LooksRare Becomes the Latest Platform to Forgo Royalty Requirements
LooksRare recently announced that it will no longer support creator royalties by default and instead share 25% of the LooksRare Protocol fee with the creator’s/collection owners. Hence, it is the first zero-royalty marketplace to support creators by directly sharing protocol fees. Moreover, the platform has modified the “Trading Rewards” distribution ratio to favor sellers.
Sharing Protocol Fees With Creators
The company noted that the increasing number of zero-royalty marketplaces has caused the general unwillingness of creators to pay royalties to the various NFTs. Its new royalty structure will provide a more competitive solution for creators and investors.
While there have been ongoing debates about whether or not buyers should be required to pay royalties to the creators of NFTs, LooksRare noted that its 25% protocol fee would support both parties by allowing them to share the burden of listing tokens on the platform.
In its blog post, the company noted that it is introducing various changes to its protocol fee structure. For instance, starting today, the leading NFT marketplace will direct 1.5% of every trade to LooksRare, while the remaining 0.5% will be used to collect fees.
In addition, the company said that due to the adjustments made to the LooksRare trade incentive system, “95% of trading rewards will go to sellers, while 5% of them will be handed to buyers.”
The platform then clarified its stance on the creators’ royalties, stating that the growing number of marketplaces that do not pay royalties has eroded the general willingness of NFT users to pay them.
“Still Benefiting Creators”
The post later offers a competing proposal of splitting the protocol costs with its creators, which supports LooksRare’s choice to remove the option of creator royalties. The platform added that the long-term advantages of the new modifications would accrue to creators.
“That’s why we’re choosing to lead the charge in this new landscape by creating a competitive solution that still benefits creators: diverting protocol fees directly to creators. In this update, creators and collection owners will be able to share a flat 25% of the LooksRare protocol fee. This approach allows us to offer the most favorable conditions to NFT sellers while still supporting creators and collection owners.”
According to the post.
As part of its pro-creator stance, the platform tweeted about the importance of royalties for budding NFT artists.
Growing List of Platforms Forgoing Royalty Requirements
The decision by LooksRare to remove its artist royalty payout requirements is part of a trend among NFT platforms that have started to remove these requirements. In August, X2Y2 and Magic Eden also decided to be royalty-free.
Sudoswap also introduced a new way for traders to trade non-fungible tokens (NFTs) without paying royalties. Its liquidity pool and Automated Market allow them to buy and sell NFT without waiting for offers.
How projects intend to earn could also be affected by changes in attitudes around fees. For instance, some projects have raised royalty fees and lowered mint prices in response to the decline in the NFT market. This strategy encourages teams to continue working with their communities instead of taking a one-time payment.
