Cross Chain Spaces hosted by Binx from Pixel Land on the importance of royalties in Web3 (Part 1)

In this Twitter Spaces hosted by Binx from Pixel Land, members from various communities join to talk about the role of royalties in web3 and NFTs in the light of popular exchanges rejecting them.

Transcription

Pixel Land – Binx - Founder
‍All righty guys, everybody welcome to Bring Your Own Chain, our second-ever episode. Happy to have you all with us here today. I'd like to say hello to Bones and Goose. What's up guys?

Pixel Land – Bones - Founder
‍What's going on?

Flip – Spaces Host
‍Hey, what's going on everybody? Happy to be here, happy to expand, happy to spread knowledge and talk about some royalties today.

Pixel Land – Binx - Founder
‍Absolutely. So, the topic of conversation today is quite a hot topic I've been seeing recently: NFT royalty. So, we'll definitely be getting into that. Let's get some quick intros out of the way for anyone that's not familiar with us. My name is Binx. I have been a part of the H-bar Community since around September/October of 2021 when the NFT ecosystem kind of started here, and I am one of the co-founders of Pixel Land. I've got Bones here with me, so Pixel Land is an ecosystem of pixel art creations, NFTs, and Web3 gaming. And, Bones, I'll let you introduce yourself.

Pixel Land – Bones - Founder
‍Hey, what's up everybody? I'm Bones. I'm our pixel artist/slash indie game dev, if you can say that. We're building stuff out on Hedera. I'm looking to get into Web3 gaming and push that envelope forward.

Pixel Land – Binx - Founder
‍And we've also got one of my favorite people ever, Goose here. Goose, would you like to introduce yourself?

Flip – Spaces Host
‍Hey, what's going on? For sure, I'm happy to be here next to the Pixel Land peeps. My name is Flip Goose, whatever you want to call me. Originally started on Ethereum and moved over to Cardano where I kind of made a home. I'm going back to Ethereum now. I'm on H-bar, Solana, and V chain, a whole bunch of different chains. I just love NFTs in general, so I'm here. If y'all could retweet the room, I see it's only three retweets and one is mine, one is Bones. So if y'all can spread the love a little bit and let's get this room, and let's talk about these royalties, a very good topic.

Pixel Land – Binx - Founder
‍Yes, please retweet the room. Put something in the comments if you have any questions, anything you want us to bring up during the conversation, please add them in the comments. You can see the little comment bubble at the bottom right, so put them there. We do want to have a bit of structure to today's space because do you want to go over some of that?

Flip – Spaces Host
‍Yeah. So, do you know that this is a cross-changing space, not on purpose, but people tend to show their project. We kind of want to stay on topic. We will allow, like at the end of the space, some shilling to go on, but please, even if you're talking, you feel yourself shilling a little bit, that's fine. Just try not to go on a long tangent, keep it under two minutes, and we're just going to stay on topic with a lot of different chains here, a lot of different perspectives. So, we want to get to everybody and just be fair.

Pixel Land – Binx - Founder
‍Absolutely. So, we're reserving like the last 10 to 15 minutes to let those of you up here from different chains go ahead and show your projects, but we'll try to keep the conversation flowing throughout so, we can stay on track and within the timeframe. So yeah, so with that topic, NFT royalties, does anyone want to give like a brief synopsis of what's been going on? I know Patches, you've been quite, involved in these conversations. Did you want to start off by telling everyone what's kind of going on with the Open Sea and the blocking of artist royalties and all that?

Turtlemoon – Patches - Founder
‍Yeah, yeah, I definitely feel passionately one way about this, and have been engaging in a lot of different spaces across chain. And I think it's an extremely important topic because it changes the entire paradigm and business models that every project has, at least assumed in the last if they were made in the last year were constant. And so, I think like this conversation first started six months ago-ish when Magic Eden removed the need to pay royalties on every transaction. That's when like the first explosion of all the Solana people talking about, "Hey, you know, are royalties needed? and it was like a fight to the bottom of trying to get more people, more volume on your marketplace by removing the creative royalties. And then they kind of came to, I think Solana is working on like a centralized solution on how it would work where worlds user always guaranteed, unfortunately, I'm not as up on that. So, if anyone from Solana can talk to the current state of realities, I think that'll help. And then, recently Ethereum Open Sea, which everyone knows, they just, like, what you wake up one day and it's zero percent fees on Ethereum, on Open Sea. Now, so that impacts Yuga Labs, that impacts CryptoPunks, that impacts, you know, Dead Fellows. It's like all these major brands that have built their empires off of how royalties function are now impacted with that previously guaranteed residual income is gone. And so, the ripple effects, I think, much bigger because it affects bigger players. And then it affects the biggest, the creator of NFTs and the biggest chain of NFTs. And so, now the question that's coming up is this is this has been the argument that I've heard on both sides, is, you know, are royalties a guarantee of payment, and is that a paradigm that we want in the NFT culture going forward? Or are projects needing to look at the state of the market and build in the assumption that royalties won't be paid, and it's like viewed as a tipping service and survive as a functioning business through other revenue generation means. And, I think that's the that's an overview of the conversation and the arguments I've heard so far. But I definitely have a passionate argument about why royalties are important.

