Will Solana’s Metaplex Fees Push Developers Back to Ethereum?

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One of the biggest sell­ing points of Solana’s ecosys­tem is its low cost of util­i­ty for NFTs, espe­cial­ly when com­pared to its gas guz­zling rival, Ethereum.

But even on the svelte blockchain plat­form, devel­op­ment still requires funding. 

In an effort to cov­er some of these costs, dom­i­nant Solana NFT pro­to­col Meta­plex intro­duced a con­tro­ver­sial net­work fee in its “Token Meta­da­ta immutabil­i­ty plan,” result­ing in angry calls for forks and gen­er­al dis­con­tent among its community.

Fol­low­ing the back­lash, Meta­plex prompt­ly back-ped­aled from ini­tial plans, remov­ing some, but not all of the pro­posed fees. The com­pa­ny stat­ed via Twit­ter that updates, ver­i­fi­ca­tions, freezes and thaws would remain free as costs “could pro­hib­it impor­tant and emer­gent use cases.”

Co-hosts Gar­rett Harp­er and San­ti­a­go San­tos dis­cussed the fee furor and the pos­si­bil­i­ty that it might draw some devel­op­ers back to Ethereum in a Block­works inter­view on the Empire pod­cast

Harp­er notes that Meta­plex “spun out of Solana Labs,” rais­ing $46 mil­lion, which he esti­mates is the third-largest raise in Solana’s ecosys­tem from an indi­vid­ual project.

“I think peo­ple thought, in gen­er­al, this was gonna be a pub­lic good.”

Vir­tu­al­ly all Solana NFTs — around 99.9% accord­ing to a com­pa­ny blog post — adopt­ed the Meta­plex stan­dard, Harp­er says, “but the issue is now that they’re adding fees on top of this, peo­ple are like, okay, we’re gonna have to fork this.”

Prob­lem being, that’s not real­ly a fea­si­ble solu­tion, Harp­er explains. “They have a license where it says it’s open source, but you can’t actu­al­ly fork it” to alle­vi­ate the fee problem.

Stephen Hess, the CEO of Meta­plex, pre­vi­ous­ly told Block­works that “​​it’s accept­able under the license for any­one to fork Meta­plex pro­grams even for a com­pet­i­tive use case, pro­vid­ed the fork isn’t remov­ing, replac­ing or mod­i­fy­ing the fees.”

“Now it’s used by all these NFTs. It’s adopt­ed by the exchanges and also wal­lets,” Harp­er says.

“It’s actu­al­ly a lot of work to build and main­tain the code,” he says, sug­gest­ing the com­pa­ny needs at least some fees to sus­tain a viable busi­ness model. 

In a fol­low-up tweet, the com­pa­ny explains that pro­ceeds from cre­ator fees “will be used to fund dev work on the Token Meta­da­ta immutabil­i­ty roadmap as well as the broad­er suite of Meta­plex pro­grams (Can­dy Machine, Auc­tion House, Com­pressed NFTs) and dev tools (SDKs, Amman, Umi, Solita).”

Will fees hinder development?

Harp­er explains that one of the prob­lems for Solana, when com­pared to Ethereum, is that it lacks pro­to­col stan­dards like ERC-20 and ERC-721. “So today, the program’s just set by Meta­plex and that’s what’s become the standard.”

San­tos won­ders if the fee intro­duc­tion might hin­der NFT devel­op­ment on the com­pet­ing plat­form. Such a move, he says, “degrades the inter­est in the broad­er Solana ecosys­tem of onboard­ing users.”

“But at the same time, pub­lic goods need to be fund­ed in some capacity.”

“You’re adding the tax­a­tion lay­er on top of it,” San­tos says, which “adds anoth­er lay­er of dif­fi­cul­ty when you’re try­ing to tell projects and users that they’re gonna be taxed for some­thing that they’re usu­al­ly not used to being taxed on in oth­er ecosys­tems like Ethereum.”

“It becomes an even greater prob­lem of com­pe­ti­tion and real­ly low bar­ri­ers to entry,” he says. “If you’re a new NFT project, this actu­al­ly changes the land­scape of it.”

“One of the cool things about Solana,” San­tos observes, is that “they do move so fast, and that’s one of their core advan­tages. But you can see an issue in sce­nar­ios like this where that can actu­al­ly be a bad thing.”

While Ethereum’s main­net devel­op­ment moves at a much slow­er pace than Solana’s, layer‑2 devel­op­ments offer low-cost and rapid­ly evolv­ing solu­tions, which “allows Ethereum to still inno­vate in a very quick way with­out hav­ing to do that at the pro­to­col lev­el,” San­tos says.

“And with that, you’re not gonna have issues with this.”

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