Discussion | What Happened To Modes and NFTs?

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Background:

For fashion, one of the most compelling prospects for NFTs is how they can help brands collect perpetual royalties for secondary sales of physical goods. While the mechanisms for doing so are yet to be finalized, brands could ideally create an NFT code tied to a physical product with a smart contract that is triggered by certain conditions and benefits every time an item is sold, not just on the initial sale. However, technical loopholes used to circumvent loyalty and a finicky marketplace leave brands and content creators with no way to enforce the rules.

One of the big tenets of Web3 is these royalties is the idea that it’s a creator-led economy, it’s not necessarily controlled by a big centralized organization. Except it doesn’t really play, says BoF tech correspondent Marc Bain.

Key Insights:

• The market responds to the controversy about enforcement of royalties. Opensea, one of the largest Web3 marketplaces, wants to attract creators, so it has an incentive to honor creator royalties. New markets seeking only sales are willing to cut costs for buyers.
• This has caused an existential crisis for the NFT community, showing that content creators are not fully accountable in a space that is being touted as having great potential to empower them.
• The market and infrastructure for fashion brands looking to earn royalties for secondary sales do not exist today. It remains to be seen how the brand will scale such a system.
• A number of start-ups including EON and the Aurora Blockchain Consortium are working to link digital identities to physical goods, but doing so is complex.

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