The Spartan Group
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The Spartan Group

Zero Royalty NFTs: A Paradigm Shift in the NFT Creator Economy or Just a Speculator’s Narrative?

Introduction

Source: @dix6986 / Magic Eden Royalty Trades vs. Non-Royalty Trades per Day (90D) (Dune Analytics)

How did Zero Royalty NFTs come about?

Source: @0xRob / sudoswap.xyz (Dune Analytics)
Source: Solana NFT Marketplace Volumes (Tiexo)

Arguments for Zero Creator Royalties

Source: @hildobby / NFT Market Overview (Dune Analytics)

Lower Trading Costs

Encourages Creators To Innovate

Source: Pudgy Penguins

Enforcing Royalties Contradicts Permissionlessness

Arguments Against Zero Creator Royalties

Source: @DeGodsNFT (Twitter)

Destroys A Revenue Stream For Creators

Source: GenesysGo (Discord)

Scams, Rug Pulls and Wash Trading Galore

Source: MagicEden

Censorship and Policing

Where can we go from here?

Enforcing Creator Royalties On The Smart Contract Level

Source: ProjectOpenSea (GitHub)

Aligning Incentives

Decreasing Creator Royalties

Source: @dix6986 / Magic Eden Average Paid Royalty Fees % Daily (270D) (Dune Analytics)

Building a Loyal Community

Marketplace Fee Sharing with Creators

Token Incentives for Honouring Royalties

We propose Harberger Tax: A new economic policy for NFTs

  1. The value of assets is self-assessed by its owners, who then pay taxes on that self-assessed value.
  2. Anyone at any given time can purchase that asset from the owner at that self-assessed price, thus taking ownership of the asset. The new owner will then set a new self-assessed price.
  1. Transfer fees are trivially circumventable with wrapper contracts.
  2. We want to move to smart contract wallets (eg. multi-sig wallets), and smart contract wallets themselves are effectively sellable wrapper contracts.
  3. There are legitimate (non-sale) reasons to transfer your asset to another wallet.

Conclusion

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