Explore how Magic Eden’s optional royalty system on the Solana blockchain benefits both artists and collectors in the NFT ecosystem.

Introduction

The rise of Non-Fungible Tokens (NFTs) has revolutionized the digital art landscape, providing artists with new avenues to monetize their creations and collectors with unique investment opportunities. On Magic Eden’s Solana marketplace, a significant innovation has emerged: optional royalties. This feature empowers buyers to actively support creators by choosing the royalty percentage they wish to contribute with each purchase. In this blog post, we’ll delve into how Magic Eden’s optional royalty system operates and explore how platforms like Coda are further advancing the NFT ecosystem by addressing the evolving needs of artists and investors.

What Are Optional Royalties?

Optional royalties on Magic Eden provide buyers with the flexibility to select the royalty percentage they wish to pay to creators when purchasing NFTs. Buyers can choose from three options:

Full (100%) Royalty: The entire royalty percentage is directed to the creator.
Half (50%) Royalty: Half of the standard royalty rate is contributed.
None (0%) Royalty: No royalty is paid, giving buyers the option to support creators to their discretion.

By default, royalties are set to full (100%) for every transaction, ensuring creators receive their full compensation unless the buyer opts otherwise.

Mandatory Royalties and the MIP-1 Standard

It’s important to distinguish optional royalties from mandatory royalties governed by the MIP-1 standard. Optional royalties are available only for NFT collections that have not adopted the MIP-1 standard. Collections adhering to MIP-1 enforce a fixed royalty rate, leaving no room for buyer discretion. This distinction allows Magic Eden to cater to a diverse range of creators and collections, balancing flexibility with established royalty standards.

The Rationale Behind Optional Royalties

Magic Eden introduced optional royalties to empower buyers and foster a more engaged and supportive community. Recognizing the challenges posed by a landscape where creator royalties are sometimes neglected (the “zero creator royalty meta”), Magic Eden aims to adapt to market trends while maintaining the integrity of its ecosystem. By allowing buyers to make conscious choices about royalty payments, the platform promotes a fairer distribution of earnings and strengthens the relationship between creators and their audience.

How Optional Royalties Work

Optional royalties are implemented exclusively on the BUY side of transactions. Here’s a breakdown of how the system operates:

Sellers: Receive the listed price minus Magic Eden’s platform fee.
Buyers: Pay the listed price plus the royalty percentage they select (full, half, or none).

This setup ensures that creators are compensated based on the buyers’ choices, providing a transparent and flexible royalty distribution mechanism. Buyers can set their royalty preferences at the account level, which are then applied to all future transactions unless changed.

Applying Optional Royalties

To set your royalty preference on Magic Eden:

Navigate to the Collection Page: Access the specific NFT collection you wish to engage with.
Locate the Settings Icon: Found in the bottom right-hand corner of the screen.
Select Royalty Option: Choose between ‘None’, ‘Half’, or ‘Full’ royalties.
Confirm Your Choice: Your preference will be saved and applied to all subsequent transactions unless modified.

Advantages of Optional Royalties

The optional royalties system introduces several benefits for both buyers and creators, enhancing the overall NFT trading experience on Magic Eden.

Buyer Benefits

Empowerment: Buyers can tailor their support to match their values and budget, deciding how much they wish to contribute to creators.
Access to Perks: Opting for full royalties may unlock additional utilities or perks offered by creators, providing tangible incentives to support them fully.

Creator Benefits

Flexibility: Creators can still receive full royalties from buyers who choose to support them at the highest level, ensuring fair compensation.
Enhanced Exposure: The system encourages buyers to consider the importance of supporting creators, potentially increasing visibility for creators who offer unique benefits and fostering a supportive community.

Comparing Magic Eden and Coda: Enhancing NFT Royalties

While Magic Eden’s optional royalties offer a progressive approach to supporting creators, platforms like Coda are taking NFT royalties a step further by addressing broader aspects of intellectual property (IP) rights and monetization.

Magic Eden’s Strengths and Limitations

Feature	Magic Eden
Optional Royalties	Allows buyers to choose between full, half, or no royalties, promoting flexibility and buyer empowerment.
Platform Fee Deduction	Sellers receive the list price minus platform fees, ensuring a streamlined revenue process.
Limited to Solana and Specific Standards	Optional royalties are only available for collections not adhering to the MIP-1 standard and are exclusive to the Solana blockchain.
Buyer-Centric Flexibility	Empowers buyers to support creators based on their preferences, fostering a more engaged community.

Limitations:

Scope: Limited to Solana and specific royalty standards, potentially restricting cross-chain flexibility.
Functionality: Focused primarily on royalty distribution without broader IP management or monetization features.

Coda’s Innovative Solutions

Feature	Coda
IP Rights Tokenization	Enables artists to tokenize their intellectual property, offering fractional ownership and investment opportunities.
Automated Royalty Distribution	Utilizes smart contracts to ensure transparent and automatic royalty payments, enhancing trust and efficiency.
Zero Upfront Costs	Artists can access tokenization services without initial financial barriers, making it accessible to a wider range of creators.
Broad Blockchain Compatibility	Supports multiple blockchains, facilitating cross-chain IP management and broader market reach.
Enhanced Monetization	Provides diverse revenue streams through IP token sales, fractional ownership, and direct community engagement.

Advantages Over Magic Eden:

Comprehensive IP Management: Beyond royalty distribution, Coda offers extensive tools for managing and monetizing intellectual property.
Cross-Chain Support: Facilitates operations across various blockchains, enhancing flexibility and integration within the broader crypto ecosystem.
Investor Opportunities: Allows supporters to invest in and earn from the success of their favorite artists, creating a symbiotic relationship between creators and their audience.

Future Scope

Magic Eden’s optional royalties are poised to evolve, with potential expansions based on user feedback and market dynamics. Future developments may include extending optional royalties beyond the BUY flow and integrating with additional blockchains, aligning with the growing demand for flexible and transparent NFT marketplaces.

Similarly, Coda continues to innovate by exploring partnerships with existing music platforms, podcasts, and content creators to broaden its user base. As the legal landscape around tokenized assets becomes clearer, Coda aims to establish itself as a leading platform for digital ownership across multiple creative sectors, including art and literature.

Conclusion

Magic Eden’s introduction of optional royalties marks a significant milestone in the NFT marketplace, empowering buyers to support creators in a manner that aligns with their preferences. By offering flexibility in royalty payments, Magic Eden fosters a more inclusive and sustainable ecosystem for digital art.

However, platforms like Coda are building on this foundation, offering comprehensive solutions for IP tokenization, automated royalty distributions, and broader monetization strategies. For artists and investors seeking a more integrated and versatile approach to managing and profiting from intellectual property, Coda presents a compelling alternative.

Ready to take your intellectual property to the next level? Discover how Coda is revolutionizing IP rights and join a community where creators and supporters thrive together.