The creators of Bored Apes suggest a new system for royalties paid to NFT authors.
The BAYC founders desire a creator royalties model for NFTs that guarantees free NFT transfers between wallets and incentivizes creators to stay within the NFT ecosystem.
The Bored Ape Yacht Club (BAYC) founder offered their opinion on the continuing nonfungible token (NFT) creator royalties discussion and suggested a potential course of action that, in their opinion, best addresses the problem.
Co-founders Greg Solano and Kerem Atalay of BAYC and Wylie Aronow of BAYC wrote in a blog post dated Nov. 8 that they see creator royalties as “the single most critical aspect that pulled them [creators and artists] into the ecosystem.”
The article was written in response to OpenSea’s Nov. 6 announcement that it would follow other NFT marketplaces on royalty enforcement. Aronow claimed that this move was “not great” and indicated that OpenSea’s intention was to “move with the rest of the herd and remove creator royalties for legacy collections from their platform.”
In response, the creators of BAYC put forth a model for NFT royalties that makes use of “allow lists” that are encoded in an NFT collections smart contract. This model permits NFT trading between conventional wallets, but only for “marketplaces that respect royalties.”
A simplified explanation of how this might operate stated that the first stage would be to determine whether the wallet making the transfer request is a conventional wallet or a smart contract.
Transfer requests would be permitted for regular wallets, but smart contract transfers are checked against “an oracle of contracts that are known to respect royalties,” with approval granted if a match is found.
The BAYC founders emphasize that free wallet-to-wallet transfers are necessary to ensure that asset ownership, one of the main advantages of NFTs, is recognized. Owners would be able to transfer assets between wallets without paying any fees under this model.
The BAYC creators agree that this approach still has drawbacks, noting allowlist upkeep and a higher barrier to entry for new markets, but they added that for the time being, this allowlist is still only a tiny one.
They consider allowlist maintenance to be the more difficult problem, particularly the composition of the governing body.