NFT Marketplace LooksRare Joins Royalty-Free Bandwagon
LooksRare, one of the world’s most popular marketplaces for non-fungible tokens (NFTs), is the latest in the industry to scrap compulsory royalty fees for transactions on its platform.
- NFTs are cryptographic records hosted on a blockchain that can’t be replicated. They’re often used to represent ownership of digital artwork.
- NFT marketplaces usually pay royalty fees to creators each time users buy or sell their artwork, but many are increasingly making royalty fees non-compulsory, drawing backlash from creators.
LooksRare is the latest platform to announce that it wouldn’t add royalty fees by default for NFT transactions. Instead, it’ll dedicate 25% of the fees generated by its exchange protocol to compensate creators.
With this change, it’s now up to the buyer to choose if they want to pay royalty fees to support creators. Before now, that was non-negotiable. This change means NFT transactions will become cheaper for LooksRare users and will likely draw praise from this cohort. However, it has drawn backlash from creators whose stream of royalty fees will be significantly reduced.
“The [average] royalty paid is around 6%,” said NFTstatistics.eth, the Twitter handle for the director of research at PROOF Collective, the organization behind the Moonbirds NFT collection. “I wouldn’t say that giving artists 0.5% (a 90%+ cut) while keeping your own fee at 1.5% (a 25% cut) is a competitive solution that benefits creators.”
Before LooksRare, several big NFT marketplaces moved to scrap compulsory royalty fees, including X2Y2 and Magic Eden. This has raised fears of a race to the bottom that might lure other NFT marketplaces to follow suit. Many speculate that OpenSea, the biggest NFT marketplace by trading volume, may pull a similar move and cut down the stream of royalty fees available to creators at large.
- LooksRare is one of the leading NFT marketplaces globally, with a lifetime trading volume of over $20 billion, although there are reports of considerable wash trading occurring on the platform.
