Solana-Based Magic Eden Embraces Optional Royalty Model
Magic Eden, Solana’s top non-fungible token (NFT) marketplace, is the latest platform to switch to an optional royalty mechanism, following the controversial trend set by X2Y2 and others.
In a Friday night Twitter thread, the company said it will also scrap the 2% platform fee, effective later Friday.
“After some difficult reflection and discussions with many creators, we’ve decided to move to optional royalties on Magic Eden,” the company’s official Twitter account said. “Effective later today, we will also begin running a promotion to waive our platform fees.”
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.
Controversial No-Royalty Trend Finds Momentum
The move follows a controversial trend set by other popular NFT marketplaces like X2Y2, which have chosen to make royalty payments optional in a bid to attract more users, much to the chagrin of most creators.
In the announcement, Magic Eden shared a graph showing that the number of cumulative wallets using optional royalty marketplaces to buy or sell NFTs skyrocketed in late September. “The market has been shifting towards optional creator royalties for awhile,” the platform added.
“We hope that this decision is not permanent,” Magic Eden said in the announcement.
The company also said it is putting $1 million into a fund to create better royalty enforcement tools and hopes to experiment with “new models outside of royalties” in the future. A Magic Eden representative said that his hand was forced by 60% of NFT traders currently on royalty-optional platforms.
The Magic Eden thread sparked immediate outrage on NFT Twitter. The company organized a Twitter Spaces 30 minutes after the announcement to answer questions from its users.
While some see the move as positive for the long-term health of the industry, 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 I am obviously pro-royalties and don’t love what Magic Eden and others are doing, I do think there is one key change that they hit on… switching from a sellers FEE, to a buyer’s PREMIUM. i think this is actually much more sustainable long term,” Beeple said.
Others were more critical of the change. Brocolli DAO argued that “royalties are necessary in an immature ecosystem,” noting that according to his calculations, they have already lost up to $27,000 in royalties due to 0% purchases in other markets.
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