NFT gaming. These words paint a picture of radical new player ownership. They paint rosy pictures of dynamic new digital economies and a leveled playing field for creators. We were sold on a brave new world where musicians could finally get paid directly for the work they create. In this metaverse, players would actually own their in-game items. The actual user experience has been… lackluster. Instead, it comes off as an elaborate get-rich-quick scheme for early adopters and corporations that has both games’ creators and players feeling exploited.

Royalties were foundational to this vision. They account for a fraction of secondary sales that are returned to the original creator. It was meant to be the mechanism that got money in artists’ pockets from the perpetually appreciated worth of their work. Right now? It's a broken system. We’re already witnessing royalties being worked around, trampled on, or completely erased by these marketplaces. This isn’t just unjust, it’s an affront to the very spirit of Web3.

Think about it this way: imagine if every time a used book was sold, the author received a small cut. That’s the kind of innovative, democratic, and supportive ecosystem NFT royalties should be fostering. Instead, we’re experiencing a digital Wild West where the most powerful players are simply changing the rules to benefit themselves. It's like discovering your favorite band's music is being used in commercials without their permission – a feeling of outrage and injustice.

So, how do we fix this mess? How do we reverse this outcome, restoring the potential for equitable royalties within NFT gaming and fashioning a more just gaming ecosystem overall? Here are three steps that are essential for the coming months.

Enforce Smart Contract Integrity

The real promise of NFTs are in their smart contracts – self-executing agreements coded right onto the blockchain. These contracts must be the non-negotiable bedrock of royalty payments. The issue at stake? Plenty of marketplaces are increasingly opting not to comply with—or pay for—these contracts. They’re basically telling the music industry, “We don’t care what the code says; we’re just not gonna pay you royalties."

We need enforceable smart contract standards. Developers need to encode royalty structures into the NFT itself. This policy change renders it technically infeasible for marketplaces to do an end run around these royalties. Think about trying to discretely embed a watermark into an ANCIENT physical painting. It’s an immutable mark – always present, no matter who holds title to it.

Additionally, grantees should encourage initiatives to choose platforms that honor these principles. Stand with the marketplaces doing the right thing to uphold the integrity of smart contracts, and against those that are not. Now it’s time for the public interest community to hold these platforms accountable.

In the end, the answer to the short-term crisis is long-term community governance. What we really need are Decentralized Autonomous Organizations (DAOs) dedicated solely to establishing and regulating royalty standards throughout the NFT gaming landscape.

Community Governed Royalty Standards

Picture this kind of DAO, where creators, players, and developers all get to participate in setting the rules of the game. This DAO could establish a universal royalty standard, propose improvements to smart contract technology, and even act as a dispute resolution mechanism when royalties are unfairly withheld.

This isn’t simply a question of fairness, this is in service of creating a thriving long-term ecosystem. When creative producers are treated with respect and compensated appropriately, they’re more eager to bestow all of their talent and time. This investment is producing powerful new games and play experiences. It’s a new virtuous cycle returning development to creation and reward.

Picture the open-source software movement in the 90s. It’s a dynamic ecosystem of developers who collaborate to build something greater than any individual could provide. It’s hard to overstate what a DAO-governed royalty system would mean for NFT gaming—it’d be transformatory.

Yet when regulation has been brought up in the web3 community, there is an immediate knee-jerk reaction to oppose the regulation. Obviously, a certain amount of government regulation is needed to keep creators safe and ensure equal treatment.

Regulate For Creator Protection Now

We’re not talking about stifling innovation. Our emphasis is on building the baseline legal structures. These frameworks will prevent marketplaces from unilaterally modifying royalty agreements or participating in other anti-competitive practices.

Picture that world where NFT creators enjoy the same legal protections as musicians or authors. Copyright laws are designed to protect their intellectual property, and royalty collection agencies act for the purpose of making sure they’re compensated fairly for the labor they produce. A similar framework should be developed for NFTs, giving NFT creators a basis in law to turn to when their royalty agreements are broken.

This is especially important given the high stakes financial risks associated with the NFT market. Most creators have no understanding of financial products and are easy prey for predatory actors. Regulations protect and empower creators by clearly defining their rights. They give them access to the resources they need to protect themselves.

The NFT gaming space is very new, but it’s at an important crossroads. Together, we have the power to liberate ourselves from bad actors and unfulfilled commitments. Let’s work together to build a better, more equitable, more sustainable future! To fully achieve NFT gaming’s promise, we need to uphold smart contract integrity. Beyond that, we must set community-governed royalty standards and adopt reasonable regulations. For the developers, for the gamers, and for the sake of Web3’s promising future – it’s high time we’re all pushing for better.

The NFT gaming space is still young, but it's at a critical juncture. We can either continue down the path of exploitation and broken promises, or we can choose to build a more equitable and sustainable future. Enforcing smart contract integrity, establishing community-governed royalty standards, and implementing sensible regulations are essential steps toward realizing the true potential of NFT gaming. It's time to demand better – for the creators, for the players, and for the future of Web3.