What are NFT Royalties?
NFT royalties are a mechanism used to ensure that creators receive ongoing compensation from the sales of their non-fungible tokens (NFTs) after the initial sale. Unlike traditional art or collectibles, where the original creator might only profit from the first sale, NFT royalties allow for a percentage of subsequent sales to be paid back to the original artist.
When an NFT is minted and sold, the creator can embed a royalty percentage into the smart contract. This percentage is predetermined and can vary based on the creator's preference. For instance, if an artist sets a 10% royalty, they will receive 10% of any future resale price whenever the NFT changes hands.
This feature promotes fairness and sustainability in the digital art and collectibles marketplace, encouraging artists and creators to continue producing new work. It also incentivizes secondary market sales, which can lead to increased visibility and demand for the creator’s future projects.
However, implementation and adherence to royalty agreements can depend on the platform where the NFT is traded. Some marketplaces respect the royalty settings, while others may not, leading to ongoing discussion in the NFT community about the importance of enforcing these royalties across various platforms.