Magic Eden launches Solana NFT tool to enforce royalties to creators

Creator royalties are threatened in NFT place, especially on Solanawhere in fact all marketplaces with a significant share have stopped requiring traders to pay the fees. But now the leading Solana marketplace, Magic Eden, has taken a step towards creating a more durable system to enforce royalties on creators.

The $1.6 billion startup today announced the Open Creator Protocol (OCP), a open source tools that creators of new Solana NFT projects can implement to ensure that royalties are paid when their assets are traded on secondary marketplaces. It is built on top of Metaplex’s existing SPL token standard for NFTs on Solana.

Creator royalties are fees usually paid by the seller on NFT trades. They are usually set between 5% and 10% of the sale price, with the funds for a digital wallet controlled by the creators of the NFT project. These fees can be a lucrative source of income for NFT projects that generate significant secondary trading volume.

Magic Eden’s OCP appears to be similar in approach to OpenSea’s recent Ethereum toolkit, allowing NFT creators to block marketplaces that will not honor royalty fees on eligible assets. In other words, if a marketplace refuses to enforce royalties for OCP-enabled NFTs, that platform will be put on the OCP blocklist and those NFTs cannot be traded through it.

“Creators have the option to adopt the Open Creator Protocol, which will allow them to use the protocol to protect royalties and create their own rules for trading the collection,” said Jack Lu, CEO of Magic Eden. Decrypt. “This will only be available to creators launching new collections, but we feel many people will choose the protocol.”

Lu said that Magic Eden itself will maintain a list of blocked marketplaces, but also that creators can choose to customize the list of blocked platforms. The open source tool – which will be available for creators to use on Friday – can be supported by any Solana NFT marketplace that wants to honor royalties on OCP projects, he added.

Magic Eden enforced creator royalties until mid-October, when a wave of rival Solana NFT marketplaces began rejecting royalties or make them optional for traders, resulting in more money being held by sellers. Faced with declining market share in the Solana NFT area, Magic Eden chose to make royalties optional for buyers to pay, similar to a tip for creators.

Ethereum NFT platforms also began to follow suit, with top marketplace OpenSea saying in early November that it was considering a similar move. Following backlash from the creatorbut OpenSea said it will continue to honor royalties on existing collections, along with new projects using the Ethereum blockchain. Rival marketplace X2Y2 has since taken that approach also.

However, Magic Eden’s new tool only serves creators who adopt it for newly launched projects, and the marketplace has not changed its course on optional royalties for existing projects. The firm previously pledged $1 million toward the development of royalty enforcement tools, Lu said Decrypt that creators can choose to restore projects using OCP if they wish.

“It’s not mandatory of course – it’s just an option, in the spirit of being solution-oriented,” Lu explained. “While it may seem scary to some creators, some remain undaunted and we look forward to working with them.”

Magic Eden built the OCP tool independently of Metaplex, which develops its own new royalty enforcement asset class Solana NFT. Lu said the team has been in contact with Metaplex and had already shared the tool before today’s announcement, noting that Metaplex’s new standard won’t arrive until Q1 2023.

“We don’t see any conflict between our protocol and what Metaplex plans to roll out. We want creators to have as many choices as possible,” explained Lu, noting that both will support migration of existing collections. “Our goal is for the ecosystem to consolidate a standard upon which any business can unreservedly build.”

The OCP toolkit also enables additional functionality for creators, Magic Eden said. One feature is a dynamic royalty option that uses a linear price curve to cut down the total fee that buyers pay for higher-priced NFTs, potentially making royalties seem less daunting for expensive purchases.

Another feature allows creators to customize certain transferability details, such as whether NFTs can be resold before the first edition ends, as well as limits based on NFT metadata – or the details that specify an asset’s unique attributes – or total NFTs traded in a collection to date . Magic Eden suggests that such options could unlock “gamification” opportunities for NFT creators.