A new Solana NFT standard.
My thought process on what a solution to the 0% royalty movement could look like for Solana NFTs.
TLDR:
Royalties aren’t enforceable with the current Solana NFT standard.
Most proposed solutions don’t solve the entire problem, which makes them non-viable.
Proposal for a new NFT standard that could solve the entire problem.
Strategy on how to launch it to get ecosystem wide adoption in a short amount of time.
My evil plan.
Are royalties perfect? No.
Do the pros of NFT royalties outweigh the cons? I think so.
We did not move DeGods & t00bs to 0% royalties to destroy the Solana NFT ecosystem (despite popular belief, lol).
We did it to prove a point. The community needed a wake-up call to understand the real problem. At the same time, we wanted to prepare our community & team for the possible future where royalties would continue to trend to 0%.
The issue is that the current NFT standard on Solana does not actually enforce royalties.
Now, we are finally seeing an ecosystem-wide passion for finding solutions to this problem.
(also if this sounds suspicious… just scroll to the bottom to read my evil plan.)
Frequently Proposed Solutions
A majority of the proposed solutions I’ve seen can be simplified into 2 approaches:
Blocking/Blurring
The blocking/blurring variation of royalty evasion is when a creator can either blur/flag the image of an NFT to warn buyers that if they purchase this NFT, they won’t get access to some type of exclusive reward/utility.
Pros:
Helps existing communities & projects
Helps creators only support holders that support them (paying royalties)
Cons:
Nobody seems to like this idea (MetaShield)
Way too many edge cases/unanswered questions
Increases friction/confusion in purchasing process
Punishes buyer more than the seller
Essentially turns creators into debt collectors
New Mints with Royalty Enforcing Token Program
A few independent providers are creating a solution for new mints to enforce royalties on-chain. This would mean that the NFT is essentially frozen in the wallet and has restrictions on where it can be transferred/sold.
Pros:
Actually makes royalties enforceable on-chain
Allows creators to collect royalties reliably for their work
Blocks people from listing on optional-royalty marketplaces
No “debt collection”
Cons:
Doesn’t help existing collections
Fragmented solutions unlikely to get entire market support
Likely that NFTs can’t be transferred from wallet to wallet…
Lack of clarity on the amount of control the creator has to edit/revoke any user’s NFT
Puts immense amount of power into hands of creators of this program
I’ve also looked into (and spoken to) teams building niche solutions involving: harbinger taxes, transfer fees, and a variety of other interesting ideas.
I’m a huge supporter of people attempting to solve this problem… but I do think that the current solutions don’t feel like they’ll solve the actual issue & instead will just fragment the market further. I might be wrong on this.
An Ecosystem Wide Solution
This is purely my opinion, feel free to take it with a grain of salt.
If all 3 of the following don’t happen - I don’t see a reality where there’s enough of a counter-force to the 0% royalty movement to actually stop it.
Build an NFT standard that has a universal fixed royalty percentage & supports blacklisting of non-royalty respecting transfers.
Build a user opt-in mechanism for existing collections to migrate their NFTs to the new standard.
Get wide-spread adoption of the new standard from all the marketplaces, wallets, creators & holders.
The solution needs to be an ecosystem wide movement.
It needs to be a cultural movement on Solana to capture this opportunity and get everyone to switch to a new standard - together. New & existing collections.
Why?
If the solution only exists for new mints - then the liquidity will continue to become more fragmented. Marketplaces will beef about which standards they support & users will end up confused as to which standard each of their NFTs are on.
Let’s be 100% honest. There aren’t a ton of new people joining the Solana NFT ecosystem right now. Most people here are existing bag holders.
Without a significant percentage of existing collections migrating, I doubt any new standard will be able to get enough adoption/liquidity from current market participants to ever take off.
Proposed Action Plan
I’m going to share a rough draft of an action plan for the entire community to participate in.
I’m sure people will have plenty of commentary on the technical aspects of this - which I will leave open-ended for community/engineers to discuss & solve for.
I don’t know what the reaction to this will be & will gauge my level of participation based on that.
A new NFT standard is created that has the ability to blacklist NFTs from interacting with a list of specific contracts.
The list will be a living, breathing list of specific contracts voted upon by the community.
New standard must be supported by all of the major wallets (Phantom, SolFlare, etc) to allow for wallet to wallet transfers smoothly within the wallets.
A method to facilitate community-wide on-chain voting; either representative style or pure democratic voting.
The next steps will require a level of social consensus from the greater Solana NFT ecosystem. In order to prevent further centralized decision making, we need to choose a non-exploitable method of voting.
Open for suggestions on voting methods that will help ensure that either a group of trusted decision makers are representing the ecosystem… or a method for everyone in the ecosystem to participate without being exploited.
My opinion is that it would likely need to involve Twitter authentication in some form - to prevent people from spamming the vote with a bunch of dead/rugged projects.