Pixel Land – Binx - Founder
‍So, Patches, or even, is that Cantor behind NFTier? If you guys want to maybe touch on how royalties are different, how royalties are different on NFTs on Hedera versus like, like ETH on Open Sea and stuff because like for me, for someone who doesn't like do any purchasing or trading NFTs on ETH, when I first heard about this, it kind of didn't really make sense to me. I was like, "Wait, what do you mean they control it? Because for us, the royalties are tied to the NFT itself, so regardless of the Marketplace that you're using, you're still getting paid that royalty if you, as a Creator, put that on there. Correct versus like Open Sea, the marketplace controls whether you get your royalties or not.

Turtlemoon – Patches - Founder
‍Yeah, yeah, the breakdown is like a smart contract. Like an NFT is like a smart contract in a standard, and one of the calls, this is as I understand it, and Kantorcodes might actually be more, you know, he's much more in tune with smart contracts. But it's an optional call to call execute royalties when there is an NFT transfer, which is another call on a smart contract, and it was just kind of assumed that people would call that call on the smart contract as it's executed, and my understanding is there's new execution just removes that execute royalties or gives the person buying it the option to call that or not. So in NFTs on Hedera, it's much different where the protocol level, in an atomic transaction, will always execute the royalty on the token ID. To non-technical way to say that is if I transfer through Hedera any NFT to you, bigs, the amount of H bar that's in that transfer will always have its royalties removed and given to the Creator account to find right. The caveat is that you can circumvent royalties on Hedera. We all know about the .001 secure trades, you know, takes the royalties out of an extremely low amount, and you've, you know, again, NFTier is better to talk about this, and I'll throw it over to them right after. When you use Smart contracts to Mint, if you wanted to, you could circumvent the royalties by making first the transaction of the money, then the transaction of the NFT with a very low amount of money like the 0.001 so that the royalties aren't enacted, when the HTS call is called. So currently we don't have the problem on Hedera, but we can't throw stones in glass houses and say we're Hedera has the solution. We have more of the solution where the protocol level does execute royalties whenever there's an atomic transaction, and that's a really hard problem to solve on Ethereum and Sol on Tezos, on all of them. We don't guarantee it's impossible today to guarantee royalties. We just don't have any, I would argue, malicious marketplaces that remove the royalties and all of that talking. I'm sorry, NFT, right?

Pixel Land – Binx - Founder
‍But the difference is, is that like the marketplace is here, they protect almost protect the Creator versus like if it's done through secure trade, you can kind of bypass that, right?

Turtlemoon – Patches - Founder
‍But currently no Marketplace has removed royalties, and I think if you did, the NFT Community would be with pitchforks and fire in the Jersey out of town like your Frankenstein's monster in six months. I don't think that's true in a year when we have like one-tenth of adoption of Sol. I don't think that's true anymore, and so I think it's really good to talk about it on Hedera now and find out the solutions that we can put in through hips or through other means to guarantee royalty execution, and we're positioned to have the solution, but it's something that we're gonna have to deal with in the next year.

Pixel Land – Bones - Founder
‍Is there a reason or like a reason behind, I guess, why they would choose to not want to enact the royalty? Like, I get it from the monetary side for somebody who's just like, "Yeah, whatever, I don't want to pay the Creator." But it seems to me, and probably biased because I'm a Creator, it's like if you're trying to get around the royalties, doesn't that just end up hurting all the projects, right, that are trying to build out the ecosystem? Like, it seems to me like that's kind of inherent in what you would want to do to support the project.

