X2Y2 Twitter Space Highlights: CC0 and Royalties of NFTs

Author: X2Y2

Host (X2Y2): @alex_pengfei

Guests:

kvc - Gamefi builder @cryptohaiyu

Tina - W3 Business Analyst Hanfu NFT Mod @hanjinrong1997

ike - Chess of Stars Greater China Management @ike76805795

Alex: Welcome everyone to tonight's Space. The topic we are discussing today is actually related to NFT CC0 and royalties. Recently, this topic has been very hot, so I wanted to explore it with our guests. Let's first hear the self-introductions from our guests.

KVC: Thank you, X2Y2. I am an entrepreneur in the gaming industry and have been making games for about ten years, from web games to client and mobile games. We have a good understanding of the gaming industry. Currently, I am working on some GameFi incubation and building, and I hope to discuss interesting things about gaming direction NFTs with everyone.

Tinalalala: Hello everyone, I am a Web3 on-chain analyst and also a Mod for Hanfu NFT. Hanfu NFT represents Eastern classical aesthetics. I am very happy to be here today to discuss CC0 and copyright issues with everyone.

Alex: I have previously collaborated with Hanfu, and I am very grateful to Tina for being here as a guest.

IKE: Hello everyone, we are a multi-chain auto chess game, mainly focusing on the esports business, essentially creating a Web3 esports platform. Our first game has been completed and has recently been launched.

Alex: Now we officially enter today's Space. Recently, Moonbird has transformed itself from a copyright-protected NFT to CC0. Because of this, the floor price has seen a very rapid decline, so I am very curious if our guests have noticed this phenomenon. What are your thoughts on it? Tina, as an NFT project party, what do you think about this?

Tinalalala: I am the spokesperson for Hanfu, not the project party. I have also noticed the issue of the Moonbird CC0 floor price plummeting. Moonbird CC0 allows modifications and secondary creations of Moonbird NFTs. Both the original and new works can be sold, and the Moonbird NFT images can be printed on clothing for sale. However, the profits do not go to the project party or holders; they belong 100% to the seller. As long as the name "Moonbird" is not used, the entire original or derivative works of Moonbird NFTs can be re-listed as new NFTs.

This CC0 behavior has caused dissatisfaction among many holders because, from the holders' perspective, if I were a holder, I would also think that the team's sudden decision might be too hasty and did not communicate and collaborate with everyone in the community. Many DAOs in the Web3 community have autonomy, and every holder has a certain influence on the project party's decisions. If everyone does not want you to do this and you do it anyway, it will affect the holders' mentality. It seems that rights have been given away, but in fact, it still infringes on the rights of the holders.

Many NFT holders do not want the NFTs they purchased with real money and ETH to be used for commercial purposes or to create derivatives by many others. Therefore, changing to CC0 midway deprives some NFT holders of their exclusive rights. The team may also be questioned; many people wonder if they need to sell to give authorization to others, rather than operating this team themselves. So in many people's minds, if the project team relinquishes more rights, it may mean that the team no longer wants to use this brand. Many NFT holders may think that the Moonbird team wants to run away; this is my understanding.

Alex: Thank you very much. I think you articulated it very well. From an emotional and community perspective, this behavior is not particularly positive or friendly. I want to ask a follow-up question: do you think that transitioning from having copyright to allowing others to use it for commercial purposes is more easily accepted, or is it better to start as CC0? Mfers was born as CC0 and gained a lot of attention and success. Which of the two is more in line with people's acceptance?

Tinalalala: I think this still depends on what the project itself is doing. If what I am doing is a widely spread meme-like image, then I can completely open up CC0 from the start. It can be secondary created by anyone who sees our NFT image, which is beneficial for better spreading our project. If it is about other projects, for example, those that are not very suitable for initially opening up CC0, currently, there is no explicit legal regulation on NFT copyright, and even copyright issues are still in an exploratory state. Therefore, for different projects, whether to open up or not does not have an absolute standard; everyone is choosing a path that suits them.

