OpenSea’s Operator Filter Sunset: A Shift in NFT Royalties Landscape

OpenSea, a prominent non-fungible token (NFT) marketplace, is making waves by discontinuing its on-chain royalty enforcement tool, Operator Filter. The device, introduced in November 2022, enabled creators to block NFT marketplaces that didn’t enforce royalties. However, OpenSea’s founder and CEO, Devin Finzer, recently announced that the tool will cease functioning starting August 31.

Initially, the Operator Filter was designed as a straightforward code snippet to restrict NFT sales to marketplaces that upheld creator fees. Yet, according to Finzer, the tool didn’t achieve the anticipated success due to inadequate support from the NFT ecosystem. Furthermore, NFT marketplaces like Blur, Dew, and LooksRare ingeniously bypassed the Operator Filter by integrating the Seaport Protocol, thus sidestepping OpenSea’s blocklist and evading creator fees.

Challenges extended beyond technical matters. Creators expressed reservations about the Operator Filter, citing concerns that it compromised their control over where their collections were sold. Additionally, the clash between the filter’s restrictions and the concept of decentralized ownership was evident.

Finzer acknowledged the value of creator fees within specific business models but emphasized that this is just one revenue stream amid NFT technology’s numerous possibilities. OpenSea’s roadmap is dedicated to exploring new use cases, starting with digital and physical redeemable and enhancing their promotion across primary and secondary experiences.

Starting August 31, the Operator Filter will no longer block any marketplaces. However, for collections already using the tool and existing groups on non-Ethereum blockchains, the creator’s preferred fees will remain enforced until February 29, 2024. It’s essential to note that while the enforcement tool is being phased out, creator fees themselves will persist, marking a shift from ineffective enforcement to a more nuanced approach.

This decision has sparked discussions within the NFT community, particularly among artists seeking passive income. Many expressed disappointment and called collectors to rally behind platforms that mandate royalties to support NFT creators. However, some community members believe OpenSea’s move was warranted, suggesting that the initial business model leaned too heavily on speculative trading rather than nurturing creators’ sustainable success.

In the ever-evolving NFT landscape, OpenSea’s decision to sunset the Operator Filter marks a shift towards a more holistic consideration of creator revenue streams and the broader potential of NFT technology. The fallout from this move has ignited conversations about the balance between artistic integrity, financial gain, and the future of NFT platforms.