The founder of Bored Ape Yacht Club (BAYC) has weighed in on the ongoing nonfungible token (NFT) creator royalties debate and shared a potential path forward that they believe best deals with the issue.
A Nov. 8 blog post from BAYC co-founder Wylie Aronow — co-signed by co-founders Greg Solano and Kerem Atalay — shared that they regard creator royalties as “the single most important factor that brought them [creators and artists] into the ecosystem.”
The post was in response to OpenSea’s Nov. 6 announcement that it would follow other NFT marketplaces on royalty enforcement, which Aronow said shows its intent “to move with the rest of the herd and remove creator royalties for legacy collections from their platform,” and opined this move was “not great,” adding:
”For as much as NFTs have been about users truly owning their digital assets, they’ve also been about empowering creators.”
In response, the BAYC founders proposed a model for NFT royalties that uses “allow lists” coded into an NFT collections smart contract, which permits NFT trading between regular wallets but only allows NFT trading for “marketplaces that respect royalties.”
A basic version of how this would work was explained, with the first step being to check if the wallet is a regular wallet or a smart contract making the transfer request.
Regular wallets would have transfer requests allowed, while transfers initiated by smart contracts are checked against “an oracle of contracts that are known to respect royalties,” with the requests approved if a match is found.
This model would allow free wallet-to-wallet transfers, which the BAYC founders emphasize is a must to ensure one of the core benefits of NFTs — asset ownership — is acknowledged, with owners able to move assets between wallets without fees.
The BAYC founders acknowledge that this model does still carry trade-offs, citing allowlist maintenance and an increased barrier to entry for new marketplaces, but said that for now, this allowlist is relatively small, noting:
“To start with, there are only a handful of known good actors today. Starting the allowlist is easy–just add those couple marketplaces that pay creator fees. Done.”
Allowlist maintenance is what they see as the more challenging issue, particularly the make-up of the governing body, adding:
“The real work is just in figuring out what this governing body looks like. But I think that’s a solvable problem for the NFT ecosystem to take on.”
In a Nov. 8 tweet, popular NFT artist Mike Winkelmann, known as Beeple, applauded the post as a great way to protect creator royalties as many NFT marketplaces move away from them.
great work @GordonGoner !! i think this could be a great path forward to protect these royalties— beeple (@beeple) November 8, 2022
though i still think even if this is implemented the switch from sellers FEE to buyer's PREMIUM is long overdue and will help a lot with compliance. https://t.co/wdIXYo5yp8