OpenSea to Discontinue Operator Filter, Impacting NFT Royalty Enforcement

OpenSea to Discontinue Operator Filter, Impacting NFT Royalty Enforcement

OpenSea’s CEO, Devin Finzer, has announced that the NFT marketplace will be shutting down its on-chain royalty enforcement tool, Operator Filter. This tool allowed creators to blacklist NFT marketplaces that did not enforce royalties for their work. The change is scheduled for August 31, as revealed in a statement by Finzer on August 17.

Operator Filter was introduced in November 2022 and was designed as a “simple code snippet” to restrict NFT sales to platforms that enforced creator fees. However, Finzer admitted that the tool did not achieve the desired success due to lack of support within the NFT ecosystem.

Certain NFT marketplaces, such as Blur, Dew, and LooksRare, found ways to bypass Operator Filter’s restrictions by integrating the Seaport Protocol. This allowed them to circumvent OpenSea’s blacklist and avoid paying creator fees.

Creators also expressed concerns about the Operator Filter, feeling that it encroached on their control over where their collections were sold. Finzer acknowledged this sentiment, noting that the tool’s limitations clashed with the concept of decentralized ownership and full control for creators.

Finzer emphasized that while creator fees are important for certain business models, they are just one revenue stream among many for creators. He highlighted OpenSea’s commitment to exploring new use cases for NFTs, starting with digital and physical redeemables, and enhancing the overall experience for both primary and secondary market participants.

Starting August 31, the Operator Filter will cease blocking any marketplaces. However, for collections utilizing the tool and for existing collections on non-Ethereum blockchains, the creator’s preferred fees will be enforced until February 29, 2024.

To clarify, Finzer stated that creator fees will continue to exist, but the ineffective and one-sided enforcement of them through the Operator Filter will be discontinued.

This decision has drawn mixed reactions from the NFT community. Some believe that platforms that mandate royalties should be supported by collectors, while others argue that OpenSea’s decision may have been appropriate, as the business model appeared to capitalize excessively on speculative trading.

As OpenSea discontinues Operator Filter, it raises questions about how NFT artists will secure passive income in the absence of such royalty enforcement measures.