Leading Solana-based NFT marketplace Magic Eden is no longer forcing a creator royalty fee for NFT purchases on its platform after rival marketplaces cut into its market share.
Magic Eden, the largest marketplace for NFTs on the Solana blockchain, announced on Friday that it will switch to having creator-set royalties be optional on NFTs sold on the platform.
🧵After some difficult reflection and discussions with many creators, we’ve decided to move to optional royalties on @MagicEden.
Effective later today, we will also begin running a promotion to waive our platform fees.
— Magic Eden 🪄 (@MagicEden) October 15, 2022
As a result of pressure from competing royalty-free-marketplaces that had taken up Magic Eden’s market share, the decision was made after a series of “difficult [reflections] and discussions with many creators.”
In a move to win back traders, Magic Eden will soon begin running a promotion to waive platform fees.
Magic Eden once was the dominating NFT marketplace on Solana, typically owning 90% of the market share over the past year. During its Series B funding, Magic Eden had raised $150 million. In June, Magic Eden had a valuation of $1.6 billion, just nine months after launching the platform.
However, Magic Eden soon faced pressure from upstart marketplace platforms that offer buyers the option to waive paying for creator royalties, such as Hadeswap and Solanart, proving them to be formidable competitors for market shares.
Just last week, Magic Eden had announced a strategic partnership with Coral Cube, another marketplace and aggregator which offers optional creator royalties. The partnership was designed to enable Solana NFT transactions with optional royalties on Coral Cube, while still keeping full creator royalties in place on Magic Eden’s own marketplace.
Magic Eden’s Head of Marketing and Content Tiffany Huang said that the partnership is made with the intent to “protect the Magic Eden brand while serving traders,” and that the marketplace “has always been proud of being deeply creator-centric.”
However, Magic Eden backtracked on Friday night, saying that it would be following up with the rising trend of Solana NFT marketplaces making paying royalties to artists and creators of NFTs optional. “This is not a decision we take lightly. We understand this move has serious implications for the ecosystem,” tweeted Magic Eden.
4/ The market has been shifting towards optional creator royalties for awhile. These charts shows the cumulative wallets that have used optional royalty marketplaces to buy or sell NFTs. pic.twitter.com/wxiU800l2P
— Magic Eden 🪄 (@MagicEden) October 15, 2022
“We have actively been trying to avoid this outcome and spent the last few weeks exploring different alternatives. Unfortunately, royalties are not enforceable on a protocol level, so we have had to adapt to shifting market dynamics,” writes Magic Eden.
The marketplace adds that it “also [hopes] it is not a permanent decision. Today, royalties are not enforceable on-chain,” adding that it is hopeful to see new standards that protect royalties. Magic Eden had also launched a campaign for a Creator Monetization Hackathon with up to $1 million in prize money, for developing “pro-royalty & alternative creator monetization tools.”
The creation and trading of NFTs have risen in popularity as a source of passive income for creators and artists – as they can receive royalties for each sale – primary or secondary – of their creation to any user. In a secondary sale, the seller of the NFT typically pays a royalty to the NFT project creator once a transaction has been made.
However, Magic Eden’s decision, in addition to other rising royalty-rejecting marketplaces, treats NFT creator royalties as a tip.
In the case of how this will work with Magic Eden, NFT buyers are given the decision whether the NFT seller is to pay royalties for the transaction – where the buyer is to have full understanding of the benefits received that creators provide for a respective NFT.
