In a decisive response to OpenSea’s announcement to phase out its on-chain royalty enforcement tool, Operator Filter, Yuga Labs, the creators of the renowned Bored Ape Yacht Club (BAYC), declared their intention to reduce support for OpenSea.
Launched in November 2022, the Operator Filter allowed creators to limit secondary sales of NFTs exclusively to marketplaces that upheld creator royalties. This mechanism effectively excluded platforms like Blur, which had optional royalties. OpenSea’s decision to sunset the tool by the end of August was attributed to a lack of comprehensive adoption within the ecosystem, the capability of platforms to circumvent the tool, and resistance from creators.
Yuga Labs’ CEO Daniel Alegre emphasized the company’s belief in protecting creator royalties, stating that creators should be “properly compensated for their work.” The move by Yuga Labs is seen as a direct reaction to OpenSea’s policy change, reflecting a broader debate within the NFT community about the enforcement of creator royalties.
The community reacts
Although the intention behind OpenSea’s recent update was to enhance the NFT ecosystem, it seems to be adversely affecting creators and digital artists. Also, the announcement by Yuga Labs was met with widespread approval from the BAYC community and other content creators. Notable figures such as EllioTrades, Alex Becker, and Luca Netz, the Pudgy Penguins NFT project CEO, expressed support for the decision. Even investor Marc Cuban criticized OpenSea’s move, calling it a “huge mistake” not to pay royalties on NFT sales.
However, the issue of creator royalties has become a divisive topic in the NFT community. In the early stages of the NFT boom around 2021, enforcing creator royalties was the general practice. But the emergence of marketplaces like Blur, which secured significant market share by offering zero trading fees and an optional creator royalty payment model, has led to a split in opinion.
OpenSea’s decision to end royalty enforcements comes after Blur started taking a major share in the market. The move has opened the door for discussions and criticism, with some advocating for different methods of creator compensation while others staunchly support the need to pay royalties.
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