The NFT marketplace will only require a 0.5% royalty fee for projects that do not have on-chain enforcement, but sellers will be able to pay more.
Quick Take:
- To compete with Blur, OpenSea is reducing creator royalty protections. Now, OpenSea is implementing a 0.5% mandatory creator royalty fee for NFT trades without on-chain enforcement.
- Blur doesn’t charge sellers as OpenSea does. Thus, Blur is gaining users while OpenSea is losing them.
- Blur forbids secondary OpenSea trades. Due to Blur and other platforms’ actions, OpenSea claims it protected creators.
OpenSea’s Creator Royalty Changes and Blur Rivalry: A Closer Look
To cope with increasing competition from emerging rival platform Blur, OpenSea has announced that it will remove its 2.5% sales fee for a limited period. Also, the NFT marketplace will reduce creator royalty protections. This move will result in OpenSea losing its primary source of revenue. However, it hopes to adapt to the rapidly evolving market by implementing a 0.5% mandatory creator royalty fee only for NFT trades lacking an on-chain enforcement mechanism.
Notably, sellers can opt to pay more, and creator royalty fees are generally 5% to 10% of the sale price. These fees enable NFT projects to generate continuous revenue after the initial token sale.
A Brief History of the Narrative
OpenSea’s action follows a successful week for Blur, an upstart marketplace that debuted in October. Blur distributed its BLUR token to over 100,000 NFT traders through an airdrop on Tuesday. The following day, Blur recommended that creators of NFT projects prevent their tokens from being traded on OpenSea. Unlike OpenSea, Blur does not impose any sales fee on sellers using its marketplace.
Blockchain data indicates that Blur’s user count has been increasing rapidly, while OpenSea’s has been decreasing. Additionally, OpenSea’s enforcement tool blocks marketplaces that don’t fully enforce creator royalty settings, which includes Blur. However, in January, Blur apparently found a way to circumvent the blocklist, which has helped it attract more users and pull them away from OpenSea in recent weeks.
OpenSea announced that its operator filter tool will no longer block marketplaces that follow its new approach.
Blur informed NFT creators on Wednesday that secondary trades on OpenSea would be prohibited. Furthermore, it stated that it would only enforce full royalty settings on projects that had banned OpenSea. Blur presented this as a reaction to OpenSea’s previous decisions late last year, whereas OpenSea claims that it aimed to protect creators as a result of Blur and other competing platforms’ actions.
Finally, OpenSea cited on-chain data indicating that roughly 80% of NFT trading volume today occurs without some form of creator royalty. The market noted that it is attempting to chart a course forward that benefits both NFT creators and traders.
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