Mark Cuban Criticizes OpenSea’s Decision on Optional NFT Royalties
Billionaire entrepreneur Mark Cuban has voiced strong objections to OpenSea’s recent decision to make royalty payments for non-fungible tokens (NFTs) optional. Cuban highlighted his concerns in an Aug. 18 tweet, labeling the move as a “HUGE MISTAKE” with potential repercussions for the industry’s integrity.
Understanding NFT Royalties OpenSea announced on Aug. 17 that it would cease mandating creator royalties on secondary sales by month-end. Typically, platforms like OpenSea allow NFT creators to earn royalties from every subsequent sale of their digital assets. OpenSea has a cap of 10% for these royalties. However, this percentage is not consistent across all platforms. For example, marketplaces such as LooksRare and SudoSwap enable creators to decide their royalty structure.
This shift towards a voluntary royalty system by OpenSea was in response to the emerging competition. Platforms like Blur had begun to lure users by introducing optional royalty payments and additional trading incentives. OpenSea’s trading volume saw a drastic decrease, plunging from over 90% to less than 25% within 12 months, as indicated by data from Dune analytics. The platform has been actively launching initiatives to recapture its leading position.
Cuban’s Stance on the Matter Mark Cuban sees OpenSea’s new royalty strategy as a rash decision made in haste. Cuban is of the belief that while there’s a need to ensure royalties are applied uniformly across all NFT platforms, making them optional is not the solution. He expressed concerns about how this could negatively impact future applications extending beyond mere collectibles, which, according to him, will be the primary financial driver. Notably, Cuban has investments in OpenSea.
Conversely, some argue that OpenSea’s move was essential for it to remain a significant player in the industry. Sheetfu, the Chief Digital Officer of MagicEden, a leading NFT marketplace on the Solana (SOL) network, suggested that the real challenge lies in the technology. He believes that the true remedy should be executed at the protocol stage, where creators have diverse methods to ensure royalties.
