- Solana NFT protocol Metaplex introduced a controversial network fee in its “Token Metadata immutability plan.
- The move resulted in angry calls for forks and general discontent among its community.
- Accordingly, the network promptly toned down its initial plans, removing some, but not all, of the proposed fees.
- One of the problems for Solana, when compared to Ethereum, is that it lacks protocol standards like ERC-20 and ERC-721.
Solana (SOL) rides in a key selling point for its ecosystem, the low-cost utility for non-fungible tokens (NFTs), particularly when compared to its industry peer, Ethereum, described as the gas-guzzler. However, funding is a key part of survival in business in such an agile and competitive sector, which explains why dominant Solana NFT protocol Metaplex introduced a controversial network fee in its “Token Metadata immutability plan.”
Solana’s Token Metadata immutability plan
Solana Token Metadata immutability plan has resulted in angry backlash from the community, calling for forks as they communicate utter discontent. In response, Metaplex has pulled back from initial plans, eliminating some of the proposed fees. In a Twitter post, the company said that updates, verifications, freezes, and thaws would remain free as costs “could prohibit important and emergent use cases.”
Solana Labs’ Metaplex marks the third-largest raise in the SOL ecosystem
Metaplex sprouted from Solana Labs with a $46 million raise estimated to be the third-largest raise in Solana’s ecosystem from an individual project. According to a company blog post, almost all Solana NFTs adopted the Metaplex standard, only that they are now integrating fees on top, inspiring thoughts of forking among community members.
It is worth mentioning, however, that this would not be a feasible solution because Metaplex has a license saying, “It is open source, but you cannot fork it” to eliminate the fee problem. Citing Metaplex CEO Stephen Hess:
It is 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.
Take note, however, that a wide range of NFTs now uses it, and exchanges and wallets have even adopted it. This makes it a daunting task to develop and maintain the code, indicating that the company may need some fees to sustain a viable business model. According to the company, the proceeds from developer fees will go towards fund development on the Token Metadata immutability roadmap and the wider suite of Metaplex programs, including Candy Machine, Auction House, Compressed NFTs, and dev tools like SDKs, Amman, Umi, Solita.
6/ Fee proceeds 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)— Metaplex (@metaplex) May 25, 2023
Fees as a hindrance to development, pushing developers to Ethereum
The absence of protocol standards like Ethereum’s ERC-20 and ERC-21 is among the greatest shortcomings of Solana. This means the program is merely a product of Metaplex and will operate on its standard.
According to industry sleuths, introducing fees could hinder NFT development, thereby degrading the interest in the wider Solana ecosystem to onboard users.
You’re adding the taxation layer on top of it, which adds another layer of difficulty when you are trying to tell projects and users that they are going to be taxed for something that they are usually not used to being taxed on in other ecosystems like Ethereum.
Nevertheless, Solana also has its advantages, including that they move fast. Even so, Ethereum’s mainnet development moves much slower than Solana’s Layer-2 (L2) development, offering low-cost and rapidly evolving solutions.
[This] allows Ethereum to innovate quickly without having to do that at the protocol level.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.