Another NFT Marketplace Makes Paying Creators Royalties OptionalOctober 28, 2022
On Thursday, LooksRare announced its plans to stop enforcing creator royalties every time a trader performs a transaction. In a blog post, the NFT marketplace says it will no longer support creator royalties by default, instead letting buyers opt-in to pay optional royalties.
Additionally, LooksRare pledges to direct to creators about 20% of the fee charged to sellers to transact their NFTs. The company charges 2% on the sale price. Therefore, the creators will now get 0.5% of the sale price in place of their respective royalty rates.
Recently, many NFT marketplaces have made a similar move. On Ethereum, marketplaces like X2Y2 and Sudoswap have made creator royalties optional or eliminated them. Solana NFT marketplaces have also followed suit. A notable one is Magin Eden, the largest NFT marketplace on the Solana chain by market share.
Big Win for NFT Sellers on LooksRare as Creators Lose
LooksRare announces that the growing zero-royalty marketplaces have eroded the willingness to pay royalties throughout the NFT space. It is good news for traders. But a big blow to creators since royalties have served as their source of passive income.
Besides removing creator royalties and giving creators a share of transaction fees, LooksRare has revised its trading rewards model to benefit NFT sellers. Now, the marketplace will direct 94% of token rewards generated through trading to sellers, with 6% going to buyers. The move is an effort to reduce net trading fees for sellers.
LooksRare Accused of Wash Trading
LooksRare launched in January 2022 and became famous for giving big rewards in ETH and its LOOKS token to users for trading on the platform. Within the first few weeks, the marketplace saw over a billion dollars worth of Ethereum NFT trading volume. However, it became clear that users manipulated sales through “wash trading.”
Wash trading happens when a user sells an NFT at artificially inflated prices back and forth between their controlled wallets to raise the visibility of a specific project or manipulate rewards models. In February, CryptoSlam, an NFT analytics platform, reported that about 85% of LooksRare trading volume at that time was due to Wash trading.
With wash trades excluded, LooksRare saw about $10 million worth of legitimate Ethereum NFT trading volume over the last 30 days, as per DappRadar. Elsewhere, the leading NFT marketplace by market share, OpenSea, still honors creator royalties. It has recorded $315 million worth of NFT trades over the last 30 days.