Alex: I think Tina has explained it very well. I wonder what KVC thinks about this? Should the project party be blamed for the Moonbird situation? A series of operations led to a sharp drop in the floor price; how will the holders feel?

KVC: I think this matter should be viewed from both the project party's perspective and the macro perspective. After all, the overall situation is somewhat downward, so if it is not a bull market, anything can happen in a bear market. NFTs, as a product of the crypto industry, can also fluctuate like tokens. So currently, the entire market is declining, and it cannot be entirely attributed to CC0. There are still certain issues with the project; at least we feel that the so-called Soft Rug is about shirking responsibility, which feels a bit like abandoning the community. This is my personal opinion. Holders, as symbols of disappointment, to some extent also pull the floor price down; it may not necessarily rebound, so both directions are possible.

Alex: You just mentioned that this behavior feels like abandoning the community. This is similar to the Mfer founder, who directly gave the ownership to the community and even issued an End of NFT before leaving. Are the two similar in nature?

KVC: I think this is a very good question; they are completely dissimilar. The Mfer founder left during an upward trend, when the market was performing well. This was about decentralizing governance and allowing the community to self-govern. The Moonbird behavior did not notify anyone or hold a vote, so it is a Soft Rug. Everyone is urging the project party to act; they should have rallied and continued to tell everyone the subsequent story or do something like BAYC to take a land cut. When it is time to act, they should communicate with everyone; they abandoned the rights of their community without community voting.

From this perspective, Mfer relinquished personal rights, while Moonbird abandoned the entire community's copyright ownership. Recently, for artists and top blue chips, the rights of holders are quite important. Without community voting, they just dumped this responsibility, saying they are not responsible anymore, and everyone can do secondary creations. In my opinion, this feels a bit irresponsible. Of course, some people say they support it; I am not sure if the guests support this behavior.

Alex: That's fine. I think this is a very interesting debate. IKE, do you think this is a positive behavior or acceptable?

IKE: From my perspective, I definitely cannot accept it because changing the rules that were initially set is just turning it into Web2.

Alex: Since you are doing auto chess, this issue might be a bit sharp. For games, a lot of times, the project party needs to drive the initial phase, controlling the rhythm and design of the game. Moonbird says, "I can do this too," and now it has turned into CC0, allowing more people to participate. The Moonbird image can be promoted widely; perhaps it will create a better effect. How do you view this dialectical relationship?

I remember there was a project that also transitioned from copyright to CC0; I forgot which project it was. At that time, people thought, "Wow, CC0 is amazing." Back then, the concept of CC0 was a positive term; everyone felt it was a representation of openness and inclusivity. Why has it changed from being a synonym for openness and inclusivity to people feeling that their rights have been delegated without their consent after the bear market?

This shift in viewpoints has occurred in just a few months. How do you view this? Especially since you are a GameFi project party, sometimes users feel that you are too dictatorial, constantly adjusting to control the token price. There is indeed a debate on both sides here.

IKE: This really depends on the angle or identity from which you consider it. If you are the party whose interests are harmed, you will definitely oppose it. The most important thing is that changing the game rules unilaterally is a relatively centralized way of playing, which does not align with the spirit of Web3. Our game is fundamentally different from traditional GameFi. First of all, our economic model is not a Ponzi structure, so I actually do not need to do anything for token price or governance tokens. We use stablecoins, so these issues do not exist. What we mainly do is esports events.

Alex: You determine the outcome based on wins and losses; whoever wins gets the rewards.

IKE: You can understand it this way. For example, in athletics, there is a Golden League. If you register and achieve a ranking, you can receive rewards. So from an economic model perspective, there is no inflation; there is no need to attract new players or new funds every day to pay off the old players.

Alex: I think the perspectives of the project party and users are quite different, leading to this conflict. I want to extend this question because today there is also the issue of royalties. CC0 means giving up copyright rights in the real world, allowing others to use your images for commercial purposes. We can see that many project parties may be willing to do CC0 but are reluctant to give up royalties. They believe royalties are what incentivize the project to continue. In fact, the existence of royalties has always been controversial. Is it contradictory for project parties to want royalties while also supporting CC0? It feels like a conflicting stance of wanting to have it both ways.

