Multi-chain NFT marketplace Magic Eden announced on Saturday that it will launch a new Ethereum platform in collaboration with Bored Ape Yacht Club creator Yuga Labs, with a strong commitment to honoring creator royalties on NFT sales.
The companies stated that Magic Eden will have a contractual obligation to pay Yuga Labs its share of secondary market sales of its future NFT collections.
Magic Eden’s revamped Ethereum marketplace will utilize new smart contracts with technical innovations to ensure that royalties are paid out during secondary market sales. Technical details will be revealed before the marketplace launch, but Magic Eden confirmed that the standard ERC-721 Ethereum non-fungible token (NFT) standard will be in use, and NFTs minted with certain properties of the marketplace contract will have royalties enforced. Users will not be required to undergo know-your-customer (KYC) checks.
Royalties Disputes
A creator royalty is a small fee set by the artist or company behind an NFT project, taken from the sale price of any follow-up sale of the NFT. These fees, typically between 2.5% and 10%, were initially widely honored by marketplaces as a way for creators to benefit long-term. However, in the second half of 2022, some marketplaces began allowing traders to skip creator fees or pay smaller amounts, which was followed by major players to keep up. OpenSea, a prominent marketplace, eventually stopped enforcing royalties in August 2023, despite previously committing to honor them. Yuga Labs criticized OpenSea’s decision and vowed to stop supporting the marketplace’s contracts with new collections.
Magic Eden and Yuga Labs made it clear that respecting creator royalties is non-negotiable in their partnership and aimed to uphold these principles. They also encourage other marketplaces to use the same contractual framework to enforce royalties and hope to see these standards adopted by other NFT creators as well. Magic Eden is part of the Open Metaverse Alliance of Web3, working to improve royalties standards.
Shifting Strategies
Magic Eden, known for its original iteration on Solana, switched to optional royalties last year after pressure from rising rivals. The platform also launched an Ethereum NFT marketplace but took it offline before the planned revival. Magic Eden always wanted to support creators but sought a technical solution. As such solutions emerged on Solana over the past year, Magic Eden aims to establish similar standards on Ethereum. The partnership with Yuga Labs allows them to take a strong position in supporting creator royalties and aims to be on the right side of history in the NFT space.
Magic Eden and Yuga Labs are confident that their approach of enforcing royalties will work, and they are open to addressing any shortcomings once the technology is put into practice. While they do not plan to penalize NFT buyers who purchase Yuga assets from marketplaces that don’t enforce royalties, they may incentivize engagement with platforms that uphold these principles by offering exclusive benefits. The companies hope that their collaboration will lead to stronger creator royalties enforcement and fair treatment of creators in the NFT ecosystem.
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Editor Notes: A Game-Changing Development for the NFT Space
The collaboration between Bored Ape Creator Yuga Labs and Magic Eden to launch an Ethereum NFT marketplace with royalty enforcement is a game-changer in the NFT space. With the growing concerns surrounding the lack of creator royalties enforcement, this partnership sets a new standard for fair treatment of creators and offers a solution to the ongoing disputes.
By committing to honor creator royalties on NFT sales, Magic Eden and Yuga Labs are taking a stand that respects and values the hard work of artists and content creators. Through their technical innovations and contractual obligations, they ensure that creators receive their fair share of secondary market sales.
This initiative not only benefits the creators but also contributes to the overall integrity and sustainability of the NFT market. By enforcing royalties, it encourages a healthy ecosystem where creators can continue to thrive and be rewarded for their contributions.
The launch of the revamped Ethereum marketplace by Magic Eden and Yuga Labs will undoubtedly shape the future of the NFT landscape. With increased transparency and accountability, this marketplace will be a trusted platform for both creators and collectors.
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