Seller-Side Royalties: Aligning Incentives on Magic Eden
Abstract
This proposal recommends shifting NFT royalty enforcement from buyer-side to seller-side on Magic Eden’s Solana marketplace. By deducting royalties from seller proceeds at settlement rather than adding fees at buyer checkout, the platform can reduce friction for collectors, close loopholes exploited by bots, and create a more sustainable revenue model for creators. This change will strengthen trust in Magic Eden, improve user experience, and align incentives across all participants in the ecosystem.
Motivation
The current buyer-side royalty model creates several challenges:
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Buyers face “extra” fees at checkout, discouraging purchasing.
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Bots and wash traders routinely avoid paying royalties, undermining creators.
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Sellers are incentivized to flip quickly without contributing to ecosystem sustainability.
Other blockchains and marketplaces predominantly use seller-side royalties, showing clear preference for this model. Shifting to seller-side royalties will resolve these misaligned incentives, standardize Magic Eden’s UX with broader NFT markets, and help restore creator confidence in Solana NFTs.
Key Terms
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Royalties – Fees designated by NFT creators, collected on secondary sales.
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Buyer-Side Royalties – Current model on Solana where royalties are added as a checkout fee to buyers.
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Seller-Side Royalties – Proposed model where royalties are deducted from seller proceeds upon sale.
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Wash Trading – Artificial trading activity designed to inflate volume or manipulate market prices.
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AMM (Automated Market Maker) – A liquidity mechanism enabling instant NFT sales and listings, sometimes contributing to exploitative trading behavior.
Specification
Proposed Feature:
Introduce seller-side royalty enforcement as the default on Magic Eden’s Solana marketplace.
Functional / Technical Requirements:
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Adjust settlement logic so royalties are automatically deducted from the seller’s proceeds.
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Update UI so buyers see the final price without surprise fees.
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Allow optional buyer “tips” for creators to supplement royalties.
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Introduce seller incentives (badges, visibility boosts) for full-royalty listings.
Implementation Steps:
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Phase 1 (30 days): Enable seller-side royalties as an opt-in option for all collections with enforced royalty standards.
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Phase 2 (60 days): Make seller-side royalties the default for new listings, with clear in-platform communication.
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Phase 3 (90 days): Deprecate buyer-side royalties as the default model.
Compatibility Needs:
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Integration with existing Metaplex royalty enforcement standards.
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Coordination with Magic Eden’s smart contracts and UI/UX teams.
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API updates for third-party wallets and tools interfacing with Magic Eden listings.
Benefits / Risks
Benefits
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Transparent pricing builds trust and encourages more purchases.
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Reliable royalty revenue supports creators, improving project sustainability.
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Discourages botting and wash trading by removing buyer-side loopholes.
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Brings Solana NFT UX in line with Ethereum and other chains.
Risks
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Sellers may resist reduced net proceeds, leading to short-term friction.
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Competing marketplaces might delay adopting the same model, creating uneven standards. Competitor becomes the “floor”.
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Some short-term liquidity reduction as market adjusts.
Mitigation: Clear promotional campaigns with OG collections to explain the long-term benefits for all stakeholders. ME becomes the OG favorite.
Outcomes
Definition of Success:
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Seller-side royalties become the default on Magic Eden within 90 days.
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Creators report higher and more predictable royalty revenues.
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Buyers experience smoother transactions with no hidden fees.
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Overall trading volume and trust in the platform increase.
Proposed KPIs:
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Percentage of listings using seller-side royalties.
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Total royalties paid to creators (USD/SOL).
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Buyer conversion and retention rates.
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Magic Eden’s market share relative to competitors.
. Bring royalties back in full.