IKE: My understanding is that it is not about giving up; it is about sharing. In fact, it has not been given up; it is just that this right is shared. Many hands make light work, and everyone can use this IP for secondary creation and commercialization. However, if there are a lot of secondary commercial activities for NFTs that are recognized by a larger market and more people, the value of the NFTs in hand will always remain. So it really depends on how you think about this issue. I believe there should not be a conflict; it is not completely given up; it is just shared.

Alex: I do feel there is some truth to that. I will pose this question to Tina and make it a bit more specific. Earlier, I wanted to say this feels a bit like standing and talking without back pain because for the project party, after making commercial use CC0, their direct interests have not been directly harmed. The royalties are what they can directly benefit from, while holders do not receive royalties. Holders want to generate income through NFTs, either from price fluctuations or by licensing NFTs to a project or brand for commercial use to make money.

Do you think this is the project party infringing on users' interests for their own benefit? Even if it is shared, even if it is for the greater good, everyone using it to build the brand, the project party ultimately benefits the most because they can receive royalties while users do not. What are your thoughts on this?

Tinalalala: I believe that CC0 and zero royalties are not inherently contradictory. From the holders' perspective, NFT holders do not support CC0 because they do not want their purchased NFTs to be used by others for commercial purposes or to create other derivatives. The change to CC0 deprives NFT holders of their exclusive rights; originally, only I could use it, but now you take my things without spending any money, which may be their thought.

From the team's perspective, once the team declares CC0, it is a permanent declaration that cannot be revoked. Today it allows CC0, and tomorrow it does not. This means that globally, the copyright of the work has been maximally relinquished, allowing everyone to use the work for commercial or non-commercial purposes without any conditions, even without application. Users can freely copy, disseminate, and even modify images for secondary creation, taking the current NFT to create new NFTs, all of which are allowed.

If a zero-royalty approach is adopted, I personally believe that partners need to allow the project team to have clear authorization and permission for commercial cooperation, indicating which commercial uses are allowed and which are not, and some may even require community voting. Currently, NFT royalties are not in a very mature state, so for many people, as I mentioned earlier, in a market where NFT prices are continuously rising, everyone can accept these royalties because they feel that every holder is making money, and the project party also feels they are continuously making money.

If the price of NFTs has dropped significantly, even halved or more, many people feel that they are already losing money; why should they pay royalties to the project party? Psychologically, it is difficult to accept this.

We see that some project parties now use a zero-royalty approach, meaning I do not charge you royalties. This operation may provide some inexplicable psychological comfort among NFT holders, thinking that when NFT prices drop, they are not the only ones losing money; the project party is not making money either.

Alex: It's a case of not being able to stand others doing well; you have to suffer with me.

Tinalalala: It is indeed a very strange phenomenon. Hearing that you are making money is more uncomfortable than making money yourself. So let's not make money together; let's all suffer together. From the holders' perspective, zero royalties are easier to accept, making them feel that in a declining market, they are not losing more. They perceive royalties as being based on profits, not losses.

Alex: I think this reflects a sense of unfairness; either we all suffer together, or why should I suffer while you are doing well? This is a significant reason for the anger of holders, as it separates the interests of users and the project party, which is quite insightful.

Now that we are here, I will throw this question back to KVC. Do you think zero royalties are something that project parties would definitely not want, but does the existence of zero royalties in the NFT world outweigh the disadvantages or have any significance? This has been a topic of debate since the inception of NFTs; I wonder what your thoughts are on this?

KVC: The host is indeed sharp; this question is quite profound. Zero royalties are different from CC0. To some extent, CC0 relinquishes the interests of holders to facilitate secondary creation, while zero royalties depend on who can benefit. It is somewhat like an Open Source activity. I think fewer people may accept it because zero royalties and CC0 should not coexist. If there are both zero royalties and CC0, it feels a bit like what? Previously, I had a metaphor; the development of NFTs is very similar to tokens. Originally, issuing a token was very advanced, like Bitcoin, ETH, Litecoin, etc.

