The multi-chain NFT marketplace Magic Eden announced a collaboration with the founding team of Bored Ape Yacht Club, Yuga Labs, to launch the first Ethereum NFT marketplace with contractually obligated creator royalties by the end of this year; meanwhile, their competitor OpenSea announced layoffs and restructuring around a major upgrade called “OpenSea 2.0” in the same week.
Magic Eden and Yuga Labs Collaboration
Last Saturday (4th), Magic Eden announced a collaboration with Yuga Labs to launch a new Ethereum market by the end of this year, promising to protect creator royalties in NFT sales. The two companies stated in a press release that Magic Eden will have a “contractual obligation” to pay Yuga Labs a share of the future NFT series sales in the secondary market. Magic Eden’s co-founder and CEO Jack Lu stated in an interview with Decrypt that the improved Ethereum market will use new smart contracts, including code that supports decentralized applications (dApps), and ensure royalty payments in secondary market sales through technological innovation. The technical details will be disclosed before the market launch, and Lu confirmed that the ERC-721 standard will be used, and NFTs with certain “market contract attributes” will enforce royalties. This collaboration is not an exclusive agreement between Magic Eden and Yuga Labs, as other markets can choose to use similar contracts introduced through this collaboration, and Yuga Labs hopes to see them widely adopted. Additionally, other NFT creators can also use these contracts in their projects to receive similar protection.
Royalty Dispute
According to previous reports by Zombit, NFT trading platform OpenSea announced in August the closure of the Operator Filter (a tool that enforces creator royalties) and implemented “optional creator fees” for collections, meaning OpenSea will not enforce creator royalties on NFTs. This action led to dissatisfaction from Yuga Labs at the time, with the company even stating that they would cut ties with OpenSea. The press release from Yuga Labs and Magic Eden seemed to be a jab at OpenSea, mentioning that these two companies have “explicitly stated that respecting creator royalties is non-negotiable, expressed in clear terms against a backdrop of numerous other markets betraying creative entrepreneurs”.
OpenSea Announces 50% Layoffs, Focus on OpenSea 2.0
In the same week as the above collaboration was announced, OpenSea confirmed to Decrypt that the company is laying off about 50% of its staff, without disclosing the specific number of affected employees. OpenSea’s co-founder and CEO Devin Finzer detailed this statement on platform X, emphasizing how the company is streamlining the team to launch the next generation version of the marketplace. A spokesperson for OpenSea added that the company will adopt a more flat organizational structure in the future, and affected employees will receive four months of severance pay, six months of healthcare and mental health services, and an accelerated timeline for equity grants. According to data from Dune, in the past week, there were nearly 32,000 independent wallets trading on OpenSea’s standard and Pro markets, while the second-ranked NFT platform Blur had around 18,000. However, Blur’s trading volume in the past week was approximately $62 million, accounting for 73% of the NFT sales market share. OpenSea’s trading volume was about $15 million, with a market share of approximately 17.6%.