OpenSea Surrenders? Ceases Controversial Creator Royalty Fees, Yuga Labs: Will Gradually Withdraw

The NFT marketplace OpenSea recently adjusted its collection of royalties from creators, changing from mandatory to optional. This move is seen as a betrayal of NFT creators' rights and catering to the market. Yuga Labs, the parent company of BAYC, has announced that they will stop supporting the platform. Mark Cuban and several NFT project founders have also rallied against this decision, leading to ongoing controversy.

OpenSea to End Mandatory Creator Royalties

OpenSea announced on Thursday that it will deactivate the "Operator Filter" tool by the end of August, ending the mandatory enforcement of creator royalties and shifting to optional payments. The reason cited for this change is the lack of participation across the entire NFT ecosystem, rendering the tool ineffective.

The tool was introduced in November last year to ensure that creators could collect royalties of 2.5% to 10% from each transaction. However, the new selective payment model did not yield the intended benefits for creators.

OpenSea CEO, Devin Finzer, who had staunchly defended creators' rights to royalties in the past, now seems to have to yield to market pressures.

Yuga Labs Leading the Opposition

In response to this change, Yuga Labs, with a collection worth $9 billion, announced that they will begin withdrawing support for all updates and new series on OpenSea and will exit the platform by February next year.

Other NFT creators joining the condemnation include Betty, founder of Deadfellaz, BitCloutCat, founder of LaserCat, and Luca Netz, founder of Pudgy Penguins, all expressing disappointment with the platform.

Renowned NFT artist Beeple also released an image in response, hinting at a showdown between OpenSea's largest blue-chip projects and the platform.

Mark Cuban Criticizes: A Huge Mistake

Mark Cuban, a billionaire who has been actively investing in the crypto industry in recent years, stands in alignment with Yuga Labs and strongly criticized the policy:

"Not collecting and paying royalties on NFT sales is a huge mistake. It undermines people's trust in the platform and harms the entire industry,"

As an investor in OpenSea, Mark Cuban's statement holds weight.

To Collect Royalties or Not?

In October 2022, OpenSea's most threatening competitor, Blur, which focuses on a feeless and optional creator royalty payment model, took over the NFT market. With the $Blur token airdrop in February, Blur quickly caught up to OpenSea's market share, reaching an impressive 70.3% within six months.

The NFT community has become divided on whether to mandate the collection of creator royalties from buyers, sparking numerous debates and disagreements.

Responding to Mark Cuban's criticism, user scriblooooor believes that the current NFT royalty system has many flaws that are unreasonable and may actually harm creators' interests, including:

• Royalties limit liquidity: Since NFT royalties are perpetual and NFT values and demand change over time, royalties may restrict the flexibility of reselling or using the NFT.

• Loss-making sales still incur royalties: Most NFTs are sold below their original price, yet traders still have to pay royalties. This could burden those who sell at a loss due to market volatility or personal reasons.

Balancing the interests and needs of creators and users has always been a crucial issue for platforms, and OpenSea's move is seen as a surrender to its competitors by some.