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December 12, 2022

Ember Nuggets #49 | A Brief Look Into NFT Creator Royalties & A Quick November Recap

Nugget #1: Creator Royalties and NFT Marketplaces

With the launches of Sudoswap, Looksrare, and most recently Blur, we have seen decentralized marketplaces either completely avoid creator royalties or make them optional. The debate came to head when Magic Eden, the largest NFT marketplace on Solana, shifted towards an optional royalty in October.

Subsequently, OpenSea has lost 20% in trading volume, causing them to lose market share since royalties were pushed to optional. As a response, OpenSea released a code snippet that projects can incorporate into their smart contracts and effectively blacklist other marketplaces from being able to trade the collections. The code is now live and is effective for all projects launched on or after 11/8/22.

The most important point is that OpenSea, which has lagged behind the market on innovation, continues to have a strong grip on the market and leveraged its position to launch a tool that tries to fend off competition.

The royalty debate will continue, but in my opinion, it's more nuanced and blacklisting marketplaces is not the solution.

Nuggets #2: Recap on November

With November in the rearview let's look at the numbers:

  • NFT marketplace volume has declined every month since April

  • Volume has remained under $1B since June. DeFi also continues to trend downwards with TVL across chains declining from $54.7B -> $42.1B (-23% MoM).

  • ETH and BTC continue to hold relatively well given declines across KPIs in the ecosystem and broader market.

  • ETH: $1,571 -> $1,216 (-22.5% MoM)

  • BTC: $20,494 -> $16,441 (-19.8% MoM)

While generally transaction activity on-chain is declining, this is consistent with the activity seen in previous bear markets. While this is the first recession that Bitcoin has experienced, we do believe that Bitcoin will bottom before other risk assets.

Some traders, including trader Arthur Hayes (former CEO of BitMex), have developed cases that the recent FTX dump is the Bitcoin bottom. Time will tell, but as always, investing on a recurring basis is what most experts recommend at the moment.

That's all we've got for this week - thank you for reading!

Harsharn Singh

Ember Fund

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