Huobi Ventures Weekly Insights
Insight provided by Juliet of Huobi Ventures
Should NFT royalties be charged? What will happen to NFT platforms which do not charge royalties?
At present, there are many talks about whether it’s reasonable for NFT marketplace to cancel NFT royalties. Some people think that royalty should be canceled because it will benefit NFT holders and traders, the others think that canceling royalty would disencourage creators.
Personally, the abolition of NFT royalties is the general trend, mainly for two reasons:
1. The market landscape has changed
In the past, the NFT marketplace was an oligopolistic trading market dominated by Opensea, and now other NFT trading markets have grown up and gradually increased their market shares such as LooksRare and X2Y2. The market has gradually transformed into a parallel situation of multiple trading markets. Among them, some markets propose royalty-free trading, and the rules of the market are changing.
2. The royalty-free trading market is more dominant in a buyer’s market
In the past, most traders were not aware of the royalty fees charged by the trading platform, but now traders have more options when trading, they can choose whether to pay for it on different platforms. When faced with the same transaction target, traders would naturally prefer a platform for trading at a lower transaction cost.
Therefore, in the future, there will be a trend of evolving into NFT royalty-free trading, and more and more trading institutions will cancel royalties. Of course, there is still room for the future royalty market. Making royalties as transparent operating funds to promote the long-term development of NFT can provide sustainable benefits for both traders and creators. If the copyright of the creator and charge IP royalties are retained, users can directly realize the IP value of NFT, which may also become a feasible transaction structure in the future.