The Shift to Optional NFT Royalties

Key Insights

• Over the past year, many new NFT marketplaces have launched with an opt-in royalty fee structure, disrupting NFT creator revenue streams in the process.
• Since January, the average number of weekly active unique (WAU) traders is down 48% on OpenSea and nearly 80% on LooksRare. Meanwhile, the relatively new player X2Y2 has seen steady growth since launch.
• As more competitors opt to decrease creator revenue to incentivize trading with lower fees, all eyes will remain on OpenSea to see if the protocol follows suit.

Over the past year, many new NFT marketplaces have launched with a zero-royalty fee structure. These marketplaces targeted incumbents that charged fees of up to 10% on behalf of collection creators. By eliminating part of the fees for traders, they would potentially boost trading activity across the platform. LooksRare became the latest NFT marketplace to eliminate enforced creator royalty fees last week, joining the ranks of new players entering the scene without enforced royalties. In this report, we will discuss what’s driving this shift in marketplace revenue structure and its implications.

NFT Market Conditions

NFT trading activity has been in a steady decline over the past 6 months. Despite poor market conditions, new players have entered the space attempting to find their niche. After launching earlier this year, X2Y2 has kept pace with, if not exceeded, OpenSea’s dominating trading volume.