Magic Eden Losing Market Share as Solana NFT Traders Reject Royalties

Are creator NFT royalties on the way out on Solana? Zero-royalty trading platforms are quickly gaining traction, and Magic Eden is adapting.

The debate over NFT royalties is raging again, this time in the Solana NFT space—and marketplaces that eschew creator royalties are finding eager traders while capturing market share in a way that they haven’t yet in the larger Ethereum NFT community.

Magic Eden has been the leading NFT marketplace on Solana over the last year, quickly commanding 90% or more of the market en route to a $1.6 billion valuation in June. But its grasp on the Solana market has been rapidly eroding in recent weeks as new and evolving rivals alike successfully draw away NFT traders with the allure of zero-royalty transactions, which allow traders to eke out greater profits by allowing them to avoid paying upwards of 12% in fees on each trade.

And now the shifting tides of the Solana NFT market appear to have forced Magic Eden’s hand.

The company announced on Wednesday that it was “joining forces” with Coral Cube, a marketplace and aggregator that allows zero-royalty NFT sales. Magic Eden also teased that it will give users “the ability to determine what royalties on our platform will look like.”

Tiffany Huang, Magic Eden’s Head of Marketing and Content, told Decrypt today that the startup will “protect” its brand by keeping creator royalties intact on Magic Eden. But it will also offer the option for traders to sell NFTs without paying royalties via Coral Cube—an apparent attempt to have it both ways in a quickly shifting market.

Solana shuffle

NFT creators, regardless of blockchain network, typically set royalties between 5% and 10% on their tokenized artwork, profile pictures, collectibles, and video game items, thus earning a percentage of the sale price of any future secondary market trades. Some NFT enthusiasts consider it a key part of the Web3 value equation, rewarding creators in perpetuity.

It’s built into the smart contract—or autonomous code that powers NFTs—but not in a way that’s immutable. In other words, they’re not consistently enforceable: marketplaces can effectively code around it and let people buy and sell NFTs without paying creator royalties. On large trades valued in the thousands or even hundreds of thousands of dollars, saving 10% in fees can make a significant difference, especially in a down market. The platforms that allow this have angered creators and businesses that depend on royalties for revenue, but they’re gaining traction on Solana among traders.

Upstart marketplace Yawww made the first move on Solana earlier this summer, launching a platform that didn’t honor NFT creator royalties, and then early Solana marketplace Solanart followed suit by shifting gears and making creator royalties optional for NFT sellers. The recently launched Hadeswap is now luring even more traders away from Magic Eden.

The impact has been swift and significant. According to data compiled by NFT marketplace Tiexo, Magic Eden’s Solana market share has dwindled in recent weeks. Looking at the charts, its share fell from 89% over the last six months to 79% over the last month—with bigger drops to 61% over the last week and 58% over the last 24 hours, as of this writing.

That’s a startling decline for a marketplace that has effectively ruled unopposed over the last year. Magic Eden saw barely any impact from the April entrance of top overall NFT marketplace OpenSea into the Solana space—OpenSea has claimed about 2% of trading volume over the past six months—but there’s a larger movement afoot this time around.

Source : decrypt

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