Alex: Everyone thought, "Wow, you can actually issue a coin," which was like going public. Now, who can't issue a coin?

KVC: It may depend on the attributes of NFTs. If the community attribute is not strong, people will really think, "Aren't you just making a small image? Are you really planning to harvest us with a small image?" Without a subsequent story, there is no value. So in my view, I think zero royalties are not very meaningful. If the participants in a matter do not gain benefits, why do it? Tokens that anyone can issue, with both zero royalties and CC0, what value is there?

I believe that both Web2 and Web3 are commercial societies. People not only need to uphold ideals but also need to ensure certain returns. If it is an art category or PFP token, I feel that making it zero royalties does not have much significance. My thought is that CC0 still has certain value because after open co-creation, holders as original owners still have a face, representing high-end groups and blue chips. GameFi may not accept zero royalties. I think GameFi can accept CC0, allowing me to use my things for secondary creation. If it is zero royalties, what is the significance of doing it?

Alex: Then I will be even sharper. I have always had a question: in the world of NFTs, trust is more emphasized. Everything is built on the trust of the project party, which is also the foundation of the community and the project. However, for many projects, there is something called Mint Fee. Some project parties may have a Mint Fee of 0.1; if they issue 5000, that is 500 ETH.

So, when spending money to mint, has the project party already received a considerable fee? This covers the basic costs of running the NFT project, including initial marketing and other expenses. Why, during the ongoing creation process, does the project party continue to collect fees? Sometimes royalties are charged very cheaply; 2.5% is considered low, while many project parties charge very high, even 10% or 15%, which is quite excessive.

From the perspective of a holder, I have already paid once during minting, and at that time, I was taking on significant risks because there was nothing to guarantee that the project would not rug. I gave you my trust, and you did not rug, which means I got the NFT at a lower price. What does this mean? More Risk, More Return; risk and return are proportional. At that time, I took on a larger risk and should receive a higher return. Why should I pay you royalties after receiving returns, especially high royalties?

Shouldn't you achieve results first before continuing to collect royalties? I think this is an unreasonable phenomenon. I wonder how you, as a project party, view this idea? I am just expressing my doubts.

KVC: I think you made a good point. When you were speaking, I was thinking that zero royalties are actually a combination punch. If it is a Free Mint, then zero royalties cannot apply. If I am charging for minting, a conscientious project party can do zero or low royalties, which would be relatively reasonable. Whether to charge for minting, whether it is CC0, and whether there are zero royalties should be a combination.

If everyone recognizes a certain value, in any commercial or natural economic society, as long as value is recognized, people will never complain about high fees or high transaction costs. Only when something has no value do people start to nitpick, feeling that you charged me for minting, even if it is 0.1 or 0.01 ETH, and then you want to charge royalties, that is unreasonable. Whether royalties are a false proposition is still under discussion. A few days ago, it seems that Sudoswap could ignore our royalty settings and directly implement low royalties, which still has no meaning.

Alex: Let me clarify here and provide some additional context. Currently, most NFT royalty settings are delegated to platform parties, such as X2Y2. We allow project parties, as long as they are legitimate, to verify their contract wallets and autonomously apply for the royalty percentage they desire. We automatically approve within a certain timeframe, so there is no intention to prevent them from setting royalties. OpenSea also requires project parties to set it themselves. Therefore, for X2Y2, we encourage and allow project parties to set royalties because we believe this is a result of their work, and we should respect others' labor. It is unethical to plagiarize or take advantage of others' work.

Previously, some friends said that X2Y2 was only focused on transaction volume and profit, not giving project parties royalties. However, the fact is that including OpenSea, royalties must be set by the project party themselves; otherwise, they will not exist. This is not something OpenSea can set on its own; it is set by the project party. As long as it is set, it will definitely exist. We have not rejected any project party unless there are ethical risks involved; we may have some considerations in such cases. Other normal projects can absolutely pass, and this can be guaranteed 100%.

