Tough times call for tough measures, and it’s for this reason that LooksRare has opted to eliminate creator royalties to encourage NFT sales, which have suffered massively over the past few months due to the bear market.
However, LooksRare the third largest NFT marketplace on Ethereum will share its protocol fees with creators and collection owners as a way of supporting them. By doing this, the protocol hopes to create favorable conditions for NFT sellers while supporting creators and collection owners.
The NFT marketplace has decided to take this route, citing the “growth of zero-royalty marketplaces which has eroded the general willingness to pay royalties throughout the NFT space.” This is good news for individuals involved in NFT trading but bad for creators, as royalties served as a source of passive income for them.
LooksRare Competitive Strategy
Therefore, the LooksRare solution is a competitive strategy that benefits creators by diverting its protocol fees to reward them. Following the update, creators and collection owners will share a flat 25% protocol fee or the fees NFT sellers are charged. Normally, the protocol charges a 2% total fee on the sale price, and following the update, 0.5% will be directed to the creators. Additionally, traders get to “opt-in to pay optional royalties.”
When you create an NFT on any marketplace, there is an option to set your royalty fee, which allows you to be remunerated for any secondary sale of the NFT. The fee is set at 5% to 10% of the total price of the NFT. However, these royalties aren’t fully enforceable on-chain as per today’s NFT standards. This has created loopholes that some marketplaces have used to lure traders.
LooksRare Follows Other NFT Marketplaces
LooksRare’s decision follows that of other top marketplaces such as Sudoswap, X2Y2, and Magic Eden which have decided to eliminate creator royalties or make them optional over the past few months. However, none has come up with a way to incentivize creators to do what they do best. Therefore, LooksRare is setting the pace for the new trend.
