Today, Highlight is launching a secondary marketplace for digital artworks created using our toolkit.

Below is a detailed post explaining why and how we built it.

Here’s a quick summary:

• Our marketplace offers artist- and collector-friendly features not found in any major marketplace. We have a lot more in store, but today’s launch includes:

  • Rewards. To start, you’ll automatically be eligible for allow-list spots for curated primary drops by creating and/or buying Highlight-native listings.

  • Convenience. A single view of all listings, sent offers, and received offers across marketplaces — Highlight and elsewhere.

  • Artist-first discovery. Because artists have a single profile on Highlight, we make it far more straightforward than other marketplaces to find related artwork in one place, regardless of the smart contract they used.

  • Generative art native. Explore original algorithms and view minted artworks as intended by artists.

  • Royalties. We toggle full royalties by default and maintain a 2% minimum for any listing created on Highlight, which we expect will drive >2x more royalties than either OpenSea or Blur for most listings.

  • Value. Our 1.5% marketplace fee is 40% lower than OpenSea.

• Aiming for transparency, today we’re also releasing in-depth analysis and data dashboards for the community on how far royalties have declined in the past 24 months:

  • Effective royalty rates have slid from 5% to 0.8% today; in a few weeks, OpenSea will stop enforcing royalties entirely, lowering them to near Blur’s 0.5% minimum.

  • Once the killer app of blockchain art, perpetual royalties are on life support.

• Our goal for Highlight is to provide a competitive and enjoyable art collector experience and help artists earn materially more royalties by nudging rates up within a liquid, inclusive market.

• To further support artists, we’ve also removed our primary mint fees for artists minting reserves.

• We believe what’s best for artists also benefits collectors, and we can help grow trust in a positive-sum ecosystem versus promoting a race to the bottom.

Today, Highlight is launching a secondary marketplace for digital artworks created using our toolkit.

We built a marketplace because we’re passionate participants in a vibrant, global ecosystem of artists, collectors, curators, and enthusiasts. We feel the status quo needs to change when it comes to buying digital art on a secondary market.

We usually don’t court controversy, but for clarity, we’ll name the two behemoths in the room: OpenSea and Blur.

Both have abdicated responsibility for supporting creators on royalties, operated with constant spin and opaqueness and ignored the art community in designing their products.

We’re releasing data analysis and dashboards today to support this perspective, but more importantly, we’ll explain why Highlight’s marketplace better serves the needs of both digital artists and collectors.

Why Collectors Should Use Highlight

We have much more in development over the coming months, but today’s launch brings features no leading marketplace supports.

Here’s why you should list or buy on Highlight’s marketplace relative to your other options:

• Rewards. By creating and/or buying Highlight-native listings, you’ll automatically be eligible for allow-list spots for curated primary drops. We have significant releases planned this year and will have more to share soon.

  • For reference, over the last few months, we’ve supported primary drops for Andreas Gysin, Kim Asendorf, Melissa Wiederrecht, Anna Carreras, Mark Webster, Nahiko, Nicole Vella, James Merrill, Brad Damico, Leander Herzog, Modnar Wolf, Kevin Esherick, among many other brilliant artists.

• Convenience. An aggregated view of all listings, sent offers, and received offers across marketplaces — Highlight and elsewhere. Paired with email notifications, we think our marketplace can outperform the competition in making it easier to create sales.

  • Selection and liquidity are the most important things for many secondary market participants. So we’ve also aggregated all listings, including from OpenSea and Blur. You’ll pay their fees on those listings. This is also a forcing function for us to make it more intelligent and enjoyable to buy and sell natively on Highlight.

• Artist-first discovery. Because artists have a single profile on Highlight, we make it far more straightforward than other marketplaces to find related artwork in one place, regardless of the smart contract they used. This is limited to collections released on Highlight, but we’ll be expanding this soon.

• Generative art native. Explore original algorithms and view minted art works as intended by artists.

• Royalties. We toggle full royalties by default and maintain a 2% minimum for any listing created on Highlight, which we expect will drive >2x more royalties than either OpenSea or Blur for most listings.

  • If you’re a collector who cares about supporting artists, we’re actively working to help them make more money through how we’re implementing royalties. After dozens of conversations with artists and collectors, we aim to deliver >2x the effective royalty rates compared to our largest competitors.

  • Our dashboard here shows a cross-section of ten actively traded Highlight projects, all released after OpenSea stopped enforcing royalties, that collectively have an effective royalty rate of 0.892% with 200+ in ETH trading volume. That translates to <2 ETH paid in royalties. If we can nudge this up to 2%, we’ll more than double what artists receive. With our lower marketplace fee and the rewards we’ll offer, Highlight should be the de facto marketplace for any earnest art collector and most casual art traders.

• Value. Our 1.5% marketplace fee for native listings is 40% lower than OpenSea.

  • If you’re happy to continue paying 40% more in fees to OpenSea, email us why at forty-percent-more-fees@highlight.xyz, and, at our discretion, we’ll send you $5 in USDC for a coffee.