Community-wide vote on a universal fixed royalty percentage/creator fee.
Most users don’t want 0%, but they also don’t want 10%... the key to this solution is finding the right number that everyone can agree is reasonable.
Equal playing field for communities, holders & traders.
For example: Community votes on 3.33% as universal royalty percentage and all NFTs on the standard have the same royalty percentage.
An application that allows holders to convert their existing NFTs to the new standard.
How It Works:
NFT holders connect their wallet.
They see all the NFTs they hold separated by collection.
They can click one button, maybe it says something like “I Support Royalties”
The program converts/wraps their NFTs into the new standard.
If they do it within a 2 week period, they get an NFT of their current Twitter PFP with a cool badge on it.
This signifies that they were here and participated in a potentially trajectory altering moment in Solana NFT history.
Also, having this all happen in a short window of time (like 2 weeks) would help ensure most liquidity is bridged to the new standard to prevent too much fragmentation.
If the community actually supports royalties (at a % that a majority agrees is fair), then they should willingly convert their existing NFTs to the new standard.
Nobody should expect an existing collection to have a 100% conversion rate. That’s fine.
Instead of pursuing blocking/blurring mechanisms, creators can now more easily manage their community by only focusing on the holders of the NFT on the new standard.
The solution seems messy from surface level, but in reality… for creators it’s actually cleaner than blocking/blurring NFTs. Just only allow Matrica/utility for the hashlist of your NFTs on the new standard.
This should be marketed/packaged as a social movement for the betterment of the space in the long term… because that’s what it is. A movement to upgrade the current infrastructure of Solana NFTs & solve the non-enforceable royalties exploit… together.
Who Can Make This Happen?
Team(s) that create & maintain the token standard (and potentially voting system)
Metaplex, Cardinal Labs, Magic Eden, SolportTom, etc.
Marketplaces need to integrate trading for the new standard (new & existing collections)
Magic Eden, HyperSpace, OpenSea, etc.
Wallet(s) that enable wallet-to-wallet transfers for the new standard
Phantom, SolFlare, etc.
Creators that want royalties to be enforced in the cleanest way possible
Happy to sign DeGods & y00ts up to this list if this concept gains traction.
I’m sure that this list will have no trouble filling up though.
Community that is ready to participate in voting & converting to a new standard.
And no, bitching on Twitter isn’t going to solve anything 🫡
Conclusion
Up until a few months ago, most people didn’t even know that royalties weren’t technically enforceable. Most assumed that of course, a multi-billion dollar ecosystem would have something in the “code” that enforces royalties.
As we all know now, that is not the case.
Timeline of Solana NFT Royalties :
The average NFT royalty percentages were getting way too high (> 5%)
DeGods was absolutely a key instigator of this problem with our 9.99% royalties. We didn’t realize the negative downstream impacts this would have. Can’t change the past, but can try to solve for the future.
NFT traders started moving to marketplaces that didn’t charge royalties.
First it began with OTC trading, then entire marketplaces launched with optional royalties.
Non-enforceable solutions (MetaShield) weren’t attractive to creators or community
Creators & community memed the blurring solution to oblivion
The trend of “optional royalty” marketplaces continued to grow
Aggregators grew even more popular, especially after they began aggregating liquidity from NFT AMM marketplaces
DeGods & t00bs moved to 0% royalties; conspiracy theories started flying.
Optional royalty marketplaces began to skyrocket, which squeezed Magic Eden to pivot & remove all fees to avoid being flipped in market share by other marketplaces.
The Solana NFT market has consistently decreased in sentiment & overall floor prices ever since this moment.
We can either accept royalties going to zero as “the tragedy of the commons” or we can rally together as a community to solve the problem.
The fact that royalties aren’t automatically distributed on-chain is the problem. It’s not a feature, it’s a bug. Over the last 5 months, we’ve seen this bug exploited by Solana NFT collectors, traders & marketplaces.
This entire ecosystem is driven by social consensus. If we all decide we want royalties, there is a way to make this happen. If we don’t, that’s fine too.
The key is that we all control our destiny as an ecosystem.
Disclaimer for Conspiracy Theorists
I don’t gain anything from this personally. Nowhere in this document do I suggest that Dust Labs builds any of this or that I have any control in this new standard. The investors in Dust Labs are all conflicting parties in this situation anyway (Metaplex, Magic Eden, and HyperSpace) so this has really nothing to do with that.
I do think it would be cool to launch y00ts with whatever this new token standard is.
But if the proposed standard doesn’t solve the problem for the entire community, I refuse to make y00ts a martyr to benefit some small group of companies/projects.
We’ll just launch with 0% and execute on our existing plans… we will be fine regardless. That’s the harsh reality.
I’m genuinely just trying to help & use any platform I might have to make a proposal for a solution that I think will help shift the Solana NFT ecosystem in a positive direction.
When I see the inevitable conspiracy theory thread, I will just reply with a screenshot this.