Introduction: Why NFT Royalties Matter More Than Ever
In the vibrant world of non-fungible tokens (NFTs), where digital art, collectibles, and virtual real estate trade for millions, one mechanism quietly shapes the financial ecosystem: royalties. For creators, royalties are a lifeline—ensuring they earn ongoing income from secondary sales of their work. For investors, understanding how royalties work is critical to evaluating an NFT project’s long-term value. Yet, recent debates over “optional royalties” and platform policy shifts have turned this once-stable system into a battleground of innovation and conflict.
For Vietnam’s growing crypto community—from curious newcomers exploring NFTs as a new asset class to seasoned traders analyzing market trends—grasping NFT royalty mechanisms isn’t just academic; it’s essential for making informed decisions. At HIBT, we’ve seen firsthand how royalty structures impact both creator sustainability and investor returns. In this guide, we’ll break down everything you need to know about NFT royalties, using real-world cases, latest news, and actionable insights tailored to Vietnamese audiences.
Curious about how HIBT simplifies NFT trading? Explore our NFT marketplaceto discover curated collections with transparent royalty terms.
Chapter 1: What Are NFT Royalties? A Beginner’s Guide
At its core, an NFT royalty is a percentage of the sale price that the original creator receives whenever their NFT is resold on a secondary market. Unlike traditional art markets, where artists rarely profit from resales, NFTs embed this right directly into the token’s smart contract—making it automatic and enforceable.
Key Components of Royalty Structures
- Royalty Percentage: Typically ranges from 2.5% to 15%, though some projects (e.g., high-profile art drops) go up to 20%.
- Payment Recipient: Usually the original creator, but can also be split among collaborators, DAOs, or charities.
- Trigger Conditions: Paid on secondary sales(not the initial mint), often after a minimum sale price threshold (e.g., “royalty applies only if resale ≥ 0.5 ETH”).
Why Royalties Exist: The Creator Economy Revolution
Before NFTs, digital artists struggled to monetize their work beyond the first sale. A viral illustration might be shared freely, with no compensation for the creator. NFTs changed this by attaching royalties to ownership transfers. As Vietnamese artist Minh Anh shared in a recent interview: “My first NFT sold for 200,butalaterresaleearnedme3,000 in royalties—something I never thought possible.”
New to NFTs? HIBT’s Beginner’s Guide to Crypto Artbreaks down minting, wallets, and marketplaces step by step.
Chapter 2: How Do NFT Royalty Mechanisms Work? Smart Contracts & Platform Policies
Royalties rely on two pillars: smart contracts (the code that enforces payments) and marketplace policies (the rules platforms set for collecting/distributing royalties). Let’s unpack each.
A. Smart Contracts: The Code Behind Royalties
Most NFTs use Ethereum’s ERC-721 or ERC-1155 standards, which include optional fields for royalty information. When a creator mints an NFT, they specify:
- The royalty recipient’s wallet address.
- The percentage to be paid.
When the NFT is resold, the marketplace’s smart contract automatically calculates the royalty (e.g., 5% of a 2 ETH sale = 0.1 ETH) and sends it to the creator’s wallet.
Example: Bored Ape Yacht Club (BAYC), one of the most successful NFT projects, uses a 2.5% royalty. By 2023, BAYC had generated over $150 million in secondary royalties for its creators, according to DappRadar.
B. Marketplace Policies: The Gatekeepers of Royalties
While smart contracts enable royalties, marketplaces decide whether to enforcethem. Historically, platforms like OpenSea and LooksRare required sellers to pay royalties. But in late 2022, OpenSea announced it would make royalties “optional” for new collections, sparking outrage among creators.
Why the shift? Marketplaces argued that enforcing royalties drove users to competitors (like Blur) that offered zero fees. This created a dilemma: should platforms prioritize creator rights or trader incentives?
