Yuga Labs, the parent company behind NFT brands Bored Ape Yacht Club and CryptoPunks, has decided to block new or upgradable NFT collections from being traded on OpenSea’s marketplace, SeaPort, by February 2024. This move comes as a response to OpenSea’s recent decision to no longer enforce mandatory creator royalty fees, a decision that has sparked significant controversy within the NFT community.
Yuga Labs communicated its commitment to fostering an ecosystem where creators are properly rewarded for their work via a statement on “X” (formerly known as Twitter). The company’s CEO, Daniel Alegre, emphasized the importance of protecting creator royalties in the NFT space.
Emily Kitts, a spokesperson for Yuga Labs, confirmed that the company will work toward disallowing the trading of its collections on OpenSea as the platform phases out royalties. However, specific details about which NFT collections would be affected were not disclosed.
The Significance of Creator Royalties and OpenSea’s Decision
One of the fundamental selling points of NFTs and digital art was the promise of artists receiving royalties each time their artworks were resold on secondary markets. Companies like Yuga Labs, known for their Bored Ape collection, have seen substantial revenue from these royalties. For instance, Yuga Labs generated around $35 million from royalties on the Bored Ape collection alone through OpenSea as of November 2022.
OpenSea’s recent announcement clarified that it wasn’t eliminating creator royalty fees but rather ending the unilateral enforcement of them. This move has sparked backlash from artists and the digital art community, who feel that OpenSea is not respecting creators’ contributions.
The Challenge for OpenSea’s Sustainability and Reputation
The importance of intellectual property (IP) like Yuga Labs’ Bored Ape Yacht Club and CryptoPunks cannot be overstated in fueling the success of NFT marketplaces like OpenSea. While OpenSea retains control over royalty enforcement, relying solely on IP franchises for success is not a sustainable strategy.
Ninjalerts data reveals that Yuga Labs’ 30-day volume is approximately 80% of OpenSea’s, with $52.8 million and $66.7 million respectively.
OpenSea’s upcoming implementation of an “optional” royalties mechanism for new NFT collections starting from August 31 aims to give collectors the choice of supporting artists through royalty payments. However, this decision has ignited debates about the responsibility of NFT marketplaces in ensuring fair compensation for creators.
Amidst a market decline and growing skepticism about Web3 and NFTs, the spotlight is on how NFT platforms and marketplaces navigate these controversies and contribute to fostering a sustainable and trustworthy ecosystem for artists and collectors alike.
