The NFT royalty debate
This week’s featured collection is Doc_Hustle
Doc_Hustle is a prolific collector of Ethereum NFTs and TopShots. They have many Tommy Pickles, Alien Doogles, and Frankies. Doc_Hustle’s collection is looking good! Check it out at lazy.com/doc_hustle
A trend to keep an eye on: NFT Royalties
NFT royalties have become a hotly debated topic lately. Royalties are fees paid to the NFT’s creator whenever secondary sales are made. Some projects have released their NFTs for free on the expectation that if the collection became popular they would be compensated through royalties. Now that assumption is being challenged by the rise of NFT marketplaces that do not pay royalties.
The royalty debate was sparked by the release of SudoSwap, an innovative new NFT marketplace that uses an “automated market maker.” Similar to Uniswap, and unlike traditional marketplaces like OpenSea, users buy and sell NFTs from a pool instead of from other people.
SudoSwap has proven to be immensely popular and has already achieved close to 10% of OpenSea’s volume.
The problem is that SudoSwap does not pay royalties. And if it continues to grow in size then NFT creators could see a big source of revenue dry up.
At the heart of the issue is the fact that NFT royalties have always been a voluntary standard. There is no way to enforce royalties. Creators have relied on their collectors to use marketplaces that respect royalties. This worked until SudoSwap created a marketplace whose advantages—such as instant liquidity—have lured many collectors.
Now NFT creators are being forced to adapt. Royalties are no longer guaranteed. What innovation will replace that lost potential income?
Want to learn more about this topic? We suggest recent posts by Tally and 0xFoobar.
What are the NFTs trends that you are paying attention to? Send us an email and tell us all about it.
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