Wednesday, September 20, 2023
HomeTop NFT CollectionWeb3’s Promise of NFT Intellectual Property Rights ‘Far Off,’ Says Galaxy

Web3’s Promise of NFT Intellectual Property Rights ‘Far Off,’ Says Galaxy

  • World of Women is the only Top 25 collection looking to grant intellectual property rights to NFT buyers.
  • Yuga Labs is a $4 billion NFT company and owns 63% of the implied market cap of the top 100 NFTs.

Cryptocurrency bank Galaxy Digital has surveyed the current NFT market and concluded that Web3’s promise of digital ownership and property rights is “still far away.”

Galaxy Digital reviewed the licenses of top NFT (non-fungible token) collections such as Bored Ape Yacht Club (BAYC) and CryptoPunks in their latest report, A Survey of NFT Licenses: Facts & Fictions. It was published Friday by the company’s research team.

Ethereum alone has traded more than $118 billion in NFTs year-over-year, according to Galaxy, though monthly trading volume has fallen by about 90% since January.

These declines were largely due to the slump in the cryptocurrency market, which saw many NFT investors sell at a loss.

In contrast, NFTGo data The number of addresses holding NFT investments (excluding traders) shows that it continues to grow despite the bear market, especially major collections.

Top NFTs barely convey intellectual property rights, Galaxy finds

According to the report, the majority of top collections do not convey any intellectual property ownership of the underlying artwork or media.

Azuki, Doodles, Nouns and VeeFriends NFT projects were also explored.

More recently, Moonbirds, CryptoPunks, Meebits Terms of Service have changed — Spotlight the debate on NFT licensing agreements.

In the case of Moonbirds, Galaxy switched from a commercial use license to Creative Commons (CC0) without community consent, highlighting the fact that Moonbirds owners never owned any intellectual property (IP). Did. The parent companies behind Moonbirds and Oddities had the say.

“The CC0 license is too permissive,” said Galaxy. This is to move the IP completely into the public domain. This makes it “impossible for entrepreneurs to integrate NFTs into their business because there is no legal protection.”

For the newly acquired Yuga Labs collections CryptoPunks and Meebits, the new license terms (enacted Monday) are “significantly more professional and clear in terms of ownership and licensing,” the report found. I was.

Yuga Labs acknowledges its right to unilaterally update or change the license terms of these projects. These license terms are “usually buried” in terms and conditions policies or “never clearly stated” on secondary trading platforms such as OpenSea.

Galaxy, on the other hand, labeled BAYC’s license as potentially misleading. It’s unclear if Yuga Labs intends to give Apes and Punks owners the same commercial use rights.

“Where Yuga Labs intended the licenses to be functionally identical, it updated the BAYC license to include misleading phrases such as ‘Underlying Bored Ape, wholly owns the art’. It should be removed,” the report said.

When it comes to Yuga Labs’ “Otherdeed for Otherside” NFT, the Metaverse Land parcel is the first non-commercial token issued by Yuga Labs, the report states.

NFT’s terms and conditions allow owners to use and transfer purchased virtual land, but Otherdeed’s owners say they have no rights to the copyright of associated media, including artwork. .

However, the owners of Kodas, creatures that roam the other side, have full commercial rights to the art consistent with the BAYC license.

A world of women or a world of litigation?

A Galaxy report hailed a collection as the only project to attempt to transfer full intellectual property rights to NFT owners: World of Women (WoW).

“WoW will attempt this through the provision of a new Copyright Transfer Agreement, a governance framework that transfers copyright for each artwork to WoW NFT owners.

Still, I have a problem. It’s unclear if IP deals continue to be held in the secondary market, he pointed out to Galaxy.

“Unless both Minter and the secondary purchaser agree to these terms, there is no assurance that the IP transfer agreement will pass from Minter to the secondary purchaser,” the report states.

Galaxy says metaverse realms Decentraland and The Sandbox have “done a decent job of trying to assign IP ownership of user-generated content to users, while also properly giving up what they own and what they don’t own.” There are,’ he concluded.

The company proposed three action items to enable future digital ownership. NFT issuers need to amend their contracts for Web3 to have a chance. Also, the decentralized metaverse should enable intellectual property rights by default.

“While it is not necessary for NFT issuers to explicitly grant full intellectual property rights to purchasers, the lack of intellectual property rights is a major cause for concern by NFT and Web3 promoters that this technology will revolutionize digital ownership. It undermines the declaration,” the report said.

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  • Ornella Hernandez

    block works


    Ornella is a Miami-based multimedia journalist covering NFTs, the Metaverse, and DeFi. Before she joined Blockworks, she did reports for Cointelegraph and also worked for TV stations like CNBC and She Telemundo. She originally started investing in her Ethereum after hearing about it from her father, and she has never looked back. She speaks English, Spanish, French and Italian. Contact Ornella [email protected]

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