By Billie Harvill
The biggest non-fungible token (NFT) marketplace in the Solana ecosystem, Magic Eden, has now accepted to make payment of royalty fees to NFT artists or creators optional. This is after other NFT marketplaces decided to make the same move in the past months. Magic Eden made the announcement known through a post on its official Twitter page on Saturday.
The platform also plans to put aside all platform fees for the foreseeable future. Anndy Lian, popular NFT enthusiast and author of the book “NFT: From Zero to Hero” told the media that trying to get back customers by reducing or eliminating fees is not a good long-term plan. “For [an] NFT platform, with dwindling fortunes, I am doubtful whether the no-fees plan is going to end well for the platform,” he said.
The NFT market has been bearish for five successive months as the total sales of these digital assets keep declining. This decline makes NFT creators and marketplaces think of ways to survive the ongoing bear season. Magic Eden is regarded as the largest marketplace in the Solana ecosystem; it contributes up to 90% of all sales on the Solana platform.
In June 2022, Magic Eden’s series B fundraising brought in $130 million, taking its valuation to $1.6 billion. Thus, giving Magic Eden the status of a “unicorn” – a start-up whose valuation exceeds $1 billion. Most NTF marketplaces allow creators to receive payment for each sale, and it’s usually included in the smart contract of the NFT itself.
However, they can set the fees to whatever they want because some platforms allow them to alter the code for each artwork. But Magic Eden will now enable users to decide whether to pay fees or not.
Anndy Lian Responds
According to Lian, removing the fees can also make creators increase prices to help cover the loss of income. He said it might bring about pressure on an already struggling market. According to him, the development could get out of hand if smaller NFT marketplaces decide to follow Magic Eden’s announcement.
“So, it takes us back to square one: How long will the crypto and NFT market continue to experience the bear season and how long can companies sustain that kind of strategy?” Anndy Lian asked. “If I’m not wrong, maybe platforms like Magic Eden can sustain the strategy for the next two, three, four years, maybe.”