The great royalties debate and licensing Punks (Issue #35)
Monarchies shouldn't exist in 2022, but royalties should exist in perpetuity.
It’s impossible to stay on top of NFT space, we know. You literally have to spend your productive hours trawling Twitter, wading through newsletters, and dredging the depths of your emails to keep even partially abreast of the latest developments, arguments, big Ws and tragic Ls. This is where we come in, fren, because that’s literally (in the conventional sense of the word, not the new-fangled one where “literally” means “figuratively”) what we do to bring you this minty fresh, gleaming collection of hand-selected words. Welcome. And you’re welcome.
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Right, let’s get straight into it!
Drop alert 👀
Nifty Gateway has an array of big drops lined up for next week, including a new trio of works by Gernge entitled “OFF DAYS In Saibren City” (August 18), a pair of drops from Julius Horsthuis (August 18), the debut drop of Claire Silver (August 20), and new work from Isaac “Drift” Wright (August 21), the details of which haven’t been revealed yet.
Meanwhile, RECUR’s next drop involves Hello Kitty, and it’s coming on August 24/25. RECUR, if you need reminding, has previously done sold-out drops for Nickelodeon and Care Bears. It believes nostalgia sells, and it keeps proving itself right.
The Royalty question 👑
One of the advantages of the mechanics that underpin NFTs is the ability for their creators to attach royalties so that every time an NFT is traded, they see a slice of the action. For artists, in particular, it’s a huge deal because traditionally, they’ve only earned money from the primary sales of their work. For musicians, it’s great too, because often they only see a sliver of sales at all. But, this week, an automated market maker (AMM) called Sudoswap unveiled a new protocol that enables traders to sidestep royalties… and rapid-fire, fiery, and fierce Twitter discourse ensued.
It turns out, despite what many people believe, royalties aren’t actually baked into the smart contracts that govern NFTs. At least, not yet, there are efforts to do so, but they remain just that: efforts. Instead, as Zeneca_33 points out in a must-read breakdown of the Great Royalties Debate, paying NFT royalties is more like a social contract. It’s like tipping. Most people do it, but some don’t… and other than shaming those who don’t, there’s not much that can be done to force them to comply.
Marketplaces like Opensea, Looksrare, and x2y2 affix the royalty the creator stipulates, collect it, and then distribute it… but aside from that being the unwritten rule, there’s nothing forcing them to do so. Sudoswap is capitalizing on that lack of enforceability (and on the inevitable ambition/greed of some traders) with its new zero-royalty offering. It’s gross, but it’s a unique selling proposition, and hard to combat until smart contracts get, well, smarter.
While it’s hard to accurately assess sentiment on any platform that delivers content algorithmically, the general feeling on web3 Twitter seemed to be: 1.) Artists, project creators, musicians, photographers, and the like deserve royalties, 2.) Without them, the space would be worse off with fewer incentives for participation and more incentives for malfeasance, 3.) Paying royalties is a founding tenet of web3, and 4.) The only people in favor of zero royalties are flippers and traders… not those looking to build a sustainable, supportive, healthy ecosystem that respects and rewards creators for their efforts.
The less common but equally valid point to arise from all of this is whether marketplaces’ fees (like Opensea’s infamous 2.5% commission on every sale) are too high and should be reassessed. But that’s a
fight discussion for another day, anon.
🚀 To the moon, baby 🛁
Probably nothing 🤔
License to Punk 🧷
Yuga Labs, the company behind Bored Ape Yacht Club, earlier this year announced that it was buying the licensing rights to two projects created by Larva Labs: CryptoPunks and Meebits. At the time, it said it was doing so in order to give Punk and Meebit holders the option to commercialize them in much the same way Bored Ape holders can (and, in many instances, have).
This week, the details came more sharply into focus when Yuga revealed the terms of the license for Punks. Under the license, you can create derivative works with your Punk (think merch, use in an animated series, lunchboxes, whatever)… but there are some caveats.
For starters, you have to use your Punk’s whole likeness, rather than merely an attribute like, say, its beard or glasses. You also can’t use your Punk for hate speech or other discriminatory purposes. How will Yuga police this? Presumably, with litigation. Because another part of the license agreement stipulates that licensees give up the right to any class actions against Yuga… instead, any disputes require individual lawsuits. Yuga can, presumably, use the same stick against transgressing holders.
There are further Ts&Cs, but the other really key one is that none of them are set in stone. Yuga continues to own the Punks' IP, but is licensing it to holders, and it is reserving the right to amend the terms of the license. It says this is necessary because it is “breaking new ground and need[s] flexibility to best serve the community.”
🛣 On the verge of The Merge ⛓
Like winter, The Merge is coming. Previously, the date has been vague, but now we’ve got a firmer one: on or shortly after September 15. That’s the date when Ethereum as we know it will transition from a proof-of-work consensus mechanism to the less energy-intensive proof-of-stake. There’s plenty of speculation around what that’s going to do to ETH and NFT prices and whether pre-Merge NFTs will be valued differently. With less than a month to go, some of the big players are weighing in.
Understandably, those who’ve invested heavily in the hardware required by PoW want to see it continue, so there’s a non-zero chance of a fork that would see PoW and PoS networks continuing side by side in a manner of speaking. But if enough of the industry’s big players stop recognizing pre-Merge NFTs (like Yuga says it intends to), that may prove unsustainable.
