Ever felt overwhelmed by the number of things happening in Web3? Don't have enough time to spend on Twitter to keep up with everything? Don't worry, I got you. Kio’s News is here with all the highlights from last week
Index
Crypto & NFTs
🟡 Opensea is moving to optional royalties
Solana News
🔵 Metaplex’s update on royalties
🔵 Solana spaces 3D drop
Solana NFTs
🟢 SMB FAQ after the buyout
🟢 Okay Bears released “Badges and streaks”
The trader’s corner
💰 How to gain an edge on the market using analytics
Food for thought
💭 The stunning story of the best NFT project that never minted
💭 NFTs have no real users
💭 The one truth you need to learn about NFTs: Shifting metas
Would you like to sponsor or collaborate with this newsletter? You can reach out to me through Twitter or kionftguy@substack.com
🟡 Opensea is moving to optional royalties
The inevitable finally happened. After fighting for creator royalties for months and stating that they would always respect them, Opensea finally had to give up and turned to an optional royalties model. Why was this inevitable?
Ever since royalties were created, there was a problem with them. They are not enforceable, or at least they aren’t in their current form. Why have we been diligently paying them all along then? The answer is “social consensus”.
Royalties were originally created with the intent of rewarding NFT creators for the subsequent sales of their pieces. They also played a very important role in aligning incentives between NFT projects and their holders. The higher the floor price, the more royalties creators would earn. This encouraged projects to keep adding value to the NFTs so the floor would go up, and investors would be happy about the price appreciation.
Because NFTs were built that way and it was a model that worked for both creators and holders, everyone “agreed” to pay royalties. But they weren’t actually enforceable, so some people circumvented this by trading NFTs OTC. This meant that instead of listing the NFT at a marketplace like Opensea and waiting for a buyer to step in, they would look for the buyer themselves and use an intermediary for the trade. This intermediary could be a person facilitating the trade or a smart contract.
Listing the NFT on Opensea was a much more convenient way of selling it though. Back then, Opensea had all the liquidity of the market. That was where the NFT buyers were. And because things were going well, with people making insane returns on their investments, they didn’t care that much about paying the royalties fee.
Fast forward to the end of 2022. We are in a bear market. People are fighting for 1% returns instead of making an instant 10x. The smart guys in the class realize that if they can build a marketplace where people can conveniently trade NFTs circumventing royalties, they would have an edge against other marketplaces because people could list for lower.
It first happened in Solana, due to the fast-paced nature of the space and its low base fees. Yawww, previously an OTC trading platform facilitating trades through smart contracts, developed a full marketplace where people could list NFTs and wait for a buyer to step in instead of looking for a buyer themselves. It wasn’t as easy as it sounds though. Even if people had an edge listing in Yawww, as they could list the NFTs for lower now that they didn’t have to pay royalties, the liquidity was still in Magic Eden (ME). ME had +90% of the market share back then, so at first, not many people used this new marketplace. The first collections to really gain some traction were the ones with high floor prices as the royalties cut was higher, and then many others followed.
This led to ME, the main marketplace on Solana at the time, losing almost half of its market share. And it wasn’t getting any better. So after laughing at Yawww for weeks and defending royalties to cape and sword, they had to give in and pivot to an optional royalties model. This move shook the roots of the Solana NFT space and many creators were worried about losing their only stream of income. They were gloomy days for the ecosystem.
But you know what? We came out of that situation. After some time, solutions started to appear left and right. At first, people were trying to come up with solutions that would create new revenue sources for projects, but surprisingly or not, the solution that stuck out was - royalties!
It seems that, in the end, it wasn’t that bad of a mechanism. People finally came up with an on-chain royalty-enforcement solution that looks like is going to be adopted by the majority of the space. That is the new Metaplex standard for Programmable NFTs (not without disapproval from part of the community though)
Why did I tell you all about the story of royalties on Solana if we were talking about Opensea? Because this is the exact same thing that happened there and is most likely how the issue is going to be resolved. Opensea had most of the market share until Blur came and gained traction, allowing people to trade NFTs without paying royalties. After Blur’s market share reached a critical point, Opensea had to do something, or else it would lose all of its market share.
