Meta made waves earlier this week when it revealed details about upcoming features for Horizon Worlds, a virtual reality game developed by the company. The game’s developer, Meta, is working on additional features that will allow players to buy and trade digital goods and art. In a blog post on April 11, the corporation announced that it would take a 47.5 percent cut of all sales.
If you buy something from the Meta Quest Store, you’ll be charged a 30% “hardware platform fee” (a marketplace for VR-enabled apps and games). To begin with, Horizon Worlds adds a 17.5 percent fee on top of that.
More than a few feathers were ruffled by this announcement. If this is the case, it appears to be just another example of a multi-billion dollar business taking advantage of independent artists.
However, for individuals who routinely deal with the blockchain, large fees are nothing new. Every major NFT marketplace has different costs, and several NFT markets are also making a lot of money.
Is Meta’s 47.5 percent take that much different from other markets, all things considered? Is it right for individuals to feel enraged? What do you think?
Interacting with the blockchain is not free
The fact that blockchain transactions always cost money isn’t a surprise to anyone. However, the cost of a transaction varies depending on the blockchain and the type of exchange.
If you mint a new NFT, trade coins, post them for sale, or anything else, Ethereum (like many other blockchains) levies fees on consumers. Payments provided by customers to cover the computational energy used to process and validate transactions are referred to as “gas fees.“
As a result, the cost of gas varies from blockchain to blockchain since each has a unique consensus algorithm.
We won’t get into the various consensus procedures and why some cost more and others less, because they may become a little technical and complex. The quantity of the fees is what matters most for this essay.
On average, the Ethereum blockchain has the highest fees. As little as $9 and as much as $300 were charged for every transaction in 2021. Even the most popular NFT blockchain, Tezos, recorded transaction costs of barely a few cents regularly.
On some blockchains, gas expenses can reach stratospheric levels. It’s impossible to know how much of the earnings they represent until an NFT is sold.
Gas fees may be less than 1% of the sale price if an NFT sells for a large amount of money. However, suppose an NFT is just $15 and the gas cost is $50. As a result, the fees are going to be far higher than the profits. And yes, this is a fact.
However, comparing these gas expenses to Meta fees may not be the greatest comparison.
Blockchain gas costs do not go to blockchain firms. Ethereum and Solana aren’t stealing money from their users. Instead, the gas costs fund the work of other blockchain users who vouch for the validity of the trades.
On the other hand, Meta receives a percentage when a user sells an item on Horizon Worlds. The money is invested in the company’s businesses. As a result, to provide an accurate comparison, we must look at the actual act of trading NFTs and account for marketplace costs.
What is the real cost of trading NFTs?
When an NFT is put on a marketplace, we can see right away how much the marketplace will deduct from the price. Here’s a rundown of what you’re looking at:
Zora: a free platform. Users only have to pay gas fees when creating an NFT. They don’t get any money from sales.
LooksRare: users just pay for gas. A 2% cut of every sale is taken.
OpenSea: There is no minting cost, and gas fees are all that are charged to customers. Each sale is subject to a 2.5% fee.
Rarible: Users only pay for gas, with no other surcharges. A deduction of 2.5 percent of the final sale price is made.
SuperRare: because there is no minting cost. takes 3% of each sale’s ultimate price as a commission.
Foundation: users just pay gas prices, not a minting charge. This fee is calculated at 15% of all final sales prices.
As these numbers demonstrate, Meta charges higher costs than nearly every other NFT marketplace. paying much more money.
Meta or NFT marketplaces?
Individuals may still choose to sell their works through Meta despite the lower costs required by NFT markets. However, gas costs might go as high as $100 to create NFTs on Ethereum.
As most artists are unable to sell their work for that much, this may deter some from trying to make a living off of it.
However, blockchains like Solana and Tezos do not have this problem.
In addition, there’s an ethical consideration.
Unlike conventional trading platforms, Meta owns its whole ecosystem, giving it a distinct advantage. Because the NFT ecosystem is based on the decentralization ethos, blockchain fees flow directly to users.
The people who authenticate transactions are the ones who keep the system running smoothly. So that’s what it means to have true decentralization. NFTs may be created and traded in a variety of ways in the NFT ecosystem.
It is possible for users to create an NFT on one platform and then view, list, and sell it on another. Furthermore, NFT exchanges may be found on a variety of blockchains.
OpenSea, for example, is the world’s largest NFT marketplace. Ethereum, Polygon, Solana, and Klatyn are all supported by it.
Meta is unlikely to have interoperability like that. This means that the whole Metaverse will be confined within Meta’s eco-system.
And all of that money will end up in the hands of that firm or one of its affiliates.