Royalties are one of the key ways that NFT creators make money for their work. Now, an annual report by Galaxy Digital – the crypto and blockchain investment firm – has announced some staggering figures. Using stats from blockchain data specialists, such as Dune Analytics, they estimate that Ethereum NFT creators have earned over $1.8 billion in secondary royalties over the last year.
NFT royalties continue to support artists
NFT royalties work similarly to other industries but are automatically executed through smart contract technology. Basically, the original artist gets a percentage of the sale price each time it trades on an NFT marketplace.
Significantly, most NFT marketplaces allow you to choose what percentage you would like to receive as royalties. The standard royalty fee can range from 2.5% to 10%.
Ethereum NFT creators make over $1.8 billion in royalties!
NFTs continue to grow in popularity, and there are numerous blockchains that the tokens exist on. The biggest and most popular blockchain for NFTs is Ethereum, and OpenSea is the biggest marketplace. The data confirms that Ethereum NFT creators have made over $1.8 billion in royalties in the last year.
The Galaxy Digital report on royalties shows that average fees are rising. In particular, they highlighted that NFTs on OpenSea, have seen royalties rise from 3% to 6%. This has a massive impact on the industry, as OpenSea, is the biggest NFT marketplace. It appears that NFT creators are now demanding higher royalty fees for their work.
Who is earning the most in NFT royalties?
Not surprisingly, Yuga labs, the creators of the Bored Ape Yacht Club, is the top royalties earner for Ethereum-based NFT collections. The company has seen over $147 million in payouts from secondary royalties.
Yuga’s Otherside metaverse land project, which created over 500 million dollars in less than 24 hours back in April, will have considerably impacted this.
Interestingly, ten NFT projects make up over 27% of all Ethereum NFT royalties. This data also shows that 482 NFT collections were responsible for just over 80% of all NFT royalties.
Mega corporations are also earning from NFT creator royalties
Over the last two years, huge companies have also entered the NFT space. Adidas, Nike, Disney, and others, are now heavily involved in NFTs. Nike, one of the world’s most recognizable brands, has embraced web3 head-on. What’s more, Nike also acquired the creative NFT project, RTFKT.
Because of this and other NFT projects, Nike is one of the biggest earners in the space. The company tops the charts for prominent brand royalties, with over $97 million in NFT creator earnings.
Finally, NFT royalties are a somewhat controversial topic in the NFT community. In recent months, Magic Eden, the leading Solana NFT platform, has moved to a new model – offering an optional royalty payment structure for potential buyers. The announcement has caused huge controversy in the NFT artist community, who feel they are undervalued for their work.
Over the coming year, it will be interesting to see how other NFT platforms, such as OpenSea, will deliver NFT royalties.
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This article is educational material.
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