The issue of creator royalties for NFTs is one that Magic Eden, the largest NFT marketplace on Solana, is attempting to resolve. Recently, optional-royalty NFT platforms gained over 40% of Magic Eden's market share in Solana.
At Solana's Breakpoint conference in Lisbon, Portugal, Magic Eden co-founder and CEO Jack Lu proposed a new NFT standard that would "enforce royalties at a hard, technological level."
He stated, "There is a great possibility to give rise to a new asset class," when addressing the conference. He added:
“Creators need a sustainable revenue model, and while royalties are one of those models, there is no mechanism to enforce them with the current design.”
Lu's Initiative Solution
In order to comprehend their needs, Magic Eden met with "dozens of creators across many, many industries," according to Lu, who found that those needs "really are very, very varied."
He highlighted that "some people genuinely want sovereign ownership, [while] some people really want enforcement of royalties or new business models."
While adding that "royalty enforcement by necessity means that the creator has some amount of control," Lu did warn that a new NFT standard "would have trade-offs."
"These forms of royalty-enforcing NFTs don't look like the NFTs we recognize today," he said in an interview with Decrypt. "The holders will need to give up some level of control, or freehold ownership, of these NFTs in favor of the inventor."
NFTs, as a name, has always been an umbrella term, said Lu. Sincerity dictates that I believe a new name may be rather beneficial. The existence of NFTs as a catch-all word may prove to be more beneficial. These royalty-enforcing collectibles would be one form, and the current wave of optional-royalty NFTs would be another.
Recently, a fresh strategy for collecting royalties was proposed by Metaplex, the organization that created Solana's NFT standard.
OpenSea, the largest NFT marketplace, has created a unique enforcement mechanism in the meantime. It enables project developers to restrict access to Ethereum markets that do not impose royalties.
