NFT Market: Decentralized creativity or e-commerce in the 1990s?

DAOrayaki|NFT Market: Decentralized creativity or e-commerce in the 1990s?

If NFT is a revolution, why should artists pay 15% commission?

NFT should represent a revolution for artists and collectors, but the market that sells these NFTs does not seem to be revolutionary at all.

This may be because most NFT markets follow the same Web2.0 business model: the centralized platform charges sellers high commissions in exchange for bringing traffic to their product listings, and the platform also extracts value in the form of customer and transaction data , Giving it a privileged position in the market.

Considering that it is very simple to mint NFT and use it as a transferable asset on the blockchain to give life to the code, which makes you wonder: “Why should artists sacrifice their profits for this?”

The reality of NFT commissions

Edward Snowden recently sold an NFT called “Keep Free (Edward Snowden, 2021)” on the foundation for 2,224 ETH. However, since the foundation charges a commission of up to 15%, if Edward Snowden chose a different NFT market, he could have been 15% “freer”.

Why can a technology like NFT get rid of the “middleman” in terms of trust (for example, proof of authenticity), but not in business terms? Why is some kind of agent still needed to connect buyers and sellers? Why does this agency fee need to be so high?

I recently had the opportunity to discuss these things with a successful NFT artist. (They did not want to be named, so I will call them “artists” or “my contacts.”) This person started to enter the blockchain field after experiencing the inefficiencies of our current global financial system. While working remotely and charging customers, the artist found that it was easier to transfer bitcoins internationally than through traditional bank wire transfers.

For artists, using NFT to sell their works directly on the blockchain is a natural next step. Early attempts to sell artworks on SuperRare failed because the administrators there did not approve the submitted works. However, the artist was finally accepted by another market after submitting his work under a pseudonym, and charged a 15% fee. Although it is relatively high compared to some other NFT markets, a 15% commission seems to be a fair commission compared to traditional physical art galleries that charge up to 50%.

Ideal market

Interviews with this artist show that it is clear that money is not their primary consideration. What they told me:

“The ideal market is a market open to all artists”

This comment allows me to look at the NFT landscape from a different perspective. Just when the dominant business models of the major NFT markets such as Foundation, SuperRare, and Rarible began to feel a bit like the 1990s, I realized that some NFT markets are doing the right thing — or at least doing it more right than others.

Here are the first three examples I can find:

1. Zora, zero commission option

Zora is an NFT market with a clean UI where users can create, bid and sell NFTs. The great thing about Zora is that there is no charge for selling your NFT, because the Zora agreement effectively creates a unique market for each work, allowing artists to collect market commissions from subsequent sales. The only cost required to publish your media on Zora is the gas fee (transmission fee).

When comparing Zora’s NFT and market smart contracts with smart contracts in other NFT markets, it is clear that Zora’s smart contracts actually have no write management authority. Most other NFT markets have smart contracts with important management authority, which may result in loss of value for users of these platforms.

In addition, the Zora NFT smart contract also allows NFT owners to update the IPFS links of the NFTs they own. This means that if your NFT’s IPFS link fails or is damaged, your NFT will not become worthless.

Now you may be wondering, what if the owner of the NFT decides to edit or completely change the IPFS link written to the NFT? Don’t worry, the developers of Zora have already thought of this.

The owner of the NFT cannot change the IPFS link from the original artwork to other content without being obvious. This is because the encrypted hash of the initial file uploaded to IPFS is written into the NFT itself. If the IPFS link fails and the file uploaded to IPFS by the owner of the NFT does not exactly match the original file, the encrypted hash will be completely different, indicating that the re-upload work does not match the original file.

This is a big problem, because other NFT market smart contracts do not have such functions built in.

DAOrayaki|NFT Market: Decentralized creativity or e-commerce in the 1990s?

Currently, the only problem with selling your NFT on Zora is that there are not as many as other platforms. However, this will definitely change. Zora is the only real Web3.0 NFT market on the list. If you want to get rid of the predatory economic practices that other NFT markets use to lock users on their platforms, Zora is the answer.

Zora’s code base is completely open source: https://github.com/ourzora

Cost: 0%

Zora NFT smart contract on Etherscan.io

Zora Market Smart Contract on Etherscan.io

All Zora smart contracts on the testnet and Polygon

2. Hic et Nunc, an avant-garde alternative

Hic et Nunc (Latin means “here and now”) is an NFT market built on the Tezos blockchain. The transmission cost of deploying NFT on Hic et Nunc is much lower than the Ethereum blockchain-as low as a few cents. The commission is also much lower, and the buyer only pays 2.5%.

Although Hic et Nunc has less traffic than Foundation, my anonymous contact (he also sells his works there) highly recommend it because there is a diverse and active artist community on the platform. This is partly because there is no gatekeeper to accept or reject submissions, and artists can remain anonymous if they want to-this is a sign of more acceptance of decentralized philosophy.

However, given that the market value of the Ethereum blockchain is currently 100 times larger than that of the Tezos blockchain, this means that the NFT minted on the Ethereum blockchain is more liquid.

Cost: Buyer pays 2.5%

3. OpenSea, a veritable mainstream option

OpenSea is currently the NFT market with the largest active users. OpenSea was established in December 2017 and is currently the most mature NFT market.

Compared with other NFT markets, OpenSea is unique in that if you have your own ERC721 smart contract (that is, you deploy it yourself), you can use OpenSea’s storefront and auction smart contracts to sell NFT to a large audience. This may be the reason you see NFTs created using smart contracts in other NFT markets being sold on OpenSea, because sellers try to avoid paying high fees in other markets.

For each sale, OpenSea charges a 2.5% fee, however, the fact that they allow users to use their own ERC721 smart contract means that users can better control their NFT.

Cost: 2.5% (from buyer or seller)

OpenSea smart contract on Etherscan.io

OpenSea transaction volume on Etherscan.io

What is the next step for the NFT market?

Artists may have some way to go in the future for real p2p sales of their own NFTs by dealing directly with the blockchain (although Zora is very close). Although it is not technically difficult to deploy your own ERC-721 smart contract, which can protect artists from future market policy changes (including fee changes), it is currently too difficult to find audiences in this way-unless you It is already very famous in the NFT world.

At the same time, most artists will continue to use some form of market, and competition between these markets will heat up. Today, sites that feel too Web2.0, such as Foundation and Rarible, will have to evolve to survive.

Interestingly, SuperRare recently introduced a more decentralized art curation through its RARE governance token, which is a step in the right direction and also shows that the market is beginning to respond to expected changes. But even SuperRare is still a long way from its stated goal of becoming a truly decentralized organization (DAO).

Ultimately, unless there is some compelling reason to stay (such as a unique large audience or amazing curation), users will simply switch to more decentralized options that offer low or zero fees, as I listed above example of. In fact, this drift has already begun to happen.

 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/nft-market-decentralized-creativity-or-e-commerce-in-the-1990s/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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