Launch of an on-chain tool by OpenSea to enforce NFT royalties.

OpenSea, a non-fungible (NFT) marketplace, appears to have weighed in on the issue of NFT royalties by introducing a new “on-chain” tool to assist producers in enforcing royalties.

While other players in the market have been implementing their own tactics over the past few months, the NFT marketplace, which according to CoinGecko controls 66% of the market share in NFT marketplaces, has remained largely silent on the subject of royalties and enforcement.

OpenSea CEO Devin Finzer wrote in a blog post on November 6 that they’ve “seen the voluntary creator fee payment percentage decrease to less than 20%” in marketplaces where payments are optional, while in other marketplaces creator fees are “just not paid at all.”

The CEO of OpenSea announced the debut of a new tool in the marketplace that will enable authors to deliver “on-chain enforcement” of their royalties.

The solution, which Finzer called a “simple code snippet,” enables developers to impose royalties on present upgradeable smart contracts as well as new and upcoming NFT collection smart contracts. Additionally, the code will limit the sale of NFT to only those marketplaces that impose creator fees.

The option to enforce fees on-chain is clearly desired by many artists, and essentially, Finzer said, “we feel that the choice should be theirs to make — it shouldn’t be a decision made for them by marketplaces.”

Finzer added that while OpenSea will use an on-chain enforcement tool to impose royalties for new collections, it won’t do so for new collections that don’t opt-in.

OpenSea is “not forcing people to utilize our specific solution,” according to Finzer in an accompanying Twitter Spaces. Instead, creators are free to use “whatever solution you choose and execute it anyway,” he added.

The criterion is that if you want creator fees, you must impose them on the chain. “We provide a sample GitHub repo that enables you to deploy a solution that basically blocks lists marketplace that doesn’t support creator fees,” the statement reads.

Due to technical difficulties, the tool won’t be made available for the time being for NFT collections that already exist.

For existing collections with non-upgradable smart contracts, Finzer noted, “to the best of our knowledge, the only method to achieve on-chain creator fee enforcement is to take severe measures with their communities, such as transferring the canonical collection to a new smart contract.”

“In our view, the far superior course of action is for existing creators to seek new forms of monetization and alternate means of compelling buyers and sellers to pay creator fees, and to ensure that future collectors enforce creator fees on-chain,” he continued.

Finzer suggests possibilities including enabling optional creator fees, continuing to enforce off-chain payments for select subsets of collections, and working together on further on-chain enforcement options for creators.

There has been a range of responses from the Twitter community and NFT founders. Although I don’t fundamentally agree with the abolition of royalties, Wab.eth, the creator of the Sappy Seals NFT collection and co-founder of The Pixlverse and Pixl Labs, informed their almost 60,000 followers that they “really respect this execution.”