As for why some platforms have zero royalties, it is because at the contract level, you cannot distinguish whether it is a sale of an NFT or just a transfer. At the contract level, it is all called Transfer. For example, if I buy KVC's avatar, you list it, and I purchase it, at the contract level, it is called Transfer; you transfer to me. If KVC has a second wallet and wants to transfer it to that wallet, it is also called Transfer at the contract level. If I directly involve royalties at the contract level, when you transfer to your other wallet, you would also have to pay royalties.

This is why it is impossible to distinguish between transferring to oneself and buying and selling; the contract level cannot differentiate. Therefore, project parties will delegate this right to the platform, allowing the platform to collect these royalties, and then the platform will pay the project party on time, or some projects pay the project party in real-time. I know OpenSea pays every two weeks to reduce gas costs, which also makes sense. Why can Sudoswap achieve zero royalties?

Because they simply did not set this up; they believe project parties should not collect royalties. Currently, there is no such thing. I will not name which exchange it is, but a traditional large cryptocurrency exchange transitioned to NFTs and initially did not set this function at all, believing it should be zero royalties. Later, why did they set it? Because the pressure was too great; well-known project parties negotiated with them, and their exchange is very famous. If they do not give me royalties, I will sue you, starting from the US. Because of this reason, they added the royalty function.

Sudoswap is an anonymous team and is not that popular yet, but now it is gaining more attention, largely due to many Chinese KOLs promoting it. In fact, their current trading volume is not that high. Do people think trading platforms should have zero royalties? This puts a lot of pressure on X2Y2. Everyone knows that one reason we started was that project parties did not know us and did not set royalties, but now we can clearly tell everyone that the BAYC project collected royalties, Azuki collected royalties, and many well-known blue chips have collected royalties on our platform. Even many ordinary project parties have collected royalties, yet our market share remains above 10%, and even recently surpassed 20%, all while collecting royalties.

I can responsibly tell everyone that we did not gain recognition without royalties; rather, it is because our product is genuinely recognized by users, and our market share is increasing. Do people think royalties should be collected by trading platforms? Or should they be allowed to collect them? I will pose this question to Tina, as I believe you must have some thoughts on this.

Tinalalala: I think, from my personal perspective, it is better to let the market answer this question. Since I come from a data analysis background, there is a statistical experiment in my work called A/B Testing, which involves changing a single experimental variable under the same conditions and collecting data to see which option performs better.

For example, friends in the internet circle may be more familiar with this. I want to change a function on a webpage; one wants to set a red button, and another wants to set a green button. We randomly give a portion of users the red button and another portion the green button to determine the click-through rate and conversion rate of each button, and then decide whether to adopt the red or green button.

Therefore, from the perspective of NFT holders, if you think zero royalties are better, you can sell those high-royalty NFTs and no longer hold them, saying goodbye to them, and buy zero-royalty NFTs to show your support for zero royalties. I believe users should have the choice, but they should not change the contract unilaterally to lower the price or royalties. Buying this item but now having no ideal price to lower royalties or using other means to purchase at a lower price is inappropriate.

From the project team's perspective, I think whether to charge royalties is a matter that each project team considers differently. I have encountered artists and collectors who enter the NFT space and may respect the rules of their own circles more, and they will definitely charge certain royalties, including those from the music industry who cross over into NFTs.

Recently, I saw a video on Douyin saying that a certain celebrity, despite being less popular now, still earns millions from royalties every year because even though they are not popular now, songs from the past are still being sung and used, so they will still collect royalties. If artists come to our crypto market, they may hope to collect royalties.

Returning to the project team, if they promote zero royalties, there may be a temporary growth-hacking model, gaining a lot of support and showing a significant increase in new user acquisition. However, this is only targeted at themselves, and the behavior is made for the user market. As I mentioned earlier, artists and collectors may not necessarily support this, so the competitive advantage may disappear if those people do not support it.

Overall, the NFT market is in a developmental stage, and it is also for the development and prosperity of the market. We hope more people, regardless of their roles, whether artists, collectors, investors, or ordinary collectors, join this large social experiment of Web3. My view is that whether to charge royalties should be left to the market to decide.