Pixel Land – Binx - Founder
‍Yeah, so essentially what they're doing is favoring the collectors to draw more volume on their Marketplace because a lot of people don't want to pay those extra royalty fees, correct?

Pixel Land – Bones - Founder
‍So is that kind of the play, right? And then they still get a percentage of the sales, like the actual Market still gets a percentage of those sales.

Pixel Land – Binx - Founder
‍Well, I think they cut their actual, like, their fees down for a limited time, correct me if I'm wrong, Patches, but I think it was like 2% now it's like zero for like a limited time, at least from what I recall.

Turtlemoon – Patches - Founder
‍Yeah, on OpenSea. Yeah, you say, let a Flip answer that one, I think he'd have a better.

Flip – Spaces Host
‍Yeah, yeah, on obviously. Yeah, so like the whole royalties thing, why it's interesting is because some projects account for royalties when they're going over, I guess, their finance strategy. That shouldn't be the case because that volume isn't promised. It's never promised, you know? What if, you know, you hit a brick wall and people aren't buying your NFTs? Gonna have to market anymore. Projects are relying on that instead of, you know, building with the mint funds or any type of funds that they had already and building it out, you know, that way which I think is the more appropriate way. And it kind of, when you cut out royalties, it makes projects work a little harder to figure out ways to have, you know, income coming in or be able to build or, you know, some something else besides, you know, a second man or a mutation man or the third man or the fourth man that that's not going to be sustainable, you know, long term. Like you have to be able to build your project out with the funds that came in, you know, whatever meant, you know, if you promised one man, it should be one minute for the project, and you should be able to build now. Raise your prices if it's an issue. You should raise your prices, you know, you need, and you know, you could display that and show what you're going to do with these funds based on, you know, this is why I'm hiring my prices. People get stuck around the same, you know, most projects average maybe point zero two ETH, this is what we're gonna cost, or whatever. Whatever the average is on any change, they try to stick to that cost to be appealing to the public, instead of, you know, being honest like, "Yo, we need more money than this. We need more, you know, we need more to build." You want to see these things be accomplished in our roadmap, well, we need more.

Pixel Land – Binx - Founder
‍And there is also that argument of like not only are, I mean, it's always about like getting paid for your content, right? Like having your royalties on there as an artist, as a Creator, it almost like guarantees your ownership of it. And I do see that argument,  side as well. Patches, go ahead, you have your hand up.

Turtlemoon – Patches - Founder
‍Yeah, I saw Depth does too, so I'll throw it to him right after. The biggest problem with that assumption there is like, again, my focus is onboarding non-technical artists to engage with the global audience without having people steal the money they should earn from their art, and no middleman. And the only way that works is royalties. An artist who is a musician would never embrace web3 if they can guarantee that every time someone streams on Spotify, it might be a crap number, but they'll get some revenue from that. But if I've been an NFT, I only get the initial sale, but then any time that that NFT's played, I don't get anything. And then even on the secondary market when it's sold for the next 10 years, I get zero value. Why would I embrace this as a medium? And just extrapolate that to any artist, it's like the royalties are what were the incentive to break the regular grind of Web 2 that enabled creators to resonate with an audience directly, impact, and be incentivized to continue the project by residual income. If you do something that's successful, more people want to buy in, that buy-in raises the floor, the floor goes up, I get paid more. That the entire foundational mechanic of this economics were based on a Creator being able to continue based on the success of that continued progress, and the removal of royalties is like, I don't know, front-loaded and that just destroys any artist engaging the space productively in my view.

Flip – Spaces Host
‍Depth, there are ways to make money, and so there's, there's ways you can be paid, you know, to make the art for the project up front. Royalties is an add-on which is beneficial, and I think the only way to kind of fix this whole thing is to only artists can get the royalties, not the projects, but then again, you know, it would be a bunch of loopholes in there, there's no way to control that. So, I do see what you're saying and I do actually agree with what you're saying, but sometimes to me, like projects with Rooks, like I said, they count on it too much to build, and then they often go, you know, okay, we gotta do another mint, or we gotta do this, our funds are running low, and it just like, it's just like, come on, like what, we gotta, somehow.

Turtlemoon – Patches - Founder
‍I would argue that we gotta do another mint would be the answer to a lot of projects that are like, here's an example: I run a turtle moon, it's a company that at one point we had a road map and a trajectory where we could bootstrap this, we could hire developers all off of what we had, and overnight we lost nine tenths of our revenue because of the coin crashing from FTX. And so even if you have a road map planned out, at the beginning you're incentivizing projects to pull all of that liquidity out to USD so that they can have a defined roadmap.

Flip – Spaces Host
‍Not all of it, but guarantee your struggles financially are not my struggles as somebody that's buying into your products. You have to fix it if you think there's value, and the answer to me isn't okay, we got to come out with season two. Now the answer to me is, then I will. I will take, and we're like, I said, I'm just being hyped. I'm not gonna play devil good conversation. I'm kind of playing, like a little bit of me is playing, because I do understand what you're saying, but on the other hand, as an investor, I'm a flipper. I love NFTs. I'm moving on to the next one because I see that you can't handle the funds from them in, you know, you're irresponsible as a team, not you, not Turtlemoon, you know. I'm not saying you, I'm just saying in general, and it'll make me move on.

Turtlemoon – Patches - Founder
‍But yeah, but the Dynamics aren't the Project's fault, you know? I'm not freaking SBF, I didn't destroy, I'm not Luna, you know?

Flip – Spaces Host
‍And like even projects put it in Stables. Did you invest in a real-world company that offers some type of residual income over time, or did you just let it sit there? Like what did you do with the funds? And that's what the cybers when I'm picking the NFT project that I want to hold long term. It's a couple of key components that I look at, and one of the key components that I look at is what are you going to do with these funds? What is your plan? What is your goal? What is your, you know, plan A, B, and C? That's kind of just like what I look at. But we got.

Pixel Land – Binx - Founder
‍Let me throw it over to that real quick because he did have his hand up, and then we'll go over to,  Death Ranger.

XRP Café – Vet - Founder
‍Cool. Yeah. Hey, guys, yeah, for that, I would say, it's like a very common theme with the second collection and with the funds discussion, or third collection even, but this is just the reality, basically, you know, Patches basically also said that you know, sometimes you cannot plan this ahead, and if things happen, like what should you do? In my opinion, this is very important to just incorporate the community in and see if everybody's on the same page. And if so, then that's, in most cases, the alternative is mostly then, well, you know, what should we do? We have no funds, and we just got wrecked by, you know, no fault of our own. So yeah.

Death Ranger
‍Yeah, you know, just, thank you for having me up, by the way. Being saw some space, you know, but just to what you were saying, flip right? If you invest in an NFT project, right, expecting them to take the money and then invest it and then do something with it, you just bought a security. And so, if they're not a registered company, you know, this is an unfortunate position that I think a lot of these projects are in because this is people don't realize that a project is a business, and if you don't treat it like a business, this, you know, there's regulations and laws that exist already, and you know, it's a difficult position to be in, um, as a project. That's why it's easier to come into it with capital or have VCs or, you know, some sort of funding method that's, rather than funding yourself with the public. And I think, I think that's one of the problems that probably exists today in the space, but, you know, it's, yeah, it's just one of those, you know.

Flip – Spaces Host
‍Yeah, I feel like we're in a gray area when it comes to the rules, kind of with the NFTs, so it's kind of like, it could be a bit confusing t many people, but I like, I said, I do understand what you're saying, but I'm just speaking kind of on the royalties aspect of things that I know a lot of projects that don't deserve royalties, that don't give it back to artists, which it should be, to me, 100% back to Harvest. Just taking royalties and, you know, doing nothing with them, and it's just like pointless. Why are we even allowing that? It is kind of interesting that people came together to actually take royalties away in general. I would never, if someone told me this, you know, like two years ago when I started NFTs, that, you know, they're going to take away royalties, and, I wouldn't, I would not. I was like, "No way.

Death Ranger
‍This is one of the benefits of the NFTs on The XRP Ledger. Nobody can take your royalty." So, because, uh, if you do, virtual machines or, right, the Ethereum virtual machines, my contract with secondary layer, the, this is why the marketplace is set the right royalties, but what we've built on The XRP Ledger is the royalties are built into the actual, account-based unit itself. So, nobody can take that away from you.

Turtlemoon – Patches - Founder
‍Yeah, that's, that's kind of like, Hedera as well, where the protocol layer is what executes the royalty. The difference in why you can circumvent it kind of is because we are an EVM-compatible chain, and so you can execute smart contracts in a second. That you can do that, you get all the benefits and problems of EVM, which is smart contracts that circumvent royalties.