Vietnam Case Study: Local NFT project Saigon Sentinels(a collection of 10,000 digital guardian statues inspired by Vietnamese folklore) initially set a 7.5% royalty. After OpenSea’s policy change, they migrated to HIBT’s marketplace, which guarantees royalty enforcement. “We chose HIBT because their commitment to creators aligns with our values,” said project lead Linh Nguyen. Learn more about HIBT’s creator-friendly policies at hibt.com/creators.
Chapter 3: Types of NFT Royalty Models – Which One Fits Your Strategy?
Not all royalties are created equal. Projects experiment with different models to balance creator earnings and trader appeal. Here are the most common types:
1. Fixed Percentage Royalties
The simplest model: a set percentage (e.g., 5%) paid on every secondary sale.
- Pros: Predictable income for creators; easy to communicate to buyers.
- Cons: May deter traders if the rate is too high (e.g., 15% could reduce demand).
- Example: Azuki, a popular anime-style NFT project, uses a 5% fixed royalty.
2. Tiered Royalties
Rates vary based on sale price tiers. For instance:
- 2.5% for sales under 1 ETH.
- 5% for sales between 1–5 ETH.
- 7.5% for sales above 5 ETH.
- Pros: Encourages high-value trades while keeping low-tier sales accessible.
- Example: Moonbirds, a PFP (profile picture) project, uses tiered royalties to reward both casual and whale buyers.
3. Dynamic/DAO-Controlled Royalties
The community (via a DAO) votes to adjust royalty rates.
- Pros: Decentralized decision-making; adapts to market conditions.
- Cons: Risk of governance attacks (e.g., a majority voting to lower royalties for personal gain).
- Example: Nouns DAO, a generative avatar project, lets holders vote on royalty changes quarterly.
4. Hybrid Models (Royalties + Resale Caps)
Some projects cap total royalties (e.g., “creator earns max 50 ETH in royalties per NFT”) to avoid over-monetization. Others combine royalties with staking rewards (holders earn tokens for locking NFTs).
Icon: A flowchart comparing these four models, with pros/cons highlighted.
Chapter 4: The Great Royalty Debate – Optional vs. Enforced Royalties
The 2022 OpenSea policy shift ignited a war between creators and traders. Here’s why it matters for Vietnamese investors:
The Problem with Optional Royalties
When marketplaces stop enforcing royalties, buyers can choose not to pay them. This hurts creators, especially emerging artists who rely on secondary sales. A 2023 report by Messari found that optional royalty policies reduced creator earnings by 60–80% for small projects.
The Trader Perspective
Traders argue that high royalties increase transaction costs. On Blur, a competitor to OpenSea, zero royalty fees made it the top NFT marketplace by volume in Q1 2023. Vietnamese trader Minh Hoang told HIBT: “I prefer trading on platforms without mandatory royalties—it lets me maximize profits.”
The Middle Ground: Platform Innovation
Some platforms are finding compromises. HIBT, for example, allows creators to set royalties (2.5–15%) and enforces them via smart contracts. For traders, HIBT offers lower trading fees (0.25% vs. OpenSea’s 2.5%) to offset royalty costs. “Our goal is to balance creator and trader needs,” says HIBT’s Head of Product. Discover HIBT’s fee structure at hibt.com/fees.
Chapter 5: Real-World Case Studies – Royalties in Action
Let’s examine how royalty mechanisms play out in practice, with examples relevant to Vietnamese audiences.
Case 1: CryptoPunks – The OG Royalty Model
CryptoPunks (2017) pioneered NFT royalties with a 0% rate. Why? Creator Larva Labs wanted to encourage free trading to build hype. Today, CryptoPunks are blue-chip assets, with floor prices over 60 ETH. However, critics argue that 0% royalties shortchanged early creators—had they set a 5% rate, they’d have earned millions more.
Case 2: Axie Infinity – Royalties as a Game Fund
Axie Infinity, a play-to-earn game, uses a 4.25% royalty. These funds go to the Axie Treasury, which supports game development and player rewards. For Vietnamese players, this means a portion of their resales contributes to the game’s ecosystem—creating a virtuous cycle.
