Morning Minute | MarketPlace Wars Lead to Death of Royalties

TylerD's Market Summary

The NFT marketplace wars have been bloody, and it seems creators and end users are the ones losing. Just how bad is it?

⚰️ OpenSea Says Goodbye to Enforced Royalties

OpenSea and Blur have been battling for the top NFT marketplace spot for months, and OpenSea has just made a fairly drastic move.

They're effectively killing royalties on their platform, likely in an effort to stay competitive with the royalty evasion already happening abundantly on Blur.

Now the question is - will it work? And at what cost?

What Happened?

Yesterday, OpenSea announced that it is updating its platform to allow optional creator fees and sunsetting its Operator Filter starting on August 31, 2023.

This is what that means, in plain language:

After Aug 31

• New collections: creator fees are optional
• Existing collections using the Operator Filter: creator fees enforced on OpenSea through Feb 29 ‘24; optional after
• Existing collections not using our Operator Filter: no change (meaning optional)

OpenSea shared some rationale on its decision, saying that they tried to enforce royalties with their Operator Filter and simply didn't get much opt-in support.

In their words, "To be clear, creator fees aren’t going away – the ineffective, unilateral enforcement of them is."

It is definitely a response to Blur's making royalties optional for months and having already basically killed them. 

Through their Blend loophole, sellers have been able to avoid even the 0.5% minimum royalty fee for months and have been paying 0%.

Royalties were already at all-time lows - this move just basically cements their death.

Market Impact

NFT weekly traders have been basically in a line straight down since February 2022.

Blur weekly users peaked at 65k in Feb 2023 after a 4-6 month run up, and have since been mostly down only. Now they are at 15k weekly.

The $BLUR token is down 85% over that time frame, from $1.36 to its current $0.21 level. Meanwhile Blur SZN2 has no end in sight, with 3 more updates promised before it closes and none yet delivered.

While SZN2 winds on, Blur vests 47M tokens per month (on the 14th of each month) leading to continuous and ongoing sell pressure.

This action is slowly driving farmers off the platform, with TVL down to $106M, down about 40% in the past 6 weeks.

All while the PFP market loses billions in marketcap and the large-cap PFP index reaches multi-year lows.

So to recap the impact of these marketplace wars:

• Farmers are losing (and leaving)
• Holders are losing (and leaving)
• And now creators have officially lost control of royalties

Will they leave too?

What's Next 

Current sentiment is that this may be the final straw to drive creators and users to more individualized marketplaces (i.e. project-specific).

In fact Limit Break founder Gabriel Leydon is trying his best to help here, creating his Creator Token Contracts as solution for creators to enforce on-chain and programmable royalties.

Will he catch traction?

I am still not convinced.

This is no offense to Gabe and I applaud the Creator Token Contract solution.

I'm just not convinced the existing NFT user base is ready for siloed markets.

We have seen a case study in the art market in the last few months, with dozens of platforms spinning up to showcase and sell digital art. Art Blocks has added full marketplace functionality.

Yet the majority of trades still happen on OpenSea and Blur.

It's hard to remove the incumbents and it will take a borderline paradigm shift in trading activity to displace these two at this point.

Could it happen in the future? Absolutely, but it will take some time.

In the interim, artists and creators will have to find ways to incentivize their holders and collectors to want to pay royalties.

Or find new revenue streams.

🚚 What else is happening in NFTs?

Here is the list of other notable headlines from the day in NFTs:

• Trading volume spiked over 12k ETH on Thursday, the highest day in a month; leading NFTs were very red though, with BAYC falling to 27, MAYC to 5.3 and Azuki to 4.4
• Wreck League has minted about 1/3 of its supply in the first 18 hours of its first Majestic Box mint, with just 8,381 of 25,000 selling at their 150 APE ($265) price; the team has said any remaining boxes after 24 hours will be burned from supply
• DeGods co-founder Finny announced on Wednesday that he would be leaving the team, and that the decision was not related to the fallout of this past week
• There's a new Bored Ape-focused lawsuit, this time impacting Sotheby's which was added as a defendant to a class-action lawsuit brought by BAYC collectors stating they participated in a "misleading promotion" of the NFTs to deceive investors
• The Bored & Dangerous Azurians revealed yesterday after a lengthy wait, with the floor opening at 0.08 ETH

🌎 Around Crypto and Web3

A few other Crypto and Web3 headlines that caught my eye:

• The crypto market saw a flash crash on Thursday afternoon, the worst since the FTX blow up in 2022; BTC -7.2% at $26,500; ETH -5.8% at $1,682; most alts down in same 5-10% range
• Mastercard has opened a forum for major crypto players like Ripple, Consensys and Fireblocks to discuss CBDCs as world nations consider digital money in their futures
• Friend.tech is set for its first rewards points airdrop today, rewarding beta test users and the first of many over the next 6 months

🚀 NFT Total Volume

• DeGods (4,461 ETH, 4.44 ETH Floor)
• BAYC (2,140 ETH, 27 ETH)
• Azuki (275 ETH, 4.5 ETH)
• MAYC (1,479 ETH, 5.4 ETH)
• Wreck League Majestics (273 ETH, 0.14 ETH)

📈 NFT Floor Price Increase

• Threads by Professor Jun (57%, 0.14 ETH Floor)
• 10ktf Combat Gear (25%, 0.1 ETH)
• Ready Player Cat (16%, 0.17 ETH)
• 0n1 Force (12%, 0.72 ETH)
• Opepen (9%, 0.6 ETH)

🗓 Upcoming NFT Mints and Reveals

Today is a slower day to round out the week.

Artist mpkoz is doing the Meme card drop, so that will catch some hype.

Showtime is minting on Base, after Pixelmon dropped their infamous "Kevins" on Base yesterday.

And notable collector and founder Seedphrase is also releasing his debut single "Angels" today.

Expect another slow summer weekend, and feel comfortable touching grass. We will catch you up on Monday! Enjoy!

If you want more, see the full list of today's drops from Swizzy's daily mint monitor. 

• Memes by 6529 (11:00 a.m. ET)
• Showtime on Base (1:00 p.m. ET)
• Seedphrase "Angels" (TBD)

Enjoy this write-up and/or want to sponsor the Morning Minute? Follow along with me on Twitter @tyler_did_it or reach out via email tyler.warner@luckytrader.com.

For all volume and floor price data, see Lucky Trader's Project Rankings page.

For all upcoming mints, see Lucky Trader's NFT Calendar page.