Death Ranger
‍I just was agreeing with patches. Definitely pluses and minuses, right? Because there's definitely more logic functions that can be executed on it, but in this case scenario with the royalties, it's you know, this is obviously causing an issue.

Turtlemoon – Patches - Founder
‍Does web hooks? Will that enable an ability to circumvent royalties by chance by updating the ledger on ownership of NFT without having to execute the function inside of the was it xls20?

Death Ranger
‍I mean, you know, you could too, right? If you really wanted to, you could circumvent rules. He's ready, right? I send it to you, and basically, I charge you zero for it, and so there's no royalty, and then you send me the feedback later.

XRP Café – Vet - Founder
‍That's how like most of these royalty evasion programs work, basically. They use the transfer because you cannot deduct the royalty from zero, right? So, and they funnel the funds from on a second channel, and if you do this in a somewhat secure or let's say trustworthy manner like on a platform Marketplace, then people happily to do this, yeah.

Death Ranger
‍So I mean it exists, right? The possibility always exists. The idea is to try and uh minimalize it as much as you can at like the protocol level, I guess, in a sense.

Pixel Land – Binx - Founder
‍Yeah. Marty, did you want to jump in real quick?

Marty Mcfly – NFT Creator
‍What is up guys, thanks for having me out Banks, and thanks Goose and Bones, this is awesome space, um, but I think it can have a different perspective because I don't own a project. I'm a 3D artist, and I've done some commission work for a couple of different projects, the main one being I made the cream lands for creamies,  and in that contract, I get some of the royalties from our from the art, so if they were to like ever sell or anything like that, then I would that those royalties would still have to be honored, because on Hadera at least not yet is not optional, so for me, like with that contract because I'm not doc, so it's not like I could take anybody to court, but it is nice to have that security of it being like on the network and I'm for sure going to get those royalties regardless of like if there's a falling out or if they sell or whatever.

Death Ranger
‍So this is this is an interesting position, and so to what you had said before flip, like this gray area, I think it's easier if you're an artist and I sell you a piece of music or a piece of art, right? If that ever sells, if I get the royalty for it, I think that's pretty clean and cut. That's the way that the laws exist already today. However, if you go and sell it and you get a royalty for it, I think that's where it starts to become questionable because you know, you could then be expecting me to do something in my life that will raise the value of it and so that the yield, you know, get a higher royalty cut when it sells in the future. And so I think that could give a proposition of expected value in the future but from an artist nobody should be able to take those royalties away from them, right?

Marty Mcfly – NFT Creator
‍That's kind of my point because it could get to the point where, like say, there's a Marketplace that supports royalties and one that doesn't, like in the future. The Cream Lands could be like, "Hey, for our holders, let's switch to the let's go on the Marketplace that doesn't have royalties," and then that's a decision that they're making for me also, that would go technically against the contract that I have. And there would be really nothing that I could do about that.

Turtlemoon – Patches - Founder
‍Well, to be clear though, like, the project wouldn't dictate who sells on what secondary Market, so right, it's not, it's not a project level decision. At the same time, with technology, there's like two, there's two things that I always think about. One, anytime you create a piece of data, the best and worst thing will happen. Data lasts for hundreds of years, and you just have to assume the worst-case scenario with any piece of data will happen when you create it. And the other is there, most things are bullying, and so royalties are just like that where, okay, if there is an option to not pay royalties, all royalties are gone. Like, there is no delineation between this is a music track from an artist, and this is a painting from an artist, and this is a pfp project from a project. It's either royalties are executed on nfts or royalties are not. And so, unfortunately, I think that is a lot of the breakdown. Like, I think you were even saying it. Your name's Flip, but I guess people call you Goose, but that's cool. I'll just call it Goose. Yeah, you know, like, to your point, you're like, "Hey, you know, this project isn't using the royalties for anything." I would argue the market dictates if that matters. You know, people won't keep buying into a project and giving royalties to the project if they don't use them to do anything. And so, the market dictates that they don't get more recurring revenue, and I would much rather some nefarious projects gain revenue that they don't use than some amazing artists not gain royalties from the art that they've created. That the trade-off to me is we should have royalties all the time because there isn't there is no gray area. It really is black and white at the end of the day.

