- LookRare has revised its NFT royalty policy.
- The web3 company will now support zero-royalty trading.
- The company will reward creators and collectors with a share of protocol fees instead.
LooksRare is revising its marketplace policy to support zero-royalty trading. The highly incentivised non-fungible token platform said on Thursday that it will reward creators and collectors with a share of protocol fees instead.
Royalties are commissions that NFT traders pay to NFT collection owners and creators when they sell the NFT to another collector.
The new incentive comes at a time when NFT marketplaces are facing a significant decline in daily transaction volumes amid the crypto downturn. The new rewards format allows traders to trade NFTs for free whilst still supporting their favourite creators.
A non-fungible token (NFT) is a digital representation of a JPEG, a collectible, a music track, an artwork, or a video clip, minted on the blockchain. Minting is the process of encrypting a digital file on the blockchain. In LooksRare’s case, most NFTs are mainly collectibles and JPEGs.
LooksRare will now share 25% of protocol fees with project creators and NFT collection owners. The protocol fee is LooksRare’s basic sales fee, also known as the NFT gas fee charged at 2% on all NFT sales, excluding private sales. This implies that the stakers and collections owners will now split the protocol fees in the ratio of 1.5%:0.5%, respectively, making up the 2%.
An NFT gas fee is generally a transaction fee charged by a blockchain-based marketplace for minting tokens to cover the computational costs of facilitating the process.
Moreover, LooksRare said that 95% of trading rewards will go to sellers, with 5% going to buyers.
Again, this revised rewards-sharing ratio is meant to boost returns for NFT traders amid the declining floor prices.
Explaining its decision to introduce zero-royalty trading, LooksRare pointed to the rapid growth of marketplaces offering free NFT trading.
“The growth of zero-royalty marketplaces has eroded the general willingness to pay royalties throughout the NFT space. Good news for traders, but with a big downside: the move away from royalties has removed an important source of passive income for most creators,” the company wrote in a blog post on its website.
Last week, Solana-based NFT marketplace Magic Eden faced backlash from the community after causing confusion about its royalty policy. Magic Eden initially appeared to confirm support for zero-royalty trading, before clarifying later that buyers have the freedom to choose whether or not to pay royalties to creators and collection owners, and how much to pay.
LooksRare seems to have left the door open for this option too.
Stay up to date: