January 13, 2023

NFTs Have a Royalty Problem – Efinity Fixes It

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NFTs Have a Royalty Problem – Efinity Fixes It
One of the most persistent problems in the NFT space is naturally solved by Efinity.

In our recent developer updates, we’ve talked about putting a few new features live, such as Fuel Tanks, royalties, and other marketplace features. But a series of dot points doesn’t fully get across what we’re trying to build.

Right now, I want to focus on royalties. It seems self-explanatory – an asset is sold, and you get a certain percentage of the sale price royalty. 

But that’s not the full story. Royalties work better on Efinity. 

There’s a strong argument for saying royalties were broken before, and this is how we propose they should work.

So let’s dive in. 

When Royalties Go Missing

We recently interviewed IrishNFTGal on The Enjin Room podcast, who talked about some of the difficulties NFT artists have when claiming royalties.

The easily available smart contracts on major marketplaces may only provide royalties if the NFT was bought on the same marketplace. If it was bought elsewhere, you might miss out.

That’s a rude awakening for anyone who thought all of this was enforced at the blockchain level. And for creators like this one in particular, they might find out the hard way, after a big sale results in no royalties paid.

In the end, IrishNFTGal had to get around the problem by hiring a developer to code her own smart contracts.

There’ll probably be a burgeoning industry around custom smart contracts for creators, filling the holes left by the incumbent marketplaces. For creators intent on publishing on Ethereum, that’s probably their best plan.

Efinity skips all that. This industry of unnecessary middlemen has been made redundant before it ever flourished.

With Efinity's royalty system, an account can get a percentage from all sales of their assets, as you'd expect -- these are enforced on-chain and aren't beholden to proprietary smart contracts.

That means a new marketplace could spring up, created by someone new and completely independent of, and you could rest easy knowing anything sold on the new storefront would still apply royalties you set up elsewhere.

All the code is visible as plug & play pallets that other parachains can even reach across and make use of. It really is how blockchain royalties should work.

Smart Contracts Aren’t Always Smart

Even when smart contracts are coded well, with the best of intentions, and audited by multiple security firms, mistakes can happen. Blockchains can’t be hacked – but smart contracts and bridges have historically been the weak link in the stack, more vulnerable to exploits.

In a recent article, we went into the benefits of having a blockchain in which NFT functionality is baked into the protocol layer, and that’s relevant here too.

Instead of a matryoshka doll of smart contracts, each adding its own smart contract risk, you get a platform with NFT functionality at its core layer, right along with token transfers. No additional smart contracts are needed to be built on top.

Because everything is in one place, it also makes the auditing process more efficient, providing further safety.

Being built on Substrate, no bridges are necessary within this ecosystem. A stablecoin provider, smart contract provider, and other services can all exist on top of the relay chain and serve each other. Efinity provides the NFT functionality within this ecosystem.

Cross-Chain and Cross-Marketplace is a marketplace built by Enjin that is designed to interface with the Efinity parachain. It recently added new features and will be adding more Efinity integration shortly.

The goal here is to provide an easy interface for NFT transactions on Efinity – ultimately we’d like it to be easy to buy, sell, trade, and mint your own collections of NFTs on the platform - including royalties - without having to worry about all the technical stuff.

But there’s nothing mandatory about it. Anyone can code their own marketplace interfacing with Efinity, just as they can with Ethereum. The key difference here is that if you use the proprietary smart contracts on Ethereum NFT marketplaces, it’s not guaranteed you’ll get your royalties if the asset is sold on a different marketplace.

On Efinity, that is protected. Even if it’s on a different marketplace. Confusions around royalties are removed – it’s unlikely for anyone to steal your lunch because the rules are enforced at the protocol layer.

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