Flip – Spaces Host
‍So, been around so long around on their teeth, and I've seen so many projects, and it's just the nature of the Beast that we're in. They just, you know, plummet, and a lot of artists, a lot of students, a lot of projects rely on those royalties. They'll burn, they'll run through that mid-money, and maybe they're doing awesome, right? Maybe they got a great aftermarket. Volumes up, but they just have no more money, and they're just relying on the little bit of royalties that come through. And I just think that's when you take away royalties, and I like, I said, I'm kind of playing devil's advocate, but when you take away royalties, it makes a project to me have to be more responsible. Have to, you know, to plan out without, you know, some type of secondary income coming in you have to plan better because now you can't fall back on that.

Pixel Land – Binx - Founder
‍Yeah, but you're assuming that's what they're relying on just because they want that ownership. Just because they want to have royalties on their work, does it mean that they're relying on that for their income? That's just one source, and to be honest, a lot of projects aren't making that much off royalties, but that just guarantees your ownership of your content.

Flip – Spaces Host
‍I would say for these, how do you put in IP rights with that as well? We have only royalties on the NFT that they're giving, you know, individual IP rights to, so should that kind of transfer over to them, or like how would y'all deal with that? I've seen the community argue this before.

Pixel Land – Bones - Founder
‍That's a tough question. I feel like it's the, I feel like there's a line blurred right, at least from the way that you're putting it. Goose, I get what you're saying, like yeah, you know, you should be responsible, you shouldn't rely on this to have a good project, and I agree with that, but to kind of touch on what Patches is saying too, I think from your standpoint, it feels like that's almost like a startup, right? It's like okay, so you're a startup, these are your funds, you don't need to rely on royalties. However, the same networks, kind of like Patches said, are also helping out artists and people that aren't really, you know, the goal of their project is really just art, writer, somebody who's trying to express themselves, and then they're also going to get wrecked by this no royalty thing. And the issue there, I think, at least the way I would see it, and Patches had hit this on the head, was, you know, like, to me, that's kind of the point of why I think Web3 is really cool. People were like, oh, I can go over there and do whatever art I want to do, put out my creativeness over there, and I'm going to get paid on it no matter what over time, right? And so, if you do take off, if you do start off as a new artist who no one knows about and, you know, 10, 15 years now, whatever, you'll kind of have that residual on your older pieces too, and I think this takes away from that, and it's not as enticing. At least, I wouldn't be as enticed to come over and want to create something if I knew that down the road, I'm just, you know, might as well be posting my stuff on Instagram, you know what I mean?

Pixel Land – Binx - Founder
‍So, right, 100. Kind of interesting, but here's the thing: I think that the power shouldn't really be taken away from these creators. You yourself should be able to look at your project as a whole, think about the fact that like, okay, I know there are going to be people who aren't going to want to participate in my project, buy my NFTs. If I have royalties on here, do I want to continue putting royalties? Is that an option for me? But the thing is that option is being taken away, and it's being, it's the thing, is where, if you're a collector, collector that doesn't want to buy an NFT that has royalties on it, then you have that option. You should have the option to do that, but creators should also have the option to be guaranteed their royalties as well. So, I don't think that power should be taken away from either side.

Pixel Land – Bones - Founder
‍Well, even when you look at, I mean, honestly, if you look at it from a standpoint of, even like copyright issues, right, like you're not allowed to take things and make them your own, with like,what's the term for it? I can't remember the name of this. I don't like intellectual, intellectual content or whatever, let's say, right. Like, I can't just go, and I can't just go Avatar, I can't just go and steal Star Wars, right? And they get their cut of all their stuff, right, and they have the rights to it, and that's kind of what royalties felt like or at least it feels like to me, and you don't have to have a lawyer involved and all this stuff because it's just your work with your, your contract tied to it, right, or your, your royalty fee. And now I think we're just getting into, uh, kind of the weeds of it, right? You're gonna have to find a way to protect yourself.

Pixel Land – Binx - Founder
‍I think it was Brad and then Nostradamus.

