New Metaplex Standards could allow creators to enforce them on-chain.
NFT creator royalties have been a hot topic of debate lately. Recently DeGods on the Solana chain switched their tone and went to 0 royalties with Magic Eden following suit by making the royalties optional due to other platforms that offer no royalties snatching away their customer base.
This may all change due to the creator of Solana’s NFT standard developing a new standard as a replacement. Metaplex is the creator of the Solana NFT standard and recently the company has announced plans to create a new standard that will allow royalty payments to be enforced across the board.
We’ve heard you – the community is ready. Metaplex is building a new asset class that will enable creators to enforce royalties at the protocol level by extending the Token Metadata program, which powers 99%+ of all NFTs on Solana.— Metaplex (@metaplex) October 20, 2022
The announcement, which was made this past Thursday, October 20, was made amid the ongoing debate as to whether royalties should even be a thing when creating an NFT project. Metaplex has stated a plan to build “a new asset class that will enable creators to enforce royalties at the protocol level.”
The original method was for artists and creators to set their royalties via smart contracts, the code that powers dapps, but a lot of the marketplaces that currently out have the ability to work around that code and choose not to honor the stipulations set out by the artist. The Current system allows traders to avoid paying the artist fees which usually sit around 5%-10%. The royalties are currently not able to be enforced by the artist on Solana.
The existing way or standard is used by more than 99% of the Solana community when it comes to creating and selling NFTs. This standard was also created by Metaplex. The company said it can create a system where royalties are enforceable simply by adding more data to the metadata program- a program in which NFT creators append data and information that makes the NFTs or blockchain tokens unique from one another.
Continuing on in the thread Metaplex has stated a plan to support multiple NFT asset standards giving options to creators for future projects.
“We believe multiple asset classes and behaviors will coexist in the future—token metadata provides the interoperability and stability the ecosystem needs to move forward without fragmentation,”
Metaplex CEO Stephen Hess made a statement on Twitter expressing how it was suggested before by Metaplex to offer enforceable royalties via the Digital Asset Standard via their published whitepaper but has expressed how the situation is now different.
More to come
More was teased by Metaplex to come just in time for the Solana Breakpoint conference that will be upon us next month in Lisbon. Many projects and creators have depended upon royalties for revenue and funding to continue their projects.
The beginning of the no royalties system began with Yawww a new Solana marketplace that wanted to take the wind off Magic Eden’s sails. Many other platforms caught on to the strategy and started implementing it on their own website in a competitive rush to gain more users on their platforms. Hadeswap is a more recent zero-royalty NFT trading platform that is built on liquidity pools and that platform has made Magic Eden’s decline all the more real for the NFT marketplace leader. As the idea gains momentum there are sure to be more marketplaces to come with zero royalties or some other gimmick to attract users, Metaplex intends to make it so creators don’t get left with the short end of the stick so to speak.
Magic Eden has been up and down with their decision on how to deal with royalties. The platform stated that royalties would remain on the platform and that royalty-optional trading would be done via their partnershp with NFT aggregator and marketplace Coral Cube. The company then made the choice to change course again and state that creator royalties would be optional on the Magic Eden site as well.
Other project leads have doubled down on their decision to go zero royalty. Founder of y00ts and DeGods Frankdegods penned out his own proposal on what things could potentially look like and how addressing creator royalties across the ecosystem is paramount to forging a new future for the technology.
The report calls for a new system that is ecosystem-wide, one that enforces royalties on trades includes a blacklist for marketplaces and platforms that evade them, and lets members of the community vote on a fixed royalty rate across every project. This new standard should also be available for existing projects to migrate to according to the DeGods founder.In his proposal Frank makes a very poignant statement:
“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 entire ecosystem is driven by social consensus. If we all decide we want royalties, there is a way to make this happen. If we don’t, that’s fine too. The key is that we all control our destiny as an ecosystem.”
The debate for royalties is ongoing but Frank’s comments and proposal come after he set his community’s NFT royalties to zero in what he called “the next experiment.” Could the experiment have been to see what would happen if a project with such value as DeGods and y00ts went zero-royalty or was there an even deeper meaning behind the move? The fact is that royalties are the lifeblood of some projects or even the means of survival for some artists, if that was taken away then a proper method would have to be created, the issue is what that method would be. As marketplaces fight for the top spot and new projects continue to be made each week needing those marketplaces it would seem that in the end the current system is just too toxic for creators or those hoping to use NFTs to build.