To debunk some of the misconceptions about The Merge, the Ethereum Foundation has released a handy guide. Illuminating as it is, it’s also saddening: according to the guide, gas fees (the price of Ethereum transactions) aren’t going to get any cheaper. Sorry frens.
Bag boosters 💰
The week that was (August 10 - 17, 2022) 🗓
The only eventful movement in this week’s top five comes courtesy of 8liens NFT, with the remaining slots held by so-called “blue chips.” In the bottom half of this week’s chart, it’s Rare Apepe YC and Lady Ape Club’s ongoing presence that’s the only surprise. Derivatives gonna derivate, but can they last? Tune in again next week to find out!
🤷 At least our failures are cheap 🤭
Shiller smackdown 🤼
As its name suggests, Truth in Advertising (TINA.org) is an industry watchdog that works to promote transparency in one of the world’s oldest and seediest trades: advertising. It’s been calling out celebrities including Reese Witherspoon, Justin Bieber, Paris Hilton, and Jimmy Fallon for promoting NFT projects without disclosing their vested interest in them, whether because they’ve entered some sort of commercial partnership, or they’ve been given NFTs from the projects they’ve subsequently shilled.
Other targets in TINA’s sights include Vitalik Buterin fanboi, Tom Brady, queen of the GOOP, Gwyneth Paltrow, and former professional boxer turned professional rug-tugger, Floyd Mayweather. As TINA points out, it’s not being petty or trying to tattletale; it’s trying to remind celebrities of the Federal Trade Commissions laws governing endorsements and testimonials. Our advice? Wen in doubt (or wen certain, for that matter) don’t take financial advice from celebs. Please. Don’t be the exit liquidity they neither need nor deserve.
To the moon 🌜
This week’s installment in our ongoing series Aged Actors Dropping NFTs stars the original Hannibal Lector himself,
Ser Sir Anthony Hopkins. It’s called The Eternal Collection, and it features AH doing his best Michael Keaton impression.
Vogue Business has a (paywalled) deep-dive into gmoney’s forthcoming “luxury T-shirt” drop. We can’t read the whole thing, but we’ve seen it shared around a lot, so if you have a VB account feel free to hit us up on Twitter with the salient points.
Our pals/partners at CoinFund announced a new $300 million, early-stage web3 venture fund.
Bored Ape Yacht Club reached and breached 1 million followers on Twitter, and just as it had threatened to, it hosted a Twitter Space to celebrate. ¯\_(ツ)_/¯
🪡 Thread of the week 🧵
Bedtime reading 📚
Our boi (your boi, and everyone’s boi) Vitalik Buterin weighed in on the issue of NFT royalties a year ago with a brief but thought-provoking Reddit post entitled, “Reminder: in the long run asset transfer fees are probably a bad idea.” 👀
☕️ Gm to you, and you, and you 🌞
Goats only 🐐
Whether you’re planning to put your Punk in a pantomime… or you’re a portrait purist passionate about preserving Punk’s prestige by putting paid to partnerships… you should be watching or listening to Goats and the Metaverse.
In each episode, collectibles OG and entrepreneur Stan “The Goat” Meytin and Metaversal co-founder and CEO Yossi Hasson talk about digital and IRL collectibles, NFTs, and the week’s news worth knowing.
Aside from providing invaluable insights into digital art and collectibles, Stan and Yossi are also putting together a collection of NFTs dubbed “The Goat Vault.” When the show hits 5,000 subscribers on YouTube, one of those lucky subscribers will win the contents of the vault which, at last count, was valued at over 10.82 ETH (~$19,700).
The Metaversal Speed Date 🍸
Whenever we can, we ask a prominent (or emerging) NFT artist five simple questions. This week it’s the turn of Archan Nair, a visual artist and illustrator based in Berlin, Germany. Nair specializes in digital art and mixed media and has produced work for the likes of Sony, Netflix, Samsung, Red Bull, Adobe, and Nike, to name just a few.
What was the first NFT you ever created?
It’s a very special piece of work titled "etage." [pictured above]. It’s truly a very intimate work of mine.
Which of your own works are you proudest of?
Oh! This is a really difficult question… all are part of my journey and a deep reflection. But, some of my favorites are “encoded,” “encore,” “quarantine,” “shine,” and… I think, well, all of them, really!
What’s your favorite thing about being an NFT artist?
I love that we are strong elements and creators of this new revolution and cultural shift. I love how transparent and open everything is, and that there is such a clear exchange between collectors, artists, and builders of all kinds. There’s also so much learning and exploration to do!
Money <> mouth 💸
We acquired our bat-faced Noun almost exactly a year ago, on August 16, 2021. In part, we were motivated by it being the first animal-headed Noun, in part by it being the last of the single-digit Nouns, but for the most part, because we believe in Nouns DAO and its mission. It’s one of the most successful CC0 projects, one of the most successful DAOs, and a project we believe is going to stand the test of time.
Until next time, see you in the Metaverse.
P.S. This week’s email header image (or footer image if you’re seeing this on Substack) is courtesy of AI art platform Midjourney and the efforts of Metaversal fellow and generative artist, Chris Barber. Thanks Chris!