The NFT community has been hotly debating what is the right thing to do with secondary royalties to the NFT creator. The two sides of the argument seem to be:
For royalties: the whole point of Web3 is to support creators, to make sure that all stakeholders are paid fairly for their work. This means making sure that artists get the upside of their work in perpetuity.
Against royalties: people, including traders, should be given maximum freedom and choice.
There is one dimension of this conversation that I want to share from my hedge fund days. When there is an investment fund that has external investors, they own their investors a "fiduciary duty." This means that you must do what is in the best interest of the investor --> getting the best return for the fund. As such, there is a thing called "best execution," which is just a fancy term for taking the trade that offers the best price.
If you're a fund that holds NFTs, does that mean that in order to create the best return for your investors, that you should adopt best execution? And if so, would the royalty free option always be needed to be able to say that you got the best price for the trade?
There are always ways to disclose around that and to let your investors know that you may pay royalties. These are all interesting questions and I am curious to see how things evolve.