A recent report by Galaxy Digital provides new data on non-fungible token (NFT) royalty payments. Among other things, the report provides the following notable statistics:

    Over $1.8 billion worth of royalties have been paid out to creators of Ethereum-based NFT collections.
  • The average royalty percentage paid out to creators on OpenSea, the platform that has paid out the most royalties to creators by far, has doubled from 3 percent to 6 percent over the past year.
  • Ten entities accounted for 27 percent of all NFT royalties earned to date.
  • 482 NFT collections accounted for 80 percent of all royalties earned to date.
  • Eight major brands have collectively earned almost $100 million in NFT royalty payments to date.

    • The report notes that NFT royalties "are not actually programmed at the token/smart-contract level," and it provides an analysis of the technical and business reasons that make this difficult and impractical. Among other topics, the report also explores "two leading schools of thought" on NFT royalties, with those in favor of NFT royalties pointing "to the potential for creators to earn more money over time as their projects become more popular" and opponents claiming "that enforcement mechanisms are not possible on-chain without severe trade-offs that negate many of the advantages of permissionless blockchains in the first place." The report closes by offering potential solutions to the problem of NFT royalty enforcement at the smart contract level.

    For more information, please refer to the following links:

      NFT Royalties: The $1.8bn Question
    • NFT Royalties Top $1.8 Billion: Galaxy Digital

      • The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mr Robert A. Musiala Jr.
BakerHostetler

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