Magic Eden Shifts to Protect Royalties with Innovative Protocol Launch
Magic Eden, the largest Solana NFT marketplace, is launching a new protocol that will enable royalty protection and allow for customizable token transferability, according to a Twitter announcement this afternoon.
This move to protect royalties is a shift from Magic Eden's recent decision in October to make royalties optional, one that sparked a month-long (and still going) royalty debate. It follows leading Ethereum NFT marketplace OpenSea, which recently rolled out a major update to enforce creator royalties on-chain, restricting NFTs listed on its platform from being listed on marketplaces that do not enforce royalties.
Today's announcement includes a free mint to celebrate the protocol launch. The protocol itself features two major innovations, dynamic royalty pricing and customizable transfers, which will provide functionality that does not yet exist in current NFT marketplaces.
The new protocol is called Open Creator Protocol (OCP), and starting on Dec. 2, project creators will have the ability to opt into using the protocol. If they do so, they will be able to protect their royalties (by banning marketplaces that do not enforce royalties) and gain access to other innovative functionality.
Creators who do not opt-in will be able to continue operating as royalty-optional "for now."
The OCP enables a dynamic royalty feature, which allows creators to set a relationship between an NFT's sale price and the amount of royalties to be paid via a linear price curve. For example, a buyer paying 10 SOL for an NFT may pay 5 percent in royalties versus a 20 SOL NFT buyer paying 4 percent.
The impact of this mechanic is that traders of higher-value NFTs will now have their royalties potentially reduced (if the creators set up the price curve). This has been one of the major complaints echoed by NFT traders of high-cost collections like BAYC and DeGods, and it will likely be welcomed very strongly by the NFT community.
“The Solana community has been waiting for solutions to NFT royalties,” said Jack Lu, CEO, and co-founder of Magic Eden, in a statement. “We have been in active conversations with multiple ecosystem partners to identify solutions for creators in a timely manner.”
This move comes in a timely manner, as royalties remain a hotly contested topic in the NFT space. Leading Ethereum NFT marketplace OpenSea recently rolled out a major update to enforce creator royalties on-chain, restricting NFTs listed on its platform from being listed on marketplaces that do not enforce royalties.
Customizable Transfers and Gamification
Perhaps even more innovative and impactful than the dynamic royalty feature is the customizable token transferability mechanism.
With this feature, creators are able to define how and when their NFTs can be traded during a mint and after. Examples include using a "Freeze" to make NFTs untradable until a mint closes, imposing limitations on tradability by time, or the total number of trades.
This is a powerful feature and one that could potentially change how allowlists are used. For example, a hotly contested allowlist could require participants to hold their NFTs for 3 months before being able to sell. Creators could also limit trading in the first few hours after mint, or delayed til closer to a reveal, etc.
"Creators are now able to gamify the rules of their own collection’s trading behavior," a spokesperson for Magic Eden said.
To celebrate the OCP, Magic Eden will hold a free mint on its launch day on its website.
The mint will consist of "a couple of thousand gift boxes," containing prizes such as a free MacBook Air laptop, whitelist access to upcoming projects, access to Genopet’s game, and free NFTs from major Solana NFT projects.