Understanding NFT Royalties
NFT royalties are payments that creators receive whenever their NFTs are resold on secondary markets. This provides ongoing passive income for artists and creators long after the initial sale.
How NFT Royalties Work
- Set at Creation: Royalty percentage is defined when minting the NFT
- Automatic Payments: Smart contracts handle royalty distribution
- Secondary Sales Only: Royalties apply to resales, not primary sales
- Platform Dependent: Not all marketplaces enforce royalties
Marketplace