Solana Sunday: DeGods and Y00ts forgo NFT Royalties
Royalties have been considered one of the major innovations created by NFTs for artists and creators alike in the world of web3 because of its ability to continuously pay a creator over the lifetime of their work (which is forever when on-chain).
While this feature has been a critical appeal to most artists now developing their work on web3 platforms, it has become a source of debate for many NFT traders that see royalty percentages as an obstacle to their total profits.
Removing royalties announcement
Frank, the founder of DeGods, explained how the popular Solana flagship collection has decided to move away from the royalty structure as an experiment on the overall quality of their collection and to see how it will affect the business side of their work.
According to the announcement, both DeGods and Y00ts (which belong to Dust Labs) have both removed their royalty models in an effort to support their web3 business. It’s also important to note the team at Dust Labs still believes that royalties have a place in web3, they simply believe that it no longer helps their specific business.
DeGods Proof-of-Work transparency
The Dust Labs team has also now started providing a daily transcript called “Proof-of-Work” of everything that has gone on within the DeGods workspace.
It reinforces the fact that Dust Labs is working continuously to improve the quality of their collections and letting their community know about their day-to-day operations is a helpful way of keeping holders informed and confident in the Dust ecosystem.
Public response
The decision from Dust Labs to remove royalties from their collections has been met with mixed responses from people that have a variety of opinions on the subject.
Some are arguing that royalties are a major incentive to the NFT ecosystem and a primary reason for artists to express interest in storing their art on-chain while those in agreement with Dust Labs believe that royalties don’t offer a sustainable amount of revenue for utility-centric collections which aren’t meant to be traded or flipped often.
Frank’s personal opinion seems to be that royalties are not integral to NFTs and are difficult to enforce because of rules set by different marketplaces. However, while marketplaces do set their own fees structures, royalties are built into the smart contract itself and are not exclusively set by marketplaces.
Why royalties matter
It’s easy to see where Dust Labs' opinions come from: royalties are no longer beneficial to their project and make it harder for traders to earn profits off of their tokens.
However, this is a major step away from the innovative technology created by NFTs which allow artists to remain attached to their work permanently, forever.
Through the majority of history, artists have only been able to collect payments off of the initial sales of their art. Royalties have given artists the ability to profit off of the success of their work as pieces grow in value which was not possible before tokenization.
Though Dust Labs acknowledges the significance of royalties structures for artists in web3, it appears that their business model doesn't have a need for it. It’ll be interesting to see how this plays out in the future, but there’s no reason to expect artists to follow suit anytime soon.
