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OpenSea has announced support for the ERC-721C token standard, a new token standard designed to address the issue of enforceable on-chain royalties for NFT creators.
This new standard allows for “programmable earnings” for NFT creators, a solution which OpenSea saw as a response to the long-standing issue of NFT wash trading.
Previously, without ERC-721C, users did not receive royalties when the commissions were programmed outside the initial markets, losing their rights over an NFT when it arrived at secondary markets. NFT royalties range between 2.5% and 10% per sale, at the discretion of the creator. To date, the top 10 NFT collections have earned over $345 million in royalties since their inception.
OpenSea began working on the integration for ERC-721C with Limit Break, the blockchain gaming firm behind the standard’s development. Limit Break’s work on the standard enabled “enforceable” token transfer conditions, such as royalties, across all channels.
The ERC-721C standard, developed by blockchain gaming company Limit Break in May 2022, standardizes token transfer conditions, such as royalties, across all channels. Prior to its introduction, traders could easily avoid paying royalties by transferring NFTs through self-custody wallets or other marketplaces that did not honor creators’ royalty requirements.
Limit Break explains the transition to ERC-721C succinctly in a Medium blog post.
“In the long-run, this allowed for the incentivization of zero-fee, royalty-optional trading with airdrops, effectively turning tokens intended to be non-fungible into proxies for fungible tokens,” in which case “traders were incentivized to farm tokens by wash-trading NFTs among their own wallets, which is bad for the NFT industry,” the blockchain gaming firm said.
Limit Break also said that the new standard is backward-compatible with ERC-721, the base standard for non-fungible tokens.
The March 13 Dencun upgrade on the Ethereum network made compatibility for ERC-721C on OpenSea possible, the NFT platform’s developers said. Creators who enforce their earnings using this standard will have their sales supported only on OpenSea and other marketplaces powered by LimitBreak’s Payment Processor.
However, creators can still manually list their digital artwork on other marketplaces, with OpenSea matching the lowest royalties set by the creator on those platforms. The new feature is also compatible with OpenSea’s Seaport 1.6, which allows NFTs to be sold under certain conditions, such as changing metadata based on sale volume.
To implement the ERC-721C standard, creators using OpenSea Studio can easily set and enforce their earnings percentage and recipient address in their collection settings. For those deploying custom smart contracts, the process involves upgrading their existing contract to be compatible with ERC-721C or ERC-1155-C and then configuring their earnings on OpenSea.
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