What Is The Primary Trigger?
Yuga Labs, the team behind the Bored Ape Yacht Club (BAYC) non-fungible token (NFT) collection, along with LSLTTT Holdings, the creator of Pudgy Penguins, are blocking some of their NFTs from being traded on popular marketplaces like OpenSea and Blur.
OpenSea, Blur Rejected By Yuga Labs
According to reports, one developer, 0xCygaar on X, said Yuga Labs was not “f*cking around” and clarified that some of its collections, including Mara, “will only be traded on royalty-enforced marketplaces.” These marketplaces don’t include OpenSea and Blur. Instead, the collection is only available on SudoSwap V2 and X2Y2 decentralized marketplaces.
The Mara collection consists of 10,000 NFTs featuring the Maras, creatures inhabiting the Otherside metaverse–another creation of Yuga Labs. They can breed and evolve, but their primary role is to serve as companions to “Kodas,” who guard the Otherside.
In NFT trading, royalties are paid to the creator as a percentage of the resale price. This means that artists, for instance, Yuga Labs or LSLTTT Holdings, can earn some profits every time their piece is resold.
When minting, the creator sets the royalties, which can be a percentage of the resale price or a fixed amount per resale. The royalty evolves and is currently less than 5% but can be any percentage. These are paid automatically to the creator through the NFT marketplace where the piece was sold.
As it is, royalties allow creators to earn passive income from their NFTs. Moreover, buying an NFT with royalties directly supports the creator.
Balancing Royalty Fees And Activity
However, OpenSea and Blur have been slashing royalty payments in response to declining activity in the past few months. NFT trading volume rapidly contracted in 2022 and remains relatively low. The two exchanges aimed to spark activity, allowing for more trading.
According to Nansen, an analytic platform, the average royalty payment as of July 2023 stood at 0.6%, down from an average of 2.5% in 2022. The drop was primarily due to the popularity of Blur, which reduced creator fees to a minimum of 0.5%. At the same time, OpenSea changed its creator policy, asking creators to include an on-chain enforcement method to receive a royalty.
OpenSea has since retired OpenSea Operator Filter, a tool that allowed creators to block marketplace that did not enforce creator royalties, on August 31. They are now opting for preferred fees after the tool, the marketplace said, didn’t find “community support.”
Feature image from Canva, chart from TradingView