Gnars

TL;DR

Let’s collect royalties on secondary sales on NFT marketplaces (like OpenSea) that will fund our treasury. While we don’t want to make this a core revenue stream, it will help keep us funded in the near-term and it is something we can always adjust in the future. If we approve this prop, we will seek to collect 4.2069% in royalties on secondary sales. There is no funding request for ETH! This prop is guaranteed to be profitable.

Introduction

Hi Gnarfam! I’m Gnarley-Quinn and I spend most of Gnar time in the auctions channel going pew pew pew. I’m an over-the-hill and retired (amateur) snowboarder and skater now living in Florida, USA, and with my wife, I’m raising what I hope to be two gnarly athletes. I’m a big believer in the Gnars ecosystem and want us to succeed internationally. My proposal does not seek any ETH and will only add ETH to the treasury!

What are all the details and impact?

Most NFT projects collect a percentage of sales when an NFT is sold on a marketplace such as OpenSea. These are called royalties or creator fees and the amount collected varies from project to project, but typically ranges from 2.5% to 10%. For example, if you sold a Bored Ape Yacht Club (BAYC) NFT for 100 ETH on OpenSea, where the BAYC creator (Yuga Labs) collects 2.5% royalties, the creator would receive 2.5 ETH and you would receive 97.5 ETH from the buyer’s 100 ETH paid to purchase the NFT. While the typical Gnars secondary sale is much less and would only generate a fraction of this ETH, every gwei counts.

To bring this concept home, let’s look at what we could have added to the treasury if we had royalties at the launch of the Gnars collection. For this example, let’s say we had launched with 4.20% royalties. According to OpenSea, as of February 3, 2023, Gnars and Gnars OG had approximately 86 ETH in secondary sales. That would be 3.61 ETH added to our treasury – enough to sponsor an athlete! And as recent sales and auction prices have shown, Gnar values are going up. With increased floor and mint prices, secondary sales volume will also increase, bringing us even more royalties.

To collect royalties, we only need our Board to notify the relevant marketplaces and designate a wallet to receive them. While some marketplaces do not honor royalties, this should not be a concern for us on OpenSea.

I’m a firm believer in royalties as I think it is one of the best things about NFTs, allowing revenue to flow back to a project’s artist, founder and team members for continuing to create value. The more popular a project becomes, sales volume typically rises and royalties paid to the supporting project increase. It’s a virtuous cycle and something that I think can greatly benefit the Gnars ecosystem.

When will it be done?

As soon as the Board notifies the marketplaces, it usually only takes a business day or two for the royalty system to be set up. As we will be reliant on these third parties, we can’t guarantee timing.

Why should we?

This is low-hanging fruit for generating revenue. Based on trading activity to date, we do not expect the introduction of royalties to have any significant impact on volume. And we can always revisit our royalties to tweak or remove them in the future. Last, and most importantly, royalties make the eth machine go brrrrr!