There is rising tension between NFT creators and their traders following an ugly decline in the NFT market. Reports say that the recent market crash has compelled top NFT exchange companies, OpenSea and Blur, to put down their royalty rates, which are paid to the artist when the ownership of their token changes.
Their action is believed to lower the price will trigger the already down levels (which has affected the buying and selling power) to rise again. The declining artist’s income may halt the progress of the new works, easing market trading activities.
It is also believed that it has the propensity to restore the already crashed market, which, according to data from Token Terminal, the value has crashed at 95%, representing $17 billion, as of January 2022. Also, according to the data, the royalties surged sometime in July at $4.3 million, and $269 million in the later month, at the rate of 0.6% per every transaction greater than 5%.
While commenting on the development, Phillip Kassab, NFT and gaming lead at blockchain technology specialist Sei Labs said that disregarding the fact that sustainable progress in the NFT industry is established on a sensitive balance that is poised on empowering creators and traders alike.
Data obtained from Nansen, which showed the comprehensive analysis of the cumulative royalties from 2021 – 2022, shows that the cumulative royalties each month reached $1.5 billion on the eve of a patch that started from August 2021 – May 2022. Nansen data has been linked to the increased popularity of collections like the Bored Ape Yacht Club by Yuga Labs Inc.
Data Shows The Role Of Ethereum Blockchain, More Experts Comment
Further research into the past activities of Blur revealed that there was a shake-up in the NFT market after the launch of Blur in October. According to the data analysis obtained from the Dune Analytics platform, the Ethereum blockchain was said to have accommodated the platform, as it went ahead to incentivize NFT trading as a way of chopping royalty rates and which now controls over 70% of Ethereum’s daily trading volume.
Expert has blamed Blur for mounting pressure on the NFT market and has predicted that OpenSea may follow next. The Research Analyst At Messari, Ally Zach, while speaking on the development, said that the NFTs were gradually “financialized” after the official launch of Blur. Zach also inquired about what the future holds for the NFT market.
Zach also added that many skeptics consider the previously launched digital collectibles a fad. Michael Winkelmann, aka Beeple, an NFT artist better known for his Everyday NFT fame, which made him over $69 million in 2021, had joined the conversation, arguing that the dwindling NFT sector will bounce back in a while. According to Beeple, the royalty rates should be coded into the software that controls the NFTs.
He defended his suggestion, insisting it is better than leaving the system to become mere variables that exchanges can adjust at will. He later referred to Art Blocks and SuperRare marketplaces, which often enforce payouts.
Another expert, an NFT industry stakeholder, and the chief gaming officer at NFT marketplace Magic Eden supported Winkelmann’s idea of encoding the system. Chris reportedly said that the NFT industry rules should always revolve around codes, as seen in all web3 activities.
