META MONDAY

Happy Meta Monday folks!

It was another slow weekend for NFTs, with OpenSea trading volume exploring new lows for the year (only $8.2m traded on Sunday).

Though volume was down, the drama stayed all the way up. If you missed it, fear not. We’ve got you covered:

  • Magic Eden announces optional royalty model
  • OpenSea demotes Solana collections
  • A few other stories we think you ought to know about…

Magic Eden capitulates... creator royalties will be optional

Magic Eden Optional Royalties

The royalty debate rumbles on. The latest addition to the discussion we’ve now had 1,000 times is Magic Eden’s recent decision to make creator royalties optional.

Solana’s top NFT marketplace is the latest platform to switch to a no-fee model. The decision on how much royalties to pay to the creator will now be passed to the buyer (i.e. a trader can choose to pay 0% royalties if they want to).

It is a flip-flop from Magic Eden, after stating in July that “royalties are up to creators. Not us.”


Why did Magic Eden change its mind?

Over the last month, Magic Eden has been rapidly losing its market share of Solana NFT trading volume. It went from regularly enjoying over 85% to as low as 50% on some days during the last few weeks.
 
Magic Eden’s fall from grace is a direct result of traders flocking to other marketplaces such as Yawww and Solanart. These platforms enable traders to buy and sell NFTs without incurring royalty fees.
 
Magic Eden’s perspective is very much “if you can’t beat them, join them.” As royalties are not enforceable on a protocol level, many traders will always opt to avoid paying royalties if possible.

 

Magic Eden’s move is a desperate attempt to claw back its market share.

 
So have we given up on creator royalties?
 
Not necessarily. Royalties are optional, so some committed community members can still choose to pay a slice of their purchase price to the NFT creator.
 
Magic Eden also hopes this is not a permanent decision. It is launching a Creator Monetization Hackathon to develop pro-royalty tools, with a $1 million prize pool. Here are some potential solution ideas to get your creative juices flowing:
  • On-chain royalty enforcement: Give traders and marketplaces no choice!
  • Reward those who pay royalties: Save some extra perks and benefits for those that are kind enough to pay royalties.
  • Punish those that do not pay royalties: Restrict access to benefits for people who do not pay royalties.

     

Stay tuned… the royalty discussion is far from over.

OpenSea makes Solana collections ineligible for 'Top and Trending' page

Solana collections ineligible

The new marketplace meta of abolishing royalty fees for Solana projects has had a very sinister unintended consequence. Wash trading.
 
Wash trading is the act of trading NFTs back and forth between controlled wallets at highly inflated prices. The benefits for wash traders are two-fold:

  1. Innocent NFT enthusiasts browsing the marketplace believe the NFTs are more expensive than the true market value. This means they might buy at an artificially inflated price.
  2. Inflated trading volumes make the collections rank higher on leaderboards that track collection sales (OpenSea’s ‘Top and Trending’ section of their home page, for example).
 
Removing royalty fees makes wash trading significantly less expensive. So project creators and backers have been wash-trading the living daylights out of Solana NFT projects.
 
This has culminated in OpenSea temporarily removing Solana NFT projects from its overall market-wide leaderboard.
 
It’s a clever move in my opinion. It is a subtle dig at Magic Eden for their recent decision to make royalties optional. It also appears to be pro-safety and community, while doing very little harm… does anyone even trade Solana NFTs on OpenSea?

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QUICK HITS

  • The Genuine Undead NFT collection was the star of the show this week. It rallied over 150% to its current floor price of 0.83 ETH.
  • Memeland launched its new website. It’s clean and simple. Could be more interactive IMO: 8/10.
  • Azuki has announced a ‘Proof of Skate’ technology installation in Hong Kong on October 19.

We’re bullish on every reader who brightens up a degen’s day by forwarding this newsletter 😎

It would mean the world to us!

 

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