Late last week, Magic Eden, the largest marketplace for Solana NFTs, caved to criticism from its fast-losing customers and stated that it would no longer strictly enforce creator-set royalties on NFTs sold via its platform.
After much internal debate and extensive conversations with artists, the platform has chosen to switch to optional royalties, as announced through Twitter. In an apparent effort to woo back traders, Magic Eden also announced that, for a promotional time, it would not charge any fees for using its platform.
Over the previous 12 months, Magic Eden has been the most influential NFT marketplace on Solana, with 90%+ market share on average. In June, just nine months after launching the platform, the startup rode that momentum to a $1.6 billion value when it secured $130 million in Series B investment.
In recent weeks, new marketplaces like Hadeswap and Solanart—which do not compel sellers to pay creator royalties on secondary sales—have begun to eat into Magic Eden’s market share, leading the platform to take action.
Magic Eden said last week that it had formed a partnership with the marketplace and aggregator Coral Cube to allow Solana NFT transactions with optional royalties while maintaining full creator royalties on Magic Eden’s marketplace.
Magic Eden’s Head of Marketing and Content, Tiffany Huang, explained the marketplace’s pride in being truly creator-centric and that the relationship with Coral Cube was formed to protect the Magic Eden brand while helping traders.
Magic Eden Will Not Pay Royalties to NFT Producers
On Friday night, however, Magic Eden announced via Twitter that it would join the growing number of Solana markets that provide customers the option of not paying royalties to NFT producers.
“This is not a decision we take lightly. We understand this move has serious implications for the ecosystem,” Magic Eden tweeted. “We also hope it is not a permanent decision. Today, royalties are not enforceable on-chain. We welcome and hope to see new standards that protect royalties.”
To facilitate this expressed goal, Magic Eden has launched a hackathon project to motivate Web3 developers to create NFT technology and standards that can make creator-set royalties ultimately enforceable on-chain. Solana co-founder Anatoly Yakovenko will be one of the judges at the hackathon Magic Eden, offering up to $1 million in prize money.
When buying anything on an NFT marketplace, the buyer will often pay the seller the agreed-upon royalty charge. But Magic Eden takes a different tack, leaving the decision of whether or not to pay the royalty up to the buyer in each transaction. Allowing people to opt-out of paying the royalties raises the value of the payment to that of a tip to the artist.
