NFT Artists Boycott OpenSea as Royalties Plummet

As the world of non-fungible tokens (NFTs) continues to evolve, a recent development has sent shockwaves through the community. Several prominent NFT creators have initiated a boycott of leading NFT marketplaces, such as OpenSea and Blur. Their primary grievance revolves around the dwindling royalties associated with NFTs.

Yuga Labs and LSLTTT Holdings Lead Boycott

Among the key players leading this protest are Yuga Labs, the masterminds behind the immensely popular Bored Ape Yacht Club (BAYC) NFT collection, and LSLTTT Holdings Inc, creators of the Pudgy Penguins collection. Both of these entities have decided to withhold some of their most sought-after collections.

This boycott stems from a substantial reduction in royalty rates offered by NFT platforms when NFTs change hands. This change in royalty structure is an attempt by NFT platforms to reinvigorate buying and selling after the boom in NFT prices during the pandemic. However, this move has left creators and artists grappling with a significant drop in their earnings.

The Importance of Royalties

Royalties are a critical element of the NFT trading ecosystem, as they provide creators with a share of the resale price each time their work changes hands. Creators, including Yuga Labs and LSLTTT Holdings, can set royalties at the time of minting, either as a percentage of the resale price or a fixed amount per resale. Historically, royalties have hovered around 5%, but these rates have now decreased significantly.

In January 2022, royalties in the NFT market peaked at a staggering $269 million. However, fast forward to September, and royalties had dwindled to a mere $2.4 million, while monthly trading volumes had shrunk from a massive $17 billion. These stark numbers prompted Yuga Labs to block its Mara collection on platforms like Blur and OpenSea.

Low Fees a Problem

One of the driving forces behind this boycott is the low-fee model introduced by platforms like Blur, which prioritizes low trading fees but limits artist income. Blur’s minimum royalty rate is 0.5%, while OpenSea offers optional creator fees. This model has frustrated many artists and creators, who believe that it hampers their ability to earn a fair share of the resale value of their creations.

In response to this challenge, Pudgy Penguins CEO Luca Netz has indicated that a paradigm shift is underway in the NFT business marketplace. He emphasizes the importance of partnering with platforms that offer royalties and maintaining the artist’s interests at the forefront.

Users Resistant to Royalties

This ongoing dispute has exposed a growing resistance among users to paying royalties and fees associated with NFTs. While the boycott strategy has gained momentum, its long-term sustainability remains uncertain.

Both OpenSea and Blur are now under pressure to balance the need for low trading costs with the preservation of creator rights. This dichotomy raises questions about the essence of blockchain technology, which was intended to democratize and empower artists, creators, and users

In the midst of this conflict, the NFT market stands at a crossroads, trying to find the delicate balance between affordability and supporting the creative community. Regardless of the outcome, the NFT world is clearly in a state of flux, with creators, platforms, and users grappling with the evolving dynamics of this digital art revolution.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.