Magic Eden Reverses Its Position On Solana NFT Royalties, Rendering Them Optional

Published on:

Last Updated on October 17, 2022 by Bitfinsider

Magic Eden, the most popular marketplace for Solana non-fungible tokens (NFTs), announced late Friday that it would no longer strictly honor creator-set royalties on NFTs sold through its platform. In doing so, the company bowed to recent pressure as competitors who shun royalties rapidly stole away its market share.

According to a tweet that was published by the platform, “after some difficult reflection and discussions with many creators, we’ve decided to move to optional royalties.” As part of its apparent effort to win back traders, Magic Eden stated that it would waive the fees associated with using its platform during the promotional period.

Over the course of the previous year, Magic Eden had been the most dominant NFT marketplace on Solana, typically owning 90 percent of the market share or more at any given time. After only nine months since the initial launch of the platform, the company was able to ride that momentum to a valuation of $1.6 billion in June, just as it was raising $130 million in Series B funding.

However, in recent weeks, upstart marketplaces like Hadeswap and Solanart have begun chipping away at Magic Eden’s dominant position, which has prompted the platform to take action. These marketplaces chose not to require sellers to pay creator royalties on secondary sales.

The previous week, Magic Eden announced that it had formed a partnership with Coral Cube, which is also a marketplace and aggregator, in order to make it possible for Solana NFT transactions to take place with optional royalties, while at the same time Magic Eden’s own marketplace continued to maintain full creator royalties.

Magic Eden’s Head of Marketing and Content, Tiffany Huang, stated on Thursday to Decrypt that the partnership with Coral Cube was intended to “protect the Magic Eden brand while serving traders,” and that the marketplace “has always been proud of being deeply creator-centric.”

On Friday night, however, Magic Eden announced via Twitter that it had changed its mind and would be joining the growing trend of Solana marketplaces in allowing users to opt out of paying royalties to artists and creators of NFT projects. This news came after Magic Eden had previously stated that it would not do so.

“We did not come to this conclusion quickly or easily. We are aware that this change will have significant repercussions for the ecosystem,” Magic Eden said in a tweet. “We also hope that this is not a decision that will last forever. On the blockchain, royalties cannot currently be enforced. We are pleased to see new standards proposed, and we have high hopes for their success.

In light of this desire, Magic Eden has announced a hackathon initiative with the goal of motivating Web3 builders to develop NFT technology and standards that are capable of rendering creator-set royalties fully enforceable on-chain. The Magic Eden hackathon will have a prize pool of up to one million dollars, and the co-founder of Solana, Anatoly Yakovenko, will be one of the judges for the competition.

When purchasing something from an NFT marketplace, it is customarily the seller who is responsible for paying the predetermined royalty fee to the project’s original developer. However, Magic Eden has taken a different approach, placing the responsibility for determining whether or not the buyer will be required to pay the royalty on each individual transaction with them. Because it is possible to avoid paying the royalty, the payment is viewed more as a gratuity to the original creator.

Hardware wallets are safe and secure devices that can be used offline. They keep your cryptocurrency offline, making it impossible for you to be hacked. To find out more on the leading hardware wallets, you may view our reviews here: Ledger & Trezor
Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, legal, tax or other advice. Investing in or trading cryptocurrency or stocks comes with a risk of financial loss.