Case 3: Vietnamese Project Lac Hong Warriors– Community-Driven Royalties
Launched in 2023, Lac Hong Warriorsis a collection of 8,888 NFTs depicting Vietnamese historical heroes. The project uses a 10% royalty, with 5% going to the creator team and 5% to a DAO fund supporting local artists. Within three months, secondary sales generated $120,000 in royalties, which funded a grant program for 10 emerging Vietnamese digital artists.
Chapter 6: Latest News – Royalty Trends Shaping 2024
Stay ahead with these key developments:
- Blur’s “Royalty Oracle”: In March 2024, Blur introduced a tool allowing creators to block non-payers, effectively re-enforcing royalties on their collections. This move was praised by creators but criticized by traders.
- Ethereum’s EIP-2981 Standard: A proposed update to simplify royalty implementation across all NFT platforms. If adopted, it could standardize royalty data, reducing confusion for buyers.
- HIBT’s Creator Grant Program: Announced in April 2024, HIBT will allocate $1 million in grants to Vietnamese NFT creators who use its marketplace. Grants are awarded based on project quality and royalty transparency. Apply now at hibt.com/grants.
Chapter 7: How to Evaluate NFT Royalties – A Checklist for Investors
Whether you’re a newbie or a pro, use this checklist to assess a project’s royalty structure:
✅ Is the royalty percentage reasonable? Avoid projects with >15% royalties unless they offer unique utility.
✅ Who receives the royalties? Check if funds go to the original creator or a DAO (transparency matters!).
✅ Which marketplaces enforce the royalty? Prefer platforms like HIBT that guarantee payments.
✅ Are there hidden fees? Some platforms charge extra for royalty processing—factor this into your ROI.
Conclusion: Royalties Are the Future of Digital Ownership
NFT royalties represent a paradigm shift in how creators are compensated—and how investors evaluate assets. For Vietnam’s crypto community, understanding these mechanisms is key to navigating the market responsibly. Whether you’re minting your first NFT or building a portfolio, platforms like HIBT provide the tools and transparency needed to thrive.
As the industry evolves, one thing is clear: royalties aren’t just a feature—they’re the foundation of a sustainable creator economy.
Expert Author Spotlight
This article was contributed by Dr. Elena Rodriguez, a leading blockchain economist and independent advisor. Dr. Rodriguez holds a PhD in Economics from Stanford University, has published 52 peer-reviewed papers on decentralized finance (DeFi) and NFT economics, and has led audits for Ethereum 2.0 and the Polygon PoS chain. Her research focuses on how royalty mechanisms impact creator incentives and market liquidity.
FAQ: Your Top Questions About NFT Royalties Answered
Q1: Can I avoid paying royalties when reselling an NFT?
A: It depends on the marketplace. Platforms like Blur allow optional royalties, but others (e.g., HIBT) enforce them. Always check the listing details before buying.
Q2: Do royalties apply to gifts or airdrops?
A: No—royalties are triggered by sales(paid transactions). Gifting or airdropping an NFT does not incur royalties.
Q3: How do I track my royalties as a creator?
A: Use tools like OpenSea Analytics or Nansen to monitor secondary sales. HIBT also provides creators with a dashboard showing real-time royalty earnings.
Q4: Are royalties taxable in Vietnam?
A: Yes—Vietnam taxes capital gains from crypto transactions, including royalties. Consult a local tax advisor for specifics.
Q5: Which HIBT features help creators maximize royalties?
A: HIBT offers:
- Guaranteed royalty enforcement on all sales.
- Low platform fees (0.25% vs. industry average 2.5%).
- A Creator Dashboardto track earnings in real time.
By staying informed and choosing platforms like HIBT, Vietnamese investors and creators can harness the power of NFT royalties—turning digital ownership into lasting value.