Yuga Labs and CryptoPunks are the two latest NFT brands to stand up and speak out against OpenSea’s extremely controversial decision last week to (once again) do away with enforcing “mandatory” creator royalty fees – by blocking all support for any new NFT collections on OpenSea’s SeaPort by February 2024.
Yuga Labs, the parent company of both BAYC and CryptoPunks announced via “X” (formerly Twitter) that it was committed to helping “foster an ecosystem where…creators are rewarded for their work.”
“For as much as NFTs have been about users truly owning their digital assets, they’ve also been about empowering creators. Yuga believes in protecting creator royalties so creators are properly compensated for their work,” said Yuga’s CEO Daniel Alegre in his tweet.
Emily Kitts, a Yuga Labs spokesperson, told The Verge that the company will be working toward “disallowing OpenSea’s marketplace to trade [its] collections as they phase out royalties,” but didn’t expand upon which NFT collections would be affected.
The Irony of NFTs and Digital Art
The biggest selling point of digital art, especially digital collectibles (NFTs) was that these artists were put front-and-center on these canvases and rewarded each time their artwork was resold on a secondary market.
For companies like Yuga, who first made a name for itself after debuting its industry-leading Bored Ape collection, the royalty fees added up to around $35 million for those collectibles alone – all through OpenSea as of November 2022.
Turning to last week’s shocking announcement from OpenSea, the NFT marketplace clarified that creator royalty fees wouldn’t be going away, and instead, it’s simply doing away with “the ineffective unilateral enforcement of them.
By nature, this sent a nasty shockwave throughout the digital art community and to artists who have all vocalized their disbelief and anger as they have begun taking a stand against OpenSea’s lack of respect and appreciation for the creators it has continued to profit off of over the years.
The irony here, of course, is that the promises by companies integrating Web3 infrastructures who wanted to enhance productivity and accessibility, as well as create new revenue streams for creators with digital art, didn’t really mean much given that the revenue streams were essentially in the hands of NFT marketplaces like OpenSea.
And this doesn’t help the overall sentiment towards Web3 and NFTs, especially in the current market decline where the average person understandably has no reason to trust in these infrastructures or promises by big tech and Web3-native brands in wanting to enrich the lives of the masses.
With Major IP Gone, What’s Next for OpenSea?
While NFT marketplaces like OpenSea may have the royalties card within their control, it’s certainly not sustainable, especially since intellectual property (IP) like Yuga’s BAYC and CryptoPunks heavily contribute to and fuel their success. In other words, without these IP franchises, what would these marketplaces do?
According to data collected from Ninjalerts, Yuga’s 30-day volume is approximately 80% the size of OpenSeas, resting at $52.8 million and $66.7 million, respectively.
Blur, which recently surpassed OpenSea as the leading NFT marketplace by trading volume, enforces a 0.5 percent fee, which, unfortunately, is below the average 5 to 10 percent royalty fees that are paid out to that NFT artist.
Beginning August 31, OpenSea will implement its “optional” royalties mechanism for all new NFT collections, giving collectors the option on whether or not they want to show their appreciation for the artist whose work they are paying to purchase.