NFT Royalties Plummet by 97%
Date: 2024-01-01 Author: Dima Zakharov Categories: BLOCKCHAIN
In a series of tweets, Twitter user punk9059, who is both a specialist and a collector in the NFT space, revealed a startling decline in NFT royalties. These royalties represent the earnings that NFT creators receive when their digital assets are resold in the market. The data showed that during the initial six months of 2022, NFT buyers paid over $1 billion in royalties to creators.
However, the situation has taken a dramatic turn as this figure plummeted by a staggering 97%. According to the analyst, the past six months have seen a meager $29 million in royalties generated from NFT purchases on the Ethereum network. This abrupt decline follows a previous trend of rising royalties, as market sentiment gradually improved and more projects found ways to ensure compliance with regulatory requirements.
Non-Fungible Tokens (NFTs) are a category of digital assets that leverage blockchain technology to establish and verify the uniqueness and authenticity of digital items, such as images, videos, audio files, gaming items, and more. Unlike traditional cryptocurrencies, each NFT possesses a unique identity and characteristic that makes it irreplaceable.
One intriguing feature of NFTs is the ability to include royalties for their ownership. This means that creators of NFTs receive a certain percentage as a reward for each subsequent resale of their asset. Royalties for NFTs serve as a means to provide creators of digital content with additional income and compensation for their creative work. These royalties can be embedded in the blockchain's smart contracts governing the NFT, automatically disbursing them with each subsequent resale.
However, the application of NFT royalties is not uniform and depends on the settings of the specific token and the platform where it is sold. Some platforms charge a commission on each sale, distributing it between the author and themselves. The NFT industry is undergoing a transformation, and the drop in royalties may signify a shift in how NFT creators are compensated for their work.
