OpenSea Cuts Fees To Compete with Rising NFT Marketplace Blur

Hey Peeps!

On February 17th, the leading NFT marketplace, OpenSea, announced major changes to the fees and creator royalties structure. 

The changes are as follows:

• OpenSea's trading fee has been reduced to 0% for a limited time.
• Mandatory Creator Royalty Fees can now be lowered to a minimum of 0.5% for "all collections without on-chain enforcement (old & new)".
• NFT Marketplaces, without on-chain enforcement, will no longer be blocked.

 
The majority of OpenSea's revenue comes from their normal 2.5% trading fee. However, now that they have reduced it to 0%, it will be interesting to see if they can remain profitable. 

OpenSea Creators used to enjoy a fixed rate between 5-10% of the sale price. With the change to a minimum Creator Royalty Fee of 0.5%, OpenSea is putting their focus on trading incentives, instead of incentives to collect and hold forever. 

 
Finally, the last change is the biggest change as OpenSea will now allow other NFT marketplaces that do not enforce Creator Royalties, which includes the likes of their new rival, Blur. 

To justify this change, OpenSea pointed to on-chain data that shows 80% of current NFT sales do not pay any creator royalties. Not to mention that Blur is rapidly catching up to OpenSea when it comes to the total number daily traders. 

It appears clear that NFT traders would rather buy/sell NFT collections that have little to no fees at all. 

With this context, you can clearly see why OpenSea is making the major changes they are, and moving away from hefty trading fees and creator royalties. 

 

"We thought we could catalyze widespread enforcement of creator earnings, and we hoped others might come up with more resilient solutions – this hasn’t happened. Recent events – including Blur’s decision to roll back creator earnings (even on filtered collections) and the false choice they’re forcing creators to make between liquidity on Blur or OpenSea – prove that our attempts are not working." 
- OpenSea

 
 
Here is the Twitter Thread from OpenSea announcing the changes to the platform:
 

"This is the start of a new era for OpenSea. We’re excited to test this model and find the right balance of incentives and motivations for all ecosystem participants – creators, collectors, and power buyers and sellers."
- OpenSea

 
At the end of the day, competition between companies is always good for the customers. When there is no competition, there is no incentive to improve your service or innovate.

However, with the change to Creator Royalties, it seems that creators and artists may be the one to suffer the most from these changes. 

Now that OpenSea's title as King of the NFT marketplaces is under threat, they are clearly feeling the pressure to make a move instead of sitting and doing nothing. 
 

What are your thoughts on this news?

Do you think this will lead to a meaningful shift back OpenSea for NFT traders?

If you are a NFT trader, does this move by OpenSea entice you?


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