The issue of creator royalties has emerged as a significant source of disagreement within the NFT sector. This fact should come as no surprise to those who closely follow developments in the Web3 domain. However, what is truly remarkable is the lack of substantial advancements in the ongoing debate about the importance of royalties, despite its long history.
Certainly, a majority of the prominent marketplaces in the NFT space have expressed their position on this issue. However, overall, attempts to address creator royalties, such as Manifold’s Royalty Registry, have largely proven inadequate in ensuring that creators receive their rightful share. This does not imply that there aren’t individuals actively working to improve the situation. Undoubtedly, there are, and the recently unveiled ERC721-C standard serves as concrete evidence of such endeavors.
What is ERC721-C?
ERC721-C introduces a fresh token standard designed to enable the effective enforcement of on-chain royalties. Unlike the widely utilized ERC-721 and ERC1155 standards for creating and trading NFTs, this innovative standard introduces programmable royalties. This means that creators can finally prevent zero-fee exchanges from featuring their works on platforms permanently.
Conceived by blockchain gaming company Limit Break, ERC721-C (and ERC1155-C) empowers creators to set new rules for their royalties on-chain. In simple terms, this new standard means artists and developers can create a sort of permissioned smart contract that dictates where and how royalties are transferred.
Essentially, this new type of customizable royalties contract allows creators to choose where their NFTs are sold and empowers them to filter interactions from only the contracts and applications of their choosing. By leveraging ERC721-C, any collection can now opt out of trading on zero-fee platforms, ensuring that traders can no longer bypass royalties.
Limit Break’s new advent can also be utilized for a wide range of applications beyond basic end-to-end royalty transactions.
The ERC721-C standard holds the potential to be employed in community-building endeavors as well. For instance, royalties generated from sales could be automatically distributed among members of a DAO or contest winners. However, rather than enduring perpetual kickbacks, creators have the ability to allocate specific percentages, determine the timing, and set the frequency of such distributions.
Furthermore, ERC721-C has been designed to ensure full backward compatibility, ensuring seamless functionality with existing chain and marketplace standards.
When it comes to ERC721-C and ERC1155-C (or other emerging standards like ERC-6551 or BRC-20), it is crucial to acknowledge that their adoption won’t occur overnight. While interest in these standards has been gradually increasing within the NFT community, they are still new and relatively intricate. Additionally, if more features are incorporated, the complexity may become further compounded.
Likewise, the introduction of customization features through ERC721-C will likely require marketplaces to make updates to their platforms in order to accommodate the new standard. However, it is important to note that this adoption may not occur until the Web3 community witnesses the viability of the standard through the successful implementation of a collection that utilizes it. This demonstration of success will likely serve as proof of concept and encourage wider adoption and integration of ERC721-C across various platforms.