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Zero or optional royalties: which is best for creators



In the summer of 2022, a new trend in the NFT space called zero royalty marketplace started in the Ethereum community, advocating for no royalties for creators whenever sales are made on the secondary markets. 

One of the marketplaces to drive this narrative was Sudoswap, with others getting aboard the zero-royalty trend including Solana native such as Magic Eden but with optional royalties. 

While there has been a lot of conversations around it on Crypto Twitter, Galaxy Digital’s Research Associate, Sal Qadir speaking at Breakpoint 2022 says there are a lot of questions that need answers.

The co-founder of Magic Eden, Zedd Yin, speaking on the royalty subject explained that the Magic Eden team was the first to protect royalty systems on Solana when the questions about its importance started. “We started Metashield because of this debate, to make sure creators get royalties from the NFTs they create,” the co-founder added. However, he stated that the plan didn’t work as expected.

The CTO of MetaplexNhan Phan, believes choosing between zero royalty NFTs and those that implement it is a choice, and that Metaplex wants creators and collectors to decide. The CTO said the Metaplex team doesn’t want to interfere with that decision. This resulted in the development of a system that allows users to opt for any while still being able to change their choice.

Creators should be empowered 

The CEO of Degenerate Ape Academy, Dustin Duane, believes NFT creators should be empowered differently about royalty. He said they are building a model where creators don’t have to depend on royalties because royalties are not sustainable and can’t be relied on to build a good business model.

Scum, an independent artist shares a contrary opinion. He believes that taking away royalties from artists is not the best option because some of them rely on what they get from royalties. If we implement such a governance tool of enforcing no royalty, we might undermine what crypto has always been about, the artist added.

The future and recommendations 

From our experimentation with Metashield, there is no one-size-fits-all model for all NFT royalties, Zedd Yin explained. I see a future where several tiers of NFT communities where creators will reward collectors based on their response to royalties – the more you comply, the more privilege you get.

Having a holistic view where we think about business owners and investors too is important to make the best decision on NFT royalties. On-chain optionality remains more potent, allowing creators to decide what they want.

Lastly, Dustin emphasized that the NFT community needs to be careful about how centralization and rules are implemented in a decentralized world.

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