VeSea – Bread - Developer
‍Howdy, my name is Brad, and I'm here to crap on royalties for utility collections." Flip, you're my dude, patches, you're my guy. We've been talking about this stuff for the last few days, I think. So, I totally agree with Binx and it, for me it goes back to first principles, right? I think like fundamentally because the reality is you cannot enforce royalties, right? You can't. So, it depends on you, well, sorry, you can't unless you cross a line. You have to cross the line of, as a creator, I'm going to limit people from using their NFT on X or Y in order to enforce wild royalties, right? That's literally the only way you can do it, is you have to gatekeep where people can transact with NFTs once they have them in their possession. If you are willing to cross that line, which I am not, I think NFTs should be a true ownership of the person in their hands, and they should be able to transact wherever they want, royalty abiding or not. Like, that's my personal belief, and it's up to the creators to do the carrot versus the stick approach, and I think carrots work better than sticks, and I think royalties are perfect for art because the carrot is supporting the artist, and you see that people with NFTs will do that stuff. Simply by having that connection to the artist, they want to support them, by and large they pay royalties because there's a level of connectivity there, whereas utility collections, and I say utility because basically anything that plans to deliver anything beyond the point of mint and they require some additional funds, those crappers are going to be trading on crap coin markets like blur, right, where this stuff is highly liquid, it's going all over the place It's not personal at all, and those people are going to go to bottom line flipping for as much money as they can make while anonymous, because they don't care. Right, that's just the natural progression of things. If you allow those people to do that stuff, and they should have the power to do that because they're NFTs, they should do. I think everyone in this world right now, because royalty is the only tool we've had. They're trying to apply royalties to a bunch of stuff that is no longer fit for royalties, and teams should be going to alternative methods of revenue generation and not simply providing services and products. I think there are alternative models like a subscription model or straight up just saying, like, you know, after X amount of time, we're no longer going to be giving utility to these collections, right? You see, like Proof Paths, they gave a three-year deadline on their utility they were going to deliver. Right, after three years, no promises. So, either going to a time-gated thing, subscription model, something else. I think the world is so fixated on royalties or it where everything dies, that they're depriving themselves and the greater community of a good conversation of what other ways can we deploy models for sustained income?

Pixel Land – Bones - Founder
‍Yeah, I think that's a really good point. Nostradamus, you want to jump in?

Upside Co-op – Nostradaomus – Head of Web3
‍Yeah, I sort of only disagree with that. I mean, like what's, you know, a core tenant of web 3 is ownership, right? And so, like there currently isn't and it wouldn't make sense to define a distinction between utility and art, but ownership is so core to web3, that the creator of any particular token, whatever it does, should absolutely have the control to impose a transfer royalty on any future transaction of it. Like that's what's fundamentally different than our current system and why, and more importantly, like you can set a royalty to zero and correct me if I'm wrong, Patches, but you can use an admin key to retro not retroactively but like you could set, you could after a token is launched, you could set the royalty to zero, and so, you know, I think that there is enough control in the hands of the creator, for instance on Hedera, that they sort of can, like they sort of can leverage their ownership over creation to the extent that they want to and to their own demise, like if they are, if they are misusing the concept of employing of imposing royalties on something. That being said, I don't think that, I mean, like, you know, much in line with Bread and Binx, I don't think that people relying on royalties and not real value creation for their community, exception you know art, like I do not mean to say that like people who create art that's not real value for their community but for everything else, you know, I think that I think that the way Hedera has done it, makes sense. And more importantly, I think it's like, you know, based on what we've discussed, I think that, like either way, it's sort of a moot argument. Right, because if you're arguing that creators shouldn't have the ability to impose royalties, then you are inferent. You are implying that the system should have the ability to impose a lack of a royalty on the Creator, which is like already what we have in our current system. So, I'm sort of very in favor of, of like the person who creates the collection gets to define their relationship to ownership of the collection.

VeSea – Bread - Developer
‍And I totally agree with you, I totally agree with you there. Like, my, I say that like I would go, I would go opposite of that, just because my own principles is, I don't think I should restrict my holders. Should I be a founder and have that power, but I totally believe it should be in the power of the Creator and they, as long as they inform their buyers appropriately, because I think the default assumption for people is that this is my thing, I can do whatever I want with it, but if the creators decide to take that away and not inform those people, then that person goes and tries to trade something and it says sorry they restricted a thing, I think that is a disingenuous thing, so I think the power should be in the creators, they should have multiple tools that they can apply to their stuff and just choose whatever is most appropriate for the vision that they have, and then inform the buyers, the buyers get it and operate within that, those Gates. I agree.

Flip – Spaces Host
‍All right, that's a lot of good, uh, points here. Thank everybody coming out to BYOC (Bring Your Own Community) cross-chain platform space. If you could, at the bottom, just retweet the space if you like what you're hearing, you know, follow people on the page, you know, get a little acclimated across chain. We're gonna go over to Patches, but yeah, appreciate everybody for coming out and just please retweet the room, comment, like all that good stuff. Thank you.

