This post includes updates to the Open3 Collective knowledgebase and sent via email to members.

The one takeaway for this week’s update

Enforcing secondary market royalties on used product sales for brand owners

Web3 has emerged as a way to offer infrastructure that allows creators of a product to earn additional revenue when the product is sold to someone else on a secondary market platform.

The problem is that centralized secondary market platforms as well as decentralized secondary market protocols have emerged that do away with secondary market revenue.

Its our opinion at Open3 Collective that creators should share in secondary market revenues, if they wish.  But ultimately it should be up to the creators to decide.  Some, like artists or brands that make collectible products, should probably share in upside for products that increase in value.  Other brands may not care to book the revenue from secondary market sales but instead divert it to towards charitable purposes.  Or brands could use it to help provide incentives for reuse and recycling. And still other brands may decide not to have any secondary market royalties.

But the point is to let creators and brands decide. One might argue that no, it is the owner of the NFT who should decide.  Our opinion is that it should be the original IP owner that should decide, which is how it has always been with IP.  An artist who creates the art is the IP owner.  A brand that designs and produces a product is the IP owner.

Tools are starting to emerge that help provide this freedom of choice for the IP owners, like Limit Break’s NFT tools recently released that enforce royalties at the individual token level, meaning each individual NFT can have its own programmable royalties. Regardless of which centralized platform or decentralized protocol is used to sell an NFT, royalties will be enforced.

To see all weekly takeaways published to one document, click here.

Key Tools Changes/Additions

  • Added developments with respect to hardware wallets to the tool Web3 Case Study Format, Tracking Key Brands, Other Developments To Watch , which is a key area of development we are watching because web3 currently has a very poor UX and UI and improvement in wallet technology is mandatory.
  • We found a new way to uniquely identify physical products via a holographic fingerprint label, which is the scannable component that is similar to a QR code but is more secure.  That has been added to the tool Product Identification Methods. Uniquely identifying physical products is pretty important for brands with higher price, durable products, like ski manufacturers.  The easy way is to somehow affix a unique number or alphanumeric code to the product and then keep that code in the inventory database for future reference.  If web3 infrastructure is deployed by the brand in the future, all prior products with unique IDs can be utilized in web3.  But there are emerging technology solutions like this holographic label.  Right now, NFC chips are the goto solution.

The above are key updates to consider.   Go to the web3 market intelligence database to see all.

Notable Market Intelligence Updates

  • Polygon is the leading L2 chain – the elephant in our post image trampling Solana tokens underfoot –  for Ethereum and is useful for high throughput, low cost NFT minting.  It competes with Solana, an L1 chain that we do not recommend.  It is using its war chest of money and its influence as the leading L2 chain to bring leading brands over from Solana.  It paid y00ts, a leading NFT collection on Solana, $3 Million to Leave Solana.  More evidence that Polygon is the chain to use.

The above are key updates to consider.   Go to the web3 market intelligence database to see all.

Forward Guidance

  • none this week

See all forward guidance published to one document here

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