Alex: Understood. Tina has articulated this very well. After all, everyone's thinking perspective and growth environment are different. Some people are artists and certainly hope to have royalties, or they are actors. For example, actors from Friends feel that every time someone plays their line, they must be paid, so now they earn hundreds of dollars daily just for one line, which is quite nice.

I think this is a progression. Friends is actually a very old show, and the actor who played Ross proposed to the production team that we should do profit sharing; every actor who appears should benefit from it, rather than just giving the copyright to the show. I think the model of Friends is quite similar to the early awakening of copyright awareness. The thinking of Chinese people and Westerners is different. Initially, we should consider whether to use zero royalties as a gimmick to enter the international market. Perhaps the price advantage is significant; some projects charge 10%, while we still offer zero royalties, allowing you to save 10%. It is a case of saying one thing while doing another; in the end, it will still be used.

X2Y2 is a very international team. We have some foreign team members, or we have people with diverse backgrounds. Some may have grown up in China, while others are now working overseas, having changed their nationality. Some may have grown up in Malaysia, the UK, or Germany; the environments are different. We find that team members who grew up abroad are naturally very resistant to the idea of infringement and feel that using this point as a promotional angle is wrong. International users would think, "I will not use a platform operating under the banner of infringement." They would see it as shameful and would not accept it in the market.

Recently, a competitor's platform also focused on zero royalties and zero transaction fees, but they have gained a portion of user volume. In fact, they have recently surpassed another well-known competitor that many people may have heard of. It can be seen that the market's answer is that I like zero royalties. Should we really pursue this? I will pose this question to IKE, as you are also involved in auto chess. How do you view zero royalties? If this platform insists on zero royalties, what will you do? Will you publicly condemn them or find some solution?

IKE: For us, we would not choose this approach. To put it bluntly, if there is no income, how do I pay my employees? What about rent and utilities? How do I continue to operate?

Alex: This brings us back to my initial question. For example, your project's mint fee is 0.1 ETH. As a user, I can say, "I have already paid you the mint fee; why should there still be royalties?" Many people support this viewpoint.

IKE: Because we are different from NFTs, the vast majority of the money goes into the reward pool. Players earn rewards through participating in the game, which are given back to players from the money spent on purchasing NFTs.

Alex: So the money from NFTs is not meant to profit off you but is used in a way to contribute to the game.

IKE: We will definitely profit, but the proportion we earn is very small. We are focused on scale, targeting Web2 game users, not those who previously speculated on tokens or mined in GameFi. We emphasize the quality of the game itself, combining the playability of Web2 games with stable financial attributes. Players can indeed earn money by playing this game rather than being exploited. The vast majority of our NFT funds go into the reward pool to reward players.

Alex: Therefore, different project parties will have different strategies.

IKE: That is certain. Nothing is absolute. If you ask me, my understanding is that it depends on the situation. The perspective from which you stand will definitely influence your understanding of what you are doing.

Alex: Do you think zero royalties might become the norm in the future?

IKE: I think it is possible.

Alex: Why? Aren't you a project party? You would certainly hope it is not zero royalties.

IKE: Some projects may be more suited to this model, or they may have other plans to achieve promotional goals, possibly increasing visibility and dissemination. I think this will test the project party's ability to find other profit points based on this.

Alex: I think the zero-royalty model can work. How can it work? Generally, project parties do not issue all NFTs at once. They will definitely keep some NFTs in hand. If they are willing to adopt zero royalties, we can see in reality that zero-royalty exchanges are quite popular among Chinese players. Spiritually, I condemn it, but when it comes to buying and selling, I still choose the lowest price. No one is foolish; everyone wants to make money.

To follow this trend and adopt zero royalties, the simplest method is to issue ten thousand, keeping one hundred or even one thousand in hand. If I can hype this up through zero royalties, then I am also profiting; I can sell my own stock and ultimately still make money. This is the form I can think of for zero-royalty project parties to work. Finally, I will throw this question back to KVC. Do you think zero royalties might have the potential to become mainstream in the future, or are there any drawbacks and benefits?

