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Solana Could Get Enforceable NFT Royalties Via New Metaplex Standard

source-logo  decrypt.co 21 October 2022 19:40, UTC

Creator royalties have largely fallen out of favor in the Solana NFT space lately, as top marketplace Magic Eden made paying them optional last week after royalties-shunning rivals snatched away market share. Now Metaplex, the creator of Solana’s NFT standard, says it is developing a new standard that can enforce royalty payments across the board.

Metaplex announced the news on Thursday night amid the ongoing debate around creator royalties, saying it is “building a new asset class that will enable creators to enforce royalties at the protocol level.”

While artists and creators can set royalty rates via project smart contracts—that is, the code that powers autonomous, decentralized apps—marketplaces can work around those stipulations and ultimately choose whether or not to honor them. In doing so, NFT traders avoid paying between 5% and 10% in fees on each sale. And while this has largely upset project creators that depend on those fees for revenue, NFT royalties are not currently enforceable with the current Solana standard.

We’ve heard you - the community is ready. Metaplex is building a new asset class that will enable creators to enforce royalties at the protocol level by extending the Token Metadata program, which powers 99%+ of all NFTs on Solana.

— Metaplex (@metaplex) October 20, 2022

The existing Metaplex standard is used by more than 99% of all Solana NFTs that have been minted to date, the firm said. Metaplex said that it can create enforceable royalties by expanding its token metadata program, which is how NFT creators append data and information that makes NFTs—or blockchain tokens representing ownership in an item—unique from each other.

Metaplex’s tweet thread suggests that it aims to support multiple NFT asset standards within its framework, offering creators options for future projects. Since the Metaplex technology is already widely supported by marketplaces and wallets, it may be well suited to roll out such changes that could impact the entire Solana creator community.

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“We believe multiple asset classes and behaviors will coexist in the future—token metadata provides the interoperability and stability the ecosystem needs to move forward without fragmentation,” Metaplex wrote, describing it as an “iterative process” ahead.

CEO Stephen Hess tweeted that Metaplex attempted to enforce royalties at the protocol level and introduce additional asset classes in July when it proposed the Digital Asset Standard framework, but that it couldn’t find “critical mass” among builders at the time. “That’s changed,” he wrote.

Metaplex also teased additional solutions for Web3 creator monetization that will be revealed at the Solana Breakpoint conference in Lisbon next month. Royalties have been a key part of many NFT projects’ revenue streams in the past, although the uncertainty around platforms honoring them has pushed creators and builders in the space to consider alternative methods.

Yawww was the first Solana marketplace to ditch creator royalties earlier this summer in an apparent effort to draw traders away from the dominant Magic Eden, and the trend caught on across other platforms, as well. The recent launch of Hadeswap—a zero-royalty NFT trading platform built on liquidity pools—helped accelerate Magic Eden’s market share decline.

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Magic Eden claimed last week that it would maintain creator royalties on its platform, instead partnering with NFT aggregator and marketplace Coral Cube to enable royalties-optional trading through its platform. But last Friday, bowing to pressure from rivals, Magic Eden changed course and said it would also make paying creator royalties optional.

Separately from Metaplex, noted pseudonymous NFT creator Frank—the founder of popular Solana projects DeGods and y00tsshared his own proposal for addressing creator royalties across the ecosystem.

My thought process on what a solution to the 0% royalty movement could look like for Solana NFTs.https://t.co/MbEW52G5xY

— Frank (@frankdegods) October 21, 2022

Frank’s pitch similarly focuses on a new ecosystem-wide standard. He envisions a standard that enforces royalties on trades, includes a blacklist for marketplaces and platforms that try to evade them, and lets community members vote on a fixed royalty rate across all projects. He also believes that existing projects should be able to migrate to the new standard.

“We can either accept royalties going to zero as ‘the tragedy of the commons,’ or we can rally together as a community to solve the problem,” Frank wrote. “This entire ecosystem is driven by social consensus. If we all decide we want royalties, there is a way to make this happen. If we don’t, that’s fine too. The key is that we all control our destiny as an ecosystem.”