Magic Eden’s new protocol will allow NFT creators to enforce royalties

According to a recent announcement, Magic Eden is launching the Open Creator Protocol. The protocol will allow NFT creators to enforce royalties, and will bring a number of other “creator-centric features”.

Open Creator Protocol for launch on December 2nd

After announces that “royalties cannot be enforced at the protocol level” in October, Magic Eden, Solana’s largest NFT marketplace known for breaking OpenSea’s near-monopoly, announced that they are finally launching a solution for creators. Starting December 2, non-fungible token creators will be able to use an open source tool called the Open Creator Protocol to customize various aspects of future trades involving their NFTs.

When launching a new collection, creators can choose to use the protocol. The tool will enable creators to enforce royalties and ban marketplaces that have not enforced royalties. In addition, it will have a number of other features, including dynamic royalties and customizable token transfer:

The dynamic royalty function will specify a relationship between an NFT’s selling price and royalty amount via a linear price curve, potentially reducing the nominal value of royalties for buyers who pay a higher price for the NFT. Customizable transferability can include many use cases, such as the pool’s tokens remaining untradable until the coin closes, or restrictions on tradability by time, total number of trades, or metadata text. This can create fun ways for creators to gamify the rules of their own collection’s trading behavior. Magic Eden also unveils bulk transfers on the platform so collectors can move their NFTs freely for collections using the Open Creator Protocol.

The marketplace will also host a promotional “Magic Mint”. The coin will enforce royalties via the Open Creator Protocol and will feature a variety of gifts, including items such as a MacBook Pro and NFTs from Degen Trash Panda and Liberty Square. The tool will be available from 2 December.

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NFTs and Creator Royalties explained

The enforcement of royalties for non-fungible tokens has been a hotly debated topic in the space for some time. Different marketplaces have chosen different solutions, sometimes after being pressured by prominent artists. OpenSea, the marketplace that at one point held 97% of the total market, decided in early November, after much deliberation, to continue to enforce royalties.

Finn Satoshi, a company known for the Solana-based move-to-earn Web3 app STEPN, took a different approach when they launched the Mooar marketplace. Their solution was to build a subscription-based NFT trading platform.

Royalties have proven incredibly profitable for certain collections. Of the $185 million Nike earned in revenue from its NFTs at the end of August, more than $92 million was from royalties alone. This success prompted the famous shoemaker to expand its Web3 business by announcing a Web3 platform for creators in November.

What do you think about enforcing royalties for NFT creators? Let us know in the comments below.

About the author

Tim Fries is the co-founder of The Tokenist. He has a B. Sc. in mechanical engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate in the investment team at RW Baird’s US Private Equity division and is also a co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.