Optional Royalties & $1M Dollar Research & Development Fund

Magic Eden Going Optional Royalties and Investing $1M In Research & Development Fund To Innovate Future of Creator Monetization

After extensive reflection and trial and error, we are officially making the move to enable optional creator royalties across our marketplace. This is a decision that we make with a heavy heart, knowing that it will make a significant impact to our creator base. To support our creators during this transition, we are launching a $1M Creator Monetization Research & Development Fund. 

Starting immediately, we will be waiving our marketplace fee discount during a special promotional period for collectors. In the near future, we are going to continue working with the ecosystem to offer different creator monetization strategies and review our marketplace fee structure. For the foreseeable future, Magic Eden will not be making any % of any sales. 

We have always prided ourselves on listening to our community and making platform changes that would benefit the unique and sometimes competing needs of our creators and collectors. In this scenario, the collectors’ need for low-fee NFT trades stands in contrast to the creator’s need to receive royalty payments. 


Announcing our Creator Monetization R&D Fund

Because we believe that royalties keep projects motivated to keep building, we are also announcing a $1M Creator Monetization Research & Development Fund to work with both creators and ecosystem partners who want to develop solutions for both royalty enforcement and alternative business models. The judges of our first Hackathon will include (among others) @aeyakovenko @HeliusLabs @flawmz  @baalazamon @immature69 and @statikdev to develop better pro-royalty and alternative creator monetization tools. 

We will work with the community to provide grants for these solutions and give them exposure. Should you be working on any solutions including protocol level royalty enforcement, collector incentives for enforcing royalties, disincentives for bypassing royalties, or alternative monetization models, we want to talk to you.

Adapting to market behaviors

There is no easy way to reconcile this tension—which has resulted in complications surrounding  creator royalties. The market has been shifting towards optional creator royalties for a while. These charts show the cumulative wallets that have used these marketplaces to buy or sell NFTs. We have actively been trying to avoid this outcome and spent the last few weeks exploring different alternatives. Unfortunately we have also had to adapt to shifting market dynamics.
We have spoken with many creators to get their thoughts because we understand this move has serious implications for the ecosystem as a whole and creates a very real threat to their livelihoods. However, over the last few weeks, traders have shown us that our static royalty model does not work for them. This is a reflection of the current state of the NFT ecosystem, and a problem that lies at the protocol level. 

As long as royalties are not enforceable across the board, traders will naturally choose more economical options. We looked at the amount of royalties the top 50 projects have received as a percentage of their total secondary trading volume. This figure was ~9% back in May and has been decreasing ever since. These days it’s around 3.5 - 4%.


How will optional royalties work on Magic Eden?

We’ve consulted with traders and creators, and have come up with the following trading experience:

  • The decision on how much royalties to pay will be passed to the buyer
  • By default, all collections/listings will honor full royalties

Our rationale for shifting royalties payments to the buyer is to make sure the buyer has full understanding of whether they are going to receive the benefits that creators provide (discord, staking etc).

As the buyer, you can choose to set your royalties in multiple different ways. You can change the settings on your user profile under your wallet. The setting will be saved and applied to NFT purchases, including Quick Buy + Pro Trade. We'll implement this for bids next week.

You can also choose how you want to honor the royalties of each NFT in the royalty section of the “Item Details” page

Finally, you can also change the collection-wide royalty option on the top of each collection’s listings page. Just hover over the disclaimer, and make your decision. Remember, by default you are honoring full royalties. 

As the seller, whichever price point you list the NFT at will be the amount of proceeds going into your wallet - as indicated through “You’ll Receive”


Please reach out to us if you’re working on solutions

We hope that this decision is not permanent. If you are working on pro-royalty tools or alternative business models, we want to hear from you. Please reach out via Twitter DMs or on help.magiceden.io.

The information provided on this website is provided for general educational purposes only and is in no way financial or investment advice. Certain information may have also been provided to us or prepared by third parties; these materials are provided for convenience and are not an endorsement by Magic Eden. Magic Eden is not liable for any errors, changes or amendments to such information, including any actions taken in reliance on such information.