Magic Eden, a Solana-based nonfungible token (NFT) marketplace, has become the latest platform to release a tool allowing creators to enforce royalties on their collections.
It follows the announcement of a similar tool from rival NFT marketplace OpenSea in early November.
According to a Dec. 1 statement, the open-source royalty enforcement tool is built on top of Solana's SPL token standard and is called the Open Creator Protocol (OCP). This will allow royalty enforcement for new collections that opt-in to the standard starting Dec. 2.
Lu previously floated the idea of NFTs designed to enforce royalties at Solana’s Breakpoint 2022 conference on Nov. 5, citing the need for NFT creators to have a “sustained revenue model.”
Creators who use OCP will also be able to ban marketplaces that have not enforced royalties on their collections. Magic Eden will still maintain optional royalties on its platform for collections that do not adopt OCP.
2/ Solana’s community has been waiting for a resolution on royalties.
When we went to optional royalties mid Oct, we said we hoped to soon return to a royalty respecting world. However, royalties needed protection at the protocol level to be truly defensible.
— Magic Eden (@MagicEden) December 1, 2022
In a Dec. 1 Twitter thread, Magic Eden said it “can't retroactively apply OCP to existing collections,” telling creators they will have to conduct “burn [and] re-mints” where the NFTs are sent to an unrecoverable wallet address and re-issued by the collection.
"We have been in active conversations with multiple ecosystem partners to identify solutions for creators in a timely manner,” Lu said in the statement. He added the marketplace's intention with OCP was to “immediately support royalties” for new collections while it coordinates with other partners for more solutions.
An additional feature of the protocol touted by Magic Eden is the ability for creators to introduce dynamic royalties — that could reduce the value of royalties of buyers who pay higher prices — and customizable token transferability which could see, for example, NFTs limited to a number of trades or be subject to a trade freeze for a set period of time.
Magic Eden moved to an optional royalties model in October allowing buyers the option to set the royalties they wish to contribute to projects, which split opinions in Twitter’s NFT community.
The OCP tool follows a similar on-chain tool launched in early November by OpenSea that restricted NFT sales to only marketplaces enforcing royalties.
Magic Eden created a similar royalty enforcement tool, MetaShield, in partnership with peer marketplace and aggregator Coral Cube in September before its move to optional royalties.