KVC: Your viewpoints are quite sharp. I feel that zero royalties may become a phenomenon that must be accepted outside of top blue chips. As you said, users may say they do not support it, but zero royalties are still quite appealing to them. According to the objective laws of historical development, if something harms the project party but is valuable to users, even if everyone says they do not support it, they will ultimately move in that direction. Zero royalties may become a mainstream trend in the future, with 80%-90% of project parties ultimately adopting zero royalties.

The same goes for games. Originally, we intended to collect some royalties to pay into the treasury. If you charge 10%, the next project may charge 5%, and the next one may charge 1%. The more aggressive ones may not charge at all, just as the host mentioned, using a reserved method. My feeling is that according to the inevitability of historical development, this is likely how it will end up. When trading, if no transaction fees are collected because X2Y2 sets a 3% royalty, while another party adopts a zero-royalty approach, we cannot stop that.

Rather than that, if we do not have enough strength to guide or control users, we can only accept a passive approach. I think zero royalties will be adopted through reserved methods. I believe this may be the trend moving forward. But I also want to know from the platform's perspective, assuming everyone adopts zero royalties, is it appropriate for the platform to still collect transaction fees? Would this method backfire on the platform itself? Would users feel that if project parties do not collect royalties, the platform should not collect transaction fees either? Would this put pressure back on the platform?

Alex: Actually, this is a good question, and I can respond to it. Why does the platform need to collect transaction fees at this stage? Because this fee ensures that a trading venue is provided for everyone. You know that when you go to an auction, a significant portion of the fees goes to the auction house. For example, Christie's charges a fee of around 5% of the total auction price because they have to cover the costs of transporting items, providing dedicated personnel to handle the items, and various translation and auction processes, which can be quite expensive.

NFTs are digital, and providing this platform is like shopping on Taobao. In our perception, does Taobao not charge any fees from buyers? If anyone has opened a Taobao store, they will find that the costs of running a Taobao store have been continuously reduced to very low levels. What is Taobao's profit source? It is from advertising for many stores and personalized recommendations. If I spend a little money here, I will recommend you. The model evolves to implement price discrimination through personalized recommendations, extracting some improper profits. Eventually, it will transform into traditional internet models, extracting a portion of the remaining value through data analysis.

Every user's tolerance for price discrimination is different, and profits can be obtained through precise algorithmic targeting. Ultimately, a small transaction fee will be charged. OpenSea's 2.5% high transaction fee is something that would be unimaginable in the traditional Web2 world because it is a very high number.

It depends on how you define NFTs. If you imagine the NFT market as a future where everyone uses something like WeChat Wallet, charging 2.5% would definitely lead to lawsuits for charging improper platform fees. However, if you define it as collectibles or art, you will find that 2.5% is not very expensive. It really depends on how you define NFTs and whether the platform can collect enough traffic to develop other non-operating income. These are just ways to acquire traffic and ports; how to monetize that traffic may be another strategy.

This is somewhat similar to current NFT tools, which do not charge any transaction fees. They may analyze data, provide data organization, and charge subscription fees or pass fees without directly directing traffic to exchanges and charging exchanges. This is not feasible; they cannot charge that fee. This is also an approach we are exploring.

KVC: Okay, I think this line of thinking is reasonable. The platform, as a tool, medium, and venue, must charge necessary fees. I was just thinking, since it is a non-compliant platform with zero royalties, why not learn from Pinduoduo and simply implement zero royalties? Then sell a bidding ranking or an advertising slot.

I am irresponsibly brainstorming; could we increase the platform's activity by selling advertising fees for free competition? Because users are all looking for bargains, if the product is good and does not charge fees, not only zero royalties but also zero service fees, by collecting project parties' money through recommended bidding rankings, it may yield more than transaction fees.

Alex: Today, everyone has discussed thoroughly and extensively. I want to thank our three guests for coming to the X2Y2 platform, and I also appreciate everyone's support. Today's Space ends here. If anyone has questions, please feel free to leave us a message.