InfoNesia.xyz – The biggest NFT marketplace on Solana, Magic Eden, is wrestling with the question of creator royalties for NFTs, after a wave of optional-royalty marketplaces ate into its market share.
Speaking at Solana’s Breakpoint conference in Lisbon, Portugal, Magic Eden co-founder and CEO Jack Lu advocated for a new NFT standard that would “enforce royalties at a hard, technological level.”
“There is a real opportunity to give rise to a new asset class,” Lu said, adding that Magic Eden has spoken to “dozens of creators amongst many, many industries” to canvass their opinions. “Some folks really want sovereign ownership, [while] some folks really want royalty enforcement or new business models,” he continued.
But Lu warned that a new standard for NFTs “will have special trade-offs,” adding that “royalty enforcing by necessity means that the creator has some level of control.”
A new kind of NFT?
Lu elaborated on his comments during an interview with Decrypt at Breakpoint. “These kind of royalty-enforcing NFTs don’t look like the NFTs we understand today,” he said.
For starters, he said, they will require some degree of centralization. “The holders will need to give up some level of control, or freehold ownership of these NFTs in favor of the creator,” Lu explained.
Indeed, they might not even be called NFTs. “I think that a new name might be pretty useful, to be really honest,” Lu said. He added that “NFTs, as a name, has always been an umbrella term,” encompassing the likes of wildly differing tokens such as digital collectibles and soulbound tokens.
“Maybe it will be more useful that there’s NFTs as an umbrella term,” he said, “and then the current wave of optional-royalty NFTs would be one form, and these royalty-enforcing collectibles would be another.”
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Similar models have been floated by other major players in recent weeks. Metaplex, which created Solana’s NFT standard, proposed a new standard for enforcing royalties. Top overall NFT marketplace OpenSea, meanwhile, created an enforcement tool that lets creators of new projects block Ethereum marketplaces that don’t enforce royalties—i.e. OpenSea’s biggest competitors.
Lu added that despite Magic Eden having lost around 40% of Solana market share to optional-royalty platforms in early October, the disruption represents an opportunity. Magic Eden has since reclaimed all of that market share since it similarly made creator royalties optional for traders on its platform.
gm: Inside NFT Unicorn Magic Eden With CEO Jack Lu
Magic Eden launched 1 year ago and already has a $1.6 billion valuation. It started as a marketplace only for Solana NFTs, but now it’s opening up to Ethereum. Co-founder and CEO Jack Lu tells Dan Roberts and Stephen Graves all about the company’s goals, his take on NFT backlash, Solana vs Ethereum, and the Ethereum merge and its impact on NFTs. Watch Episode 19 of the gm podcast and make sure to subscribe on Apple or Spotify.