OpenSea deactivates its royalty tool, aiming for transparency and creator empowerment amidst NFT market shifts.
Devin Finzer, the founder of the OpenSea NFT marketplace, has announced that it will be deactivating its royalty enforcement tool.
Starting Aug. 31, OpenSea will no longer maintain the Operator Filter tool. This change will remove any limitations on marketplaces going forward.
To improve transparency, OpenSea is streamlining the process for individuals to determine whether a sale includes the creator’s fee. However, creators who have already implemented the Operator Filter or are utilizing specific digital collections will continue to have their desired fees apply to sales until Feb. 29, 2024.
As stated by Finzer in an announcement on Aug. 17, the upcoming changes to the platform aim to empower creators and enhance autonomy within the decentralized web3 ecosystem.
The company expects the adjustments to give creators greater control over fee applications on OpenSea.
Finzer also explained that OpenSea will be introducing enhanced flexibility for sellers. From Aug. 31 onwards, sellers will find it easier to select the creator’s fee or choose their preferred method of fee payment.
This adjustment aims to create a more seamless experience for sellers on the platform.
Finzer also stated that OpenSea is not eliminating creator fees. Instead, the platform reevaluates its fee structure to ensure a practical approach. This decision is a response to the need for improved outcomes, as the previous method was not yielding favorable results.
The Operator Filter tool, first introduced in November 2022, was designed to empower creators and limit the sale of their collections to web3 marketplaces that enforced creator fees in secondary transactions. However, the anticipated widespread adoption and support across the web3 ecosystem did not materialize as expected.
Finzer also addressed why the previous system, particularly the Operator Filter, did not succeed as intended. The effectiveness of the Operator Filter relied on the collective support and participation of all marketplaces involved, but not all marketplaces agreed to abide by its requirements.
Some marketplaces even found loopholes to circumvent the filter, which posed challenges for creators and buyers. He also stated how the web3 ecosystem offers numerous avenues for creators to generate revenue beyond just reselling their digital assets.
Declining trading volumes
The NFT market experienced a rapid surge in popularity and trading volumes during 2021, with billions of dollars involved. However, the market dynamics shifted in 2022 due to several factors.
One significant factor was the downfall of Do Kwon’s Terra ecosystem and its algorithmic stablecoin project. The now-defunct stablecoin, TerraUSD, aimed to keep its value tied to the US dollar.
In May 2022, TerraUSD lost its peg to the US dollar, resulting in a panic-driven sell-off. This sudden loss of value wiped out billions of dollars from the global crypto markets, including the digital collectibles space.
In June 2022, OpenSea, the largest NFT marketplace at the time, suffered a significant security breach that resulted in the theft of over $300 million worth of digital collectibles.
The stolen NFTs included a variety of valuable digital assets, including CryptoPunks, Bored Ape Yacht Club NFTs, and other famous collections. As expected, the heist shook investor confidence in the NFT market, leading to a severe decline in trading volumes.
At the time of writing, Blur is the world’s largest NFT marketplace by total value locked ($78.46 million), according to Defi Llama.
