An NFT royalty is a percentage of the sale price that automatically goes to the original creator every time the NFT is resold on a secondary market. Typically set at 2.5-10%, royalties give artists ongoing income as their work trades hands. However, royalty enforcement is not universal: some marketplaces honor them, others allow buyers to skip them.
What Is a Royalty (NFT Creator Royalties, Mechanics)?
3 min read
The short version
Royalties in NFTs work like a musician getting paid every time their song plays on the radio. Every time your NFT sells again (not just the first time), you get a cut. The difference from traditional art: a painter gets nothing when their canvas resells at auction for 10x. With NFT royalties, the creator gets paid on every resale, forever (if the marketplace enforces it).
How It Works
Implementation: the creator sets a royalty percentage and receiver address when deploying the contract (using EIP-2981 standard). When a sale happens on a marketplace that honors royalties, the marketplace deducts the royalty from the seller's proceeds and sends it to the creator address. Example: 5% royalty, NFT sells for 10 ETH. Creator receives 0.5 ETH. Seller receives 9.25 ETH (after marketplace fee ~2.5%). Enforcement problem: royalties are not enforced at the protocol level (the ERC-721 standard has no built-in royalty logic). They are voluntarily honored by marketplaces. In 2022-2023, royalty enforcement broke down: Blur offered optional royalties to attract volume, OpenSea followed, and creator earnings dropped significantly. Newer standards (ERC-2981, operator filter) attempt to re-establish enforcement, but no solution is universally adopted.
An artist earning ongoing royalties
An artist mints a 1,000-piece collection with 7.5% royalties. Initial mint price: 0.1 ETH each. First sale: artist receives mint revenue (100 ETH total across 1,000 mints). The collection grows in popularity. Average secondary sale price: 2 ETH. Over the next year, 5,000 secondary sales occur. At 7.5% royalty on 2 ETH average: 0.15 ETH per sale x 5,000 sales = 750 ETH in royalty income. This far exceeds the initial 100 ETH mint revenue. For successful collections, secondary royalties become the primary income stream. For collections that do not trade actively, royalties generate little. The model rewards creating work people want to keep trading.
What People Get Wrong
Royalties are guaranteed by the blockchain
Royalties are a social convention enforced by marketplaces, not by the token standard itself. A direct wallet-to-wallet transfer or a sale on a marketplace that ignores royalties results in zero creator payment. EIP-2981 standardizes the royalty information but cannot force compliance.
Higher royalties mean more income
Higher percentages reduce buyer/seller willingness to trade on royalty-enforcing platforms. At 10% royalty, some buyers route through zero-royalty marketplaces. There is an optimal rate where enforcement compliance and percentage balance. Most successful collections settle around 5%.
Royalties flow to the current owner
Royalties go to the original creator (or whatever address was set in the contract), not the current seller. The seller receives the sale price minus royalties and marketplace fees. The creator earns regardless of who is selling or buying.
Keep Reading
Sources & Further Reading
- EIP-2981: NFT Royalty Standard
The standard interface for on-chain royalty information
Questions People Also Ask
- Can royalties be changed after deployment?
- Some contracts allow the creator to update the royalty percentage or receiver address. Others lock it at deployment. Check whether the contract has a setRoyalty function. From a collector perspective, immutable royalties provide more predictability.
- Do all marketplaces honor royalties?
- No. As of 2024: OpenSea makes royalties optional for most collections. Blur makes them optional. Foundation and SuperRare enforce creator royalties. The ecosystem is fragmented, and enforcement depends on which marketplace the sale occurs on.
- Can royalties be enforced on-chain?
- Partially. Operator filter registries (like OpenSea's) block sales on non-royalty-honoring marketplaces at the contract level. This is controversial: it restricts where tokens can be traded. No perfect solution exists that preserves both free transferability and mandatory royalty payment.