We’ve observed several Solana project teams change the royalty on their NFTs for a multitude of reasons – some reasons are good, but others, less so. We’d like to outline our emerging policy here to help guide users on ME and minimize situations that make people feel scammed.
First and foremost, we believe in transparency. We want to surface as much information as possible so users can DYOR and make the best possible decision they can.
Another key concept that underpins Web3 is decentralization. Rather than having a centralized entity determine prices (as further described below, in this case being the collection itself), it’s the market and the forces of supply and demand that should ultimately decide how things should be priced.
Based on these two principles, here’s what we’re doing to curb situations that violate the above principles:
We call attention to unexpectedly high royalty figures. Should we detect that an NFT’s royalty amount is above a certain threshold, we’ll highlight the royalty figure in yellow on the NFT item page so sellers and buyers are made aware of this. Buyers will also get a warning prior to executing the purchase so they can be doubly sure that they are aware of where their SOL is going.
We’ll flag or de-list collections that implement the “sin tax” or “bitch tax.” The sin tax is something we have seen some projects introduce – it is a dynamic floor control mechanism that aims to discourage sellers from listing their NFTs below a certain threshold by penalising them through high royalties. This practice unduly or improperly influences the market price, or establishes a price that may not reflect the value of holding a specific NFT. (Some projects even go so far as changing the royalty % during a transaction, effectively deceiving the buyer and the seller.) In these situations, we may flag the collection page or, in some situations, de-list the collection from our marketplace.
There are less nefarious reasons to change royalty amounts. For example, in situations where an item was allegedly stolen (through a wallet draining scam or the like), raising the royalty to 98% and buying the item back (at effectively 2% of the list price) has proven to be an effective way to retrieve stolen items. We’ll gladly work with project teams and theft victims in these situations.