Limit Break has unveiled an enhancement to the ERC721 standard for NFTs. This innovative token effectively settles issues related to copyrights and rewards, with the royalty being equally paid by the NFT buyer and seller.
Understanding the ERC721 token standard
The majority of cryptocurrency enthusiasts are familiar with the ERC721 token, even if the identifier doesn't immediately resonate with them. Anyone involved in blockchain gaming employs this standard, given its extensive application compatibility. The ERC721 token has been used since 2018 in Ethermon, MyCrypto, and the well-known Cryptodoggies.
The crux of the ERC721 NFT standard is its ability to verify ownership rights of a digital item through a smart contract. This could be anything from a house in the Metaverse, a music track, an NFT monkey, a POAP, or a kitten bought from a virtual "breeder" in the Cryptokitties game.
Tokens of this standard bear unique values and unique metadata, which make them non-fungible. However, the ERC721 standard didn't take into account author royalties, leaving creators of digital art to solely depend on the goodwill of traders reselling their NFTs.
This situation has been a long-standing dissatisfaction for creators of diverse content. Watching your unique sketches or photos being resold at a much higher value without earning a penny from it is undoubtedly vexing. Moreover, it does little to stimulate creative drive.
Limit Break addressed this problem with author royalties by proposing an extension to the ERC721 token standard with a new feature.
What exactly is ERC721-C?
This innovative token standard is taking copyright protection for NFT creators to new heights. With ERC721-C, artists and photographers can create unique digital artifacts using smart contracts. What sets ERC721-C apart is its introduction of programmable royalties. No longer will creators simply receive a token of appreciation for their work; they will now be awarded a firmly stipulated royalty fee from the resale of their NFTs. After all, the 'C' in ERC721-C stands for 'creator'!
Why are royalties so important?
From the buyers' (traders') perspective, these may seem like additional charges. When purchasing a unique JPEG on platforms such as OpenSea, there is a royalty fee paid on top of the purchase price that the seller sets. These charges (0.5-10%) are meant to support the artist. However, there's a catch: the higher the fee, the less money is left for the NFT traders. As a result, traders often look for ways to avoid overpayment, even if it means using platforms like Blur that tend to disregard copyright laws, favoring the ease of speculators over the rights of creators.
The ERC721-C standard prevents marketplaces from setting royalty fees at 0%. Presently, marketplaces resort to such tactics to compete for customers, which leaves creators on the back foot.
ERC721-C assures creators that they will be shielded from the manipulations of platform owners and will receive a fair share from each resale of their works. Furthermore, the smart contract that is the foundation of this new token automatically apportions commission fees to benefit creators among all participants of a transaction. This arrangement puts a mandatory financial responsibility on both the buyer and the person reselling the digital artifact.
This adjustment in operations on the marketplace gives creators more control: they can independently decide the size of their royalties within the constraints set by the platform, tweak them individually for each of their collections, and secure a fair income.
So far, not all NFT collections are supporting ERC721-C because its use is voluntary. But Limit Break has already added a few marketplace addresses to its whitelist (OpenSea, X2Y2, and Rarible) that theoretically can support ERC721-C tokens.
Representatives of Limit Break have stated that if major platforms don't express an interest in the expanded ERC721 standard (which is a possible scenario), they are ready to open a marketplace that prioritizes the interests of creators.
