A new contract lets people make money just from collecting NFTs, and in some cases you don’t even need to own the NFT yourself (affiliate revenue). Wild stuff.
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the blog post:
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0:00 start here
0:35 a blog post appears
0:52 the royalty problem
1:54 everything explained
3:21 royalty sharing
4:52 making millions as an affiliate
7:13 when will this take off?
8:06 whitelists (controversial)
9:18 limitbreak will stop at nothing
It's a new year and there are two things So far in 2023 that are really getting Me excited okay number one is making Chat gbt explain complex philosophical Topics to me in a pirate voice and Number two is making videos on the Latest Innovations from the world of Nfts especially when they create new Ways that people can make money and just A few days ago we got exactly this okay One of the biggest developments in the NFC space in a while and it actually Caused a big controversy but there's Something in this that as you'll see Creates a new way that collectors can Profit from nfts that wasn't really Possible before and I think it's going To be a big deal so to start off we have This gentleman right here this is Gabriel Laden he's the CEO of limit Break which raised 200 million dollars To make web 3 games he's also the Founder of Digi daigaku which is a very Popular collection and he released this Blog post representing their answer to The royalty problem in nfts now if you Don't know what the royalty problem is Essentially one of the biggest value Propositions for artists to enter web 3 Was the fact that they could collect Royalties on secondary traits and so Every time that somebody bought or sold One of their nfts they could collect a Small percentage of that sale sometimes
Between one to ten percent however this Turned out to be a little bit of a Fugazi because it turns out that Royalties were never enforceable on Chain you basically have to rely on a Marketplace like openc to collect those Royalties and then give them out Manually in a very web to way and Because they weren't enforceable it was Only a matter of time until Traders Created ways to buy and sell nfts Without paying those royalties and a Bunch of marketplaces came out that Allowed you to do this I did a video on The first popular one called pseudo swap But at this point there are even more of These marketplaces that allow you to buy And sell without paying any royalties And so the assumptions switch from yeah Royalties are a thing and nfts to well It's only a matter of time until Royalties are completely gone from nfts And from the perspective of an artist That really sucked because that was one Of the main Revenue sources that they Had now this brings us back to the blog Post that Gabe Laden released a few days Ago now the blog post itself is pretty Technical goal so I made a little Infographic for you guys because at the End of the day I don't think it's really That complicated so the main idea is That creators now have a way of wrapping Their nft so that they can enforce
Royalties on chain okay and the rapping Happens through a staking contract and This is all completely opt-in so Basically you're a collector you stake Your erc721 and you receive this rap Token instead that now can only trade Across marketplaces that enforce Royalties now the artists would have to Incentivize you to stake it in the first Place so they might have to give you Perks or benefits but once you're staked Now you're locked into that uh royalty Enforcement and this rap token also has A lot of other Dynamic features that you Can add to it so for example the Creator Can set minimum and maximum floor prices That determine whether or not you can Sell something below or above a certain Price okay and this was one of those Very controversial points but in the Context of how some games work uh it Actually does make sense but that's Beyond the scope of what we're going to Cover today you also have rentability Okay these are features that make make It easier for someone to rent out their Nft and then collect that rent on chain You have in-game utility like quests Where maybe you do things inside of a Game and that can you know automatically Change or burn your nft so it actually Adds like some Stakes to that game then You have royalty enforcement which we Spoke about already you know not letting
People bypass your royalties and then Finally you have royalty sharing this Last one right here is what this entire Video is about and it's something that I Think is still flying under the radar And the way it works is that creators Can now share royalties with collectors Themselves or even with Affiliates that Don't even own the nfts in a variety of Ways okay and we're going to run through A few of these scenarios so scenario one Is standard collector share by the way I Made these labels up like 10 minutes Before I recorded so sorry if they're Not catchy but in this scenario a Creator can set a straightforward Royalty split with a collector okay so They can say hey if you meant this nft Then you're gonna get 50 or 100 let's go With 50 of all royalties in perpetuity Okay so every time that somebody trades That nft in the future you're gonna get Half of those royalties now this is Incredible because it aligns The Collector and the Creator forever even If the collector sells okay because keep In mind that sometimes a collector just Has to sell for a variety of reasons Maybe they just need the money even if They're still fans of that brand okay And so in this way they can still be Rewarded for contributing to the growth Of that project even if they no longer Hold one of the nfts okay so narrow
