good for the NFT space as royalty fees keep the project afloat once the mint funds run out and also incentivise the team to “work harder.”
“In the short term teams have mint funds, but long-term royalties are the main incentive for teams to keep active, motivated, be able to grow and employ people in the space. DeGods are where they are because of royalties,” said @hyxttcrypto in a tweet.
Most who are against the decision said that new projects are unable to implement 0% royalties right out the gate, thereby forcing projects that do so without alternative revenue streams to fail but a successful project such as DeGods, which has generated almost 250,000 SOL from mints and royalties and over $6 million in secondary sales can afford to remove royalties.
Furthermore, Dust Labs, an NFT software company founded by DeGods and y00ts founder Frank and Kevin, recently raised $7 million in seed funding to build out DeGods’ native token.
“This may work for projects that have plenty of funds, but I fear this will negatively impact that space as it sets an expectation that royalties are supposed to be 0%. Keep in mind that not all projects have been as successful as DeGods, and I respect the Team greatly. Some projects don’t take mint proceeds from holders and instead use higher than normal royalties to generate funds for a project. Again, I respect projects that do this, but let’s not make this a new “meta” because this will make new projects hard to compete,” tweeted @WhaleWatcherBTC.
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