Controversial decision from OpenSea

Weekly NFT trading volume, which was over $3 billion in its best period, has been below $100 million recently. Declining volumes are pushing NFT marketplaces into a race to the bottom. Added to this table is an important decision taken by OpenSea the previous day, which drew great reaction from the community.

OpenSea announced on Thursday that it will now optionally enforce royalties. Until now, NFT artists were getting a 2.5 percent share of the fee on each sale. From August 31, these fees will be optional for new collections. For existing collections, this system will be implemented after February 29, 2024. Thus, the collector who bought the NFT will decide whether to give the artist a share in the next sale.

As transaction volumes decrease and interest declines in the NFT market, marketplaces reduce transaction fees as well as remove royalties to attract users. Applying a minimum royalty fee of 0.5 percent versus OpenSea’s 2.5 percent, Blur outperformed OpenSea in terms of transaction volume. Eight months ago, another marketplace X2Y2 also launched a new model with zero royalties.

Devin Finzer, CEO and co-founder of OpenSea, has previously argued that royalties are necessary to protect the rights of artists. The statement that the platform will reset these fees was also made by Finzer.

OpenSea’s decision had a huge impact in the community, and the platform was accused of killing the ecosystem. Famous billionaire Mark Cuban, one of OpenSea’s investors, commented that “OpenSea is making a huge mistake by not collecting and paying royalties from NFT sales” and emphasized that he said this as an OpenSea investor.

On the other hand, Yuga Labs, the developer of popular NFT projects such as Bored Ape Yacht Club, Mutant Ape Yacht Club and Otherside, took a step to protest OpenSea’s decision. Yuga Labs has announced that it will end support for OpenSea for all updatable contracts and all new collections. The company earned $148 million in royalties from NFT sales in 2022. Finally, there were also those who evaluated the reactions to OpenSea. Rival marketplace Rarible showed solidarity with creators and artists with the hashtag #StandForRoyalties on Friday.