Number two is conditional collector Share now in this case the Creator is Still sharing royalties with the Collector but they can add certain Limitations to that okay so for example Maybe you only activate the royalty Sharing after you held the nft for a Certain period of time say one year and Something like that could incentivize Long-term holding and thinking in your Collector base the point is that Creators can now have Max flexibility in How they share royalties and reward Different participants and then you have Scenario number three which is affiliate Royalties and this could perhaps become The most powerful of all the scenarios In this case the Creator can offer to Share royalties with someone who might Not even own the nfts but instead acts As a promoter for the collection okay so For example a Creator could approach a An influencer or maybe a website that Gets a lot of traffic and they can say Hey if you give out these 100 nfts to Your audience you're going to collect 50 Or 100 of the royalties on those Specific nfts forever or maybe promote The mint and we're going to create a Separate minting page just for you and So any nfts that get minted from that You'll get the royalties on that as well In fact this already Works in web 2 and It's called affiliate marketing and it's
Absolutely huge okay so they estimated That in 2022 affiliate marketing spend It was over eight billion dollars in the US alone and so-called super Affiliates Earn upwards of ten thousand dollars per Day okay so they make millions of Dollars a year and you may or may not Know this but here on YouTube a lot of The big channels actually make a lot of Money through affiliate links okay so Here we have Andre dick for example he Is a very popular uh Finance YouTuber And if you go down to his description You're going to see a lot of affiliate Links okay so you have get two free Stocks with weibull uh Robin Hood get One stock when you sign up and if you Click through to that you can create an Account and most likely they're getting Paid every time that an account is Created by the way there's nothing Really wrong with this as long as the Creator is upfront about the Relationship and often the audience Members can get discounts using these Affiliate links so it really is like a Win-win for everyone now all this is Going to be possible with nfts as well And perhaps even better because now the Both the affiliate marketer and the Founder can see exactly how well a Campaign did because it's all going to Be you know public data on chain and Because of royalty is all done
Automatically on chain and in a Decentralized way you don't need any Middlemen anywhere okay that could Otherwise potentially be taking fees From those royalties this ladies and Gentlemen if it catches on and we'll Talk about whether it might in a minute This would be huge for the industry okay It basically gives NFD creators access To one of the most popular and effective Forms of marketing on the internet and It gives individuals a new ability to Monetize you know content or an audience That they're building in web3 so Basically if you're someone who has been Considering creating content or a Website that you think can get a lot of Traffic you're now going to have another Potential Revenue stream coming in the Future and there's a couple reasons why This could end up taking off okay the First is that it could actually be that Solution to the royalty problem that Creators have been looking for okay Right now the best that they have is Using something like Open Seas uh Royalty enforcement contracts which one Gives the power to the marketplace to Choose where entities can be traded Whereas the limit break contract gives The power to creators to decide you know Where these entities can and cannot go The other problem is that the openc Contract uses a blacklist system okay
They're basically blacklisting Marketplaces that don't enforce Royalties and this from what I Understand is a bit easier to get around Okay you can essentially wrap your token And not have to comply with The Blacklist whereas the limit break Contract uses a whitelist system which Again from my understanding is more Airtight okay so as a solution it has a Better chance of becoming an effective Royalty enforcement standard now either Way white Liz Blacklist this all opens Up to criticism because they both limit Freedom in some way okay with a Whitelist especially what that's telling You is that there's a pre-approved list Of wallets that you can transfer your Nft to and you can't go beyond that list And a lot of us who are freedom and Censorship resistant Maxis are going to Feel like an immune system response Against that kind of idea but at the end Of the day this is just a tool that can Be used in a million different ways okay And on ethereum we're gonna see every Variation of ownership possible okay There's going to be creators that go Overboard and having all these Restrictions there's going to be Creators that have no restrictions Whatsoever and everything in between and Once you acknowledge that every kind of Asset is going to coexist and they're
Just going to run the full spectrum of Restrictions it just comes down to Making sure that people know what it is That they're buying okay that they're Fully clear what the terms are and in This case the white list is completely Opt-in okay as a holder you can actually Reject the staking protocol and what you End up having is still an ERC 721 token Which in my opinion is the gold standard Of on-chain ownership and so I don't Really see anything wrong with this you Know this is all about giving people a Choice and at the end of the day you Can't really Force One Vision on Everyone because that in itself is a Form of censorship and then finally the Other reason why this contract could Take off is because limit break has Become a very influential voice in the Space I mean Gabe Laden has half a Million followers and like less than a Year I don't know how he did that uh and He said in a recent Twitter space that They are working with some marketplaces To try to get this standard built into Their platforms okay and also they are Incentivized to make this work okay Because they run on the uh free nft Model digital was a free nft and that Business model partly depends on Royalties and so they really want to get This royalty enforcement down and so I Wouldn't be surprised if digidaigaku
Becomes one of the first major Collections to Pioneer this new staking Contract so a gun in my head I would say That affiliate nft royalties become Popular this year one way or another and I think the full royalty sharing update To this contract isn't fully out yet I Think it's coming out next month so Again if you are somebody who is trying To build an audience or a website that Might get a bunch of traffic you have a Bit of time to prepare but at least you Know that the opportunity is coming all Right guys that's it for today thanks Again for watching and I'll catch you at The next video