And now there is an uncertain period where people are debating about the royalties issue, writing threads and making spaces about it, wondering what’s going to happen. This will last until someone comes up with an ecosystem-wide solution for royalties that pleases a critical mass for it to the adopted. Just like it happened in Solana. We are watching history repeat itself, or aren’t we?
Is it possible that what happened on Solana doesn’t repeat on ETH just because there’s not a “centralized” entity like Metaplex behind the standard for NFTs? Only time will tell
🔵 Metaplex’s update on royalties
Look who we have here. Just as we were talking about how Metaplex developed the most widely royalties-enforcement mechanism on Solana, they updated us about it
Instead of creators being able to program where people can trade their NFTs, they will only be able to program where people can’t trade the NFTs. No more allowlists. Now there’s only a denylist.
🔵 Solana spaces 3D drop
As part of Solana spaces’ DRiP program, which is a weekly airdrop of art into the wallets of thousands of Solana users (you need a referral invite to be in), they released their first 3D drop. This drop also showcased the innovations Phantom has made in terms of interacting with your NFTs, as you can spin, zoom, and pan this NFT inside of the famous wallet. Last week’s drop showed how you can now watch videos and listen to music directly from Phantom. What could be next?
🟢 SMB FAQ after the buyout
If you somehow missed that HadesDAO bought the Solana Monkey Business project, I highly suggest you check out last week’s edition of the newsletter, where we talked extensively about it.
Directly from the SMB official Twitter account (notice how this is the original account of the project, not the one for MonkeDAO) we got some questions answered about the new direction of the project.
Point number one. Governance goes to $HADES. Since SMB is right now within HadesDAO’s assets, its ownership belongs to them and SMB holders won’t have any decision power per se. However, there’s an open discussion about it and HadesDAO might grant MonkeDAO 10k $HADES, which is the minimum required to initiate a proposal.
Point number two. The SMB discord won’t shut down and it will become the home for the project going forward, although they will support all the DAOs within SMB’s brand, like MonkeDAO or BanditoDAO.
Point number three. Shockingly, HadesDAO approached SMB devs without knowing that there was an ongoing deal with MonkeDAO to buy the collection. How could you miss that? Anyways, the deal was finalized in a record time of 6 days, which is quite impressive knowing that MonkeDAO had been working on it for months. They basically took too long raising money and they had to wait for a key investor. Come on, haven’t you read last week’s newsletter? You should know this
Point number four. They will be supporting MonkeDAO’s development and SMB will be happy to officially support their new collection if they wish to end up releasing it.
Point number five. They really want to put SMB’s IP to use. We are talking about merch, games, and more. Owners of the particular NFTs whose IP is used will directly benefit from the deals, getting 90% of the revenue, while 10% is shared among the rest of the holders.
Point number six. They are moving SMBs to the new standard for Programmable NFTs. They will use this to enforce the revenue share from deals. Royalties will be used to buy back and burn $HADES
🟢 Okay Bears released “Badges and streaks”
Badges are a display system designed to celebrate the collectors. Whether holding an Okay Bear from mint, being a fur maxi, or attempting to collect 100% of traits, the new badge system will celebrate all your glorious interactions with Okay Bear collectibles.
Streaks are an ever-growing reward system that challenges passive staking models in the space & aims to engage web3 audiences across multiple platforms. The first version will launch with 3 streaks that offer different reward mechanisms: GM REP SLEEP
SLEEP rewards will go to delisted holders, who will unlock physical drops, digital drops & priority access for special events.
The REP streak is designed to reward holders who consistently represent the brand, offering them weekly tickets for raffles.
But the most interesting of the is the GM streak. The GM streak is a third path to rewards, earned by saying Good Morning every day. Every time you hit the ‘tweet GM’ button (on their website), you take a step closer to multiplying your raffle ticket, while sending a WAGBO graphic to Crypto Twitter. The cool thing is that this is both for holders and non-holders, so anyone can participate
Do you think that this is something that could gain traction in the ecosystem?
💰 How to gain an edge on the market using analytics
As the NFT market matures, the days of 100x NFT mints are long gone. It's time to stop buying off vibes and start buying off analytics to gain an edge in the market.
If you want to know how to get an edge on the market, I brought you this great read from Solami Mommy
💭 The stunning story of the best NFT project that never minted
💭 NFTs have no real users
💭 The one truth you need to learn about NFTs: Shifting metas