Why Artists Should Encourage Collectors To Use Highlight

Artists who encourage their collectors to list or buy their work on Highlight’s secondary marketplace should also experience a range of benefits relative to the competition:

• Collector loyalty. Artists now have an alternative secondary market to reward good behavior from loyal collectors, ensuring a healthy primary market for their work. By awarding the collectors who respect royalties with allow-list access to new releases on Highlight, artists can regain some control and create a positive-sum relationship with their collectors.

• Art in its intended form. Rather than optimizing for OpenSea collection pages or Blur thumbnails, artists can be confident their work on our secondary marketplace is displayed with the intended aspect ratios, formats, interactivity, dynamism, and real-time animation.

• Earnings. Artists should earn more in royalties from Highlight listings than anywhere else. As we advance, we’ll use the public dashboard published today to benchmark ourselves against other marketplaces on the effectiveness of our approach.

  • We considered forcing full royalties, but we saw that what sounds like the obvious move in principle doesn’t help artists in practice. You can’t pay your rent with listings that don’t sell, and full royalty enforcement seems to stifle liquidity. As patrons of the arts, a one-size-fits-all approach that mandates 100% royalties loses any real shot of making progress for artists within today’s ecosystem.

  • The reality is that many collectors want the ability to resell art, and a liquid market requires all types of market actors — traders, flippers, art appreciators, and enthusiasts. Our marketplace is designed to accommodate everyone.

  • We’ve also removed our primary mint fee for artists wanting to mint their reserves. So, if you’re looking to hold some of your own art collection to benefit from its future value, you’ll only need to pay gas once to do so.

Surveying the Landscape

With today’s launch, we also wanted to share some of the thinking that led us to conclude that we must build a marketplace.

In short, the lack of alternatives to OpenSea and Blur has left artists and collectors vastly underserved.

Returning a Pulse: Why NFT Royalties Are on Life Support

Our analysis shows how far royalties have plummeted in the past two years. Today, the average rate is about 0.8%, down 84% from about 5% just two years ago.

When a boom in royalties drew tens of thousands of new creators to our space in 2021, they were the most-cited reason for onboarding. Perpetual royalties were the one feature — the killer app — of creating art and culture on the blockchain. It was a primary catalyst for the explosion of creativity we’ve seen since then. But this hook wasn’t enforced in code, as we all know. It was a norm and a respected social construct until trader-focused marketplaces started ignoring it.

Over the last two years, seismic changes around royalties swept under the rug in sudden policy reversals and self-serving spin from OpenSea and Blur. Though many artists and creators have found clever ways around this issue — like reserving a sizable initial supply of their art, which we support — we think more consideration should be paid to creators in how their interests and expectations are respected.

Transparency, intellectual honesty, and accountability need to be the baseline. Any functioning, sustainable market understands that looking after all participants is the only path to long-term stability and growth.

Additional arguments could be made for why paying royalties is in a collector’s interest. Principally, it incentivizes artists to take an ongoing and active role in promoting previous work and developing close relationships with their collectors. This tweet is characteristic of the current attitude among many artists.

Encouragingly, in our research, we also discovered that effective royalty rates for art are significantly higher than for other types of projects, showing signs of a collector’s desire to build a positive-sum market norm.

We believe what’s best for artists also benefits collectors, and marketplaces like Highlight can help grow trust in the ecosystem versus promoting a race to the bottom.

Art Collectors: Overlooked and Underserved

Royalties are only the tip of the iceberg. Blur and OpenSea’s product designs show that traders are first-class citizens, and artists and art collectors are in the luggage compartment.

Finding, appreciating, and collecting great art on these marketplaces is still too complex and cumbersome. So, today’s launch is our starting point for providing a better UX for digital art collectors, similar to how we’ve approached our creator tooling.

Note that we greatly respect and value traders — they provide invaluable liquidity to markets. We have many friends who flip digital artwork for fun and profit, not to mention to build outstanding art collections. Our insight is that traders are the laser focus of OpenSea and Blur’s policies and product development efforts, and the digital art community’s needs are unserved.

As a final word, we’re a platform. If we do right by our customers, namely creators and collectors, we hope to create a sustainable business by providing value in exchange for a small fee, which covers the work we do to build Highlight. We aim to become a destination for digitally native collectors to create native listings and drive secondary art markets. We think we can achieve this in three simple ways:

• Quality/Trust: Our product should work flawlessly and keep you safe, and you should trust that we’ll always be transparent, responsive, and honest in how we build our marketplace and creator tooling.

• Value: Using Highlight should be more affordable and provide more value than any other marketplace alternative.

• Selection: With our creator tooling, we’ll attract more of the most acclaimed artists to release collections on Highlight.

We’re grateful for the community of artists and collectors that have trusted us thus far. We’re here to serve you and are fired up to work on this new chapter.

As always, if you have ideas that could improve the marketplace experience for digital artists and collectors, we’re listening.

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This blog post is intended for informational purposes only and is provided on an “as is” basis with no guarantees of completeness, accuracy, usefulness, or timeliness. Although we work hard to ensure all information is accurate and from reliable sources, we make certain assumptions and are not responsible for errors and omissions or any results obtained from using this information.