November 10, 2022
By Sharan Kaur Phillora
After months of silence, the largest non-fungible token exchange, OpenSea, announced it is taking the middle road on “royalties” paid to NFT creators. The move will likely reshape an ongoing debate as to whether these digital assets should automatically pay out “creator fees” when resold (which benefits artists) or nix that standard entirely (which is better for traders).
Here’s what we know:
In an announcement on 6 November 2022, OpenSea CEO Devin Finzer said the tool offers creators an on-chain functionality to enforce fees. This will apply to new NFT collections and upgradable contracts in an official blog post.
The on-chain enforcement tool went live today, Tuesday, 8 November 2022, at 12:00 pm ET.
After 8 December, considerations for royalty payments will include continuing with off-chain fees for some NFT subsets, introducing optional creator fees, and seeking collaborations with other NFT marketplaces on on-chain enforcement options.
OpenSea CEO Devin Finzer said “To the best of our knowledge, the only way to achieve on-chain creator fee enforcement for existing collections with non-upgradeable smart contracts is to take drastic measures with their communities, like shifting the canonical collection to a new smart contract.”
The on-chain tool is a “first step,” that the NFT marketplace will look to build on via various engagements with the community, particularly on what solutions can be pursued regarding existing collections. These options are taken as the OpenSea team realise it can be difficult to enforce on-chain royalties on existing collections.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.