Turtlemoon – Patches - Founder
‍Cool, thanks. Yeah, definitely comment, retweet, yeah, this is a great panel. I think we have like some crazy good panelists up here. The only thing I'd say like to touch on Bread’s point, you know, like we can we can wax poetically all day. End result is royalties are gone on Eve. Royalties are optional and magicated. Hedera has royalties today and there's going to be a Marketplace eventually that doesn't. And so looking at it in that lens, in a little bit more pragmatic instead of, you know, where we would like to see it, it's where we are. The thing that I think would be, something to point out is as a project, you do have tools in your belt to make your project if you're a project creator, you can see if someone has paid for royalties or not on the last transaction, you can restrict utility based on non-royalty fees, and so you can say yes, you can just buy and sell and trade and make money on flipping, and that's cool. You just don't actually engage with the project. But if you want to come into our Discord and get roles, be in order for giveaways, have any of the utility we're building, you must have paid royalties to enter, and I think that is a way of projects gatekeeping the utility, in these marketplaces that are going to continue to remove their royalties. I think that's a survival technique. That your bandwidth goes down, you have less holders that you actually have to pay attention to. You won't pay attention to the ones that are actually paying you in residual income. You can set a minimum, so if someone sells it for like one H bar and they, "oh, I paid a royalty," it's like no, you didn't. It has to be at least, you know, 100h or something, but my only point being there's going to be more creative ways on how projects create, protect themselves from this degradation of the marketplace. I still want to see guaranteed royalties on Hedera, and I'm going to work towards it with hips and stuff, but until we get to that, I think, I think there will be ways for projects to try to get, guaranteed royalties or at least, a Karen, as Brad said, you know, not penalizing anyone, you're just like hey, if you want to engage with the project fully and not just flip it into a secondary make money, do this one thing. Uh, I thought I'll be back real soon, but I gotta call this person back.

Pixel Land – Binx - Founder
‍Thanks, patches. We'll go to a vet and then solo.

XRP Café – Vet - Founder
‍Yeah, what I would, you know, also add on this is royalty is really, in my opinion, are not anymore or enforced royalties not anymore really the killer feature for any chain in my opinion because, as I said, they can be evaded and recommended at some point, even on the xrpl, we will have to cross that bridge at some point as well. That will come and it's in my opinion more and which why I love these discussions is to see where the community is at because, in my opinion, there is way too much focus on these platforms, but less on the user behavior and users. So these platforms or platforms will always exist and they will always pop up and come, but it's more like, you know, to show the users or inform the users, hey, you basically choose with your wallet where you, you know, basically log in and do the trade and who you support, really. So, if you if you look at the classic and traditional Art Market or galleries where, you know, 70% of the sale goes to the gallery and the and the artist is really usually the starving end, royalties specifically, royalties, I would say, are such a great tool for artists to pursue their career and make a living because, like make a living as an artist, is really, really tough. So, you know, that's not, that's why it's so unfortunate because it's kind of like we won't even make the choice here.

Flip – Spaces Host
‍We're just talking about it, but the marketplace is gonna, you know, ultimately be the place that decides what happens. If a marketplace comes out for Hedera, they have their royalties. People are going to flock there. NFT traders are gonna flock there. People like me are going to be there. I lose thousands of thousands of thousands of dollars on royalties. You telling me they're going to open a marketplace with no royalties? Every majority of people will go to that marketplace 100%.

Turtlemoon – Patches - Founder
‍But I guess, so that one sentence, though, and I think this is a really good isolation of that ideology, like, I lost money to royalties. I would say your NFTs, you flipped, only had value from those royalties. And so yes, you paid money to them, and that could have been your money, but if you don't have royalties and the NFT goes down, and you flip that loss, would you rather pay royalties on profit or just have more risk in the investment that it might not even go up because there are no sustaining revenue for them?

Flip – Spaces Host
‍You know, I get what you're saying, but like I said, I've been trading NFTs for a long time. I lost so much money almost, not to say that I'm complaining about or anything like that. I understand like I said, I'm kind of with royalties. I'm like 50/50 or like 60/40 or whatever, but I'm just saying, once a marketplace like that opens up on these chains, users are going to go to that, just like this. Come on, like, especially when I know a lot of these chains are newer and it's not like big, you know, money being flipped for NFTs, but like if you look on Ethereum, you know, it's thousands of dollars for NFT, two, three, four, five thousand dollars for NFT. Royalties is a killer.