- OpenSea has become the first major non-fungible token (NFT) marketplace to enforce royalty fees.
- The platform is launching a tool that will allow creators to decide if secondary NFT traders pay royalty fees.
- The announcement comes hot on the heels of Ethereum Layer 2 scaling protocol Immutable’s announcement of a similar tool.
OpenSea has chosen creators over traders in the NFT royalty fee saga. Several NFT marketplaces have implemented zero-royalty trading in a move to boost transaction volume.
OpenSea is taking a less popular decision by launching an on-chain tool to enforce NFT royalty fees on new collections. The leading NFT marketplace is following a similar decision taken by Immutable.
NFT royalty fees are on-chain commissions paid to creators as residual compensation for their creations. They receive a small percentage of the amount paid by the new owner of their NFTs whenever they trade in the secondary market.
That is how the system has worked at least for the better part of the last four years. Writing in a blog post on their website on November 6, OpenSea said the reasoning behind the decision to introduce NFT royalties was to motivate creators to list their collections on the platform.
However, things have changed over the last few months with competitor platforms like LooksRare and Solona-based Magic Eden all enabling zero-royalty trading on their platforms.
Although both Magic Eden and LooksRare maintained that traders will still have the option to decide whether or not to pay royalty fees, they essentially prevented creators from enforcing royalties on traders.
That’s why OpenSea has only decided to apply the new tool for enforcing royalties on new collections. It has become almost impossible to enforce off-chain creator fees.
“It’s clear that many creators want the ability to enforce fees on-chain; and fundamentally, we believe that the choice should be theirs to make – it shouldn’t be a decision made for them by marketplaces. So we’re looking to balance the scales by putting more power in creators’ hands, equipping them with tools to control their business model,” OpenSea wrote.
The company said the tool is its first version of on-chain enforcement of creator fees. The tool is set to debut on Tuesday, November 8.
Although the current version only targets new collections, OpenSea plans to make upgrades in the company months for more on-chain enforcement.
“In the coming months we’ll launch additional tools and improvements for on-chain enforcement, and we will engage with the community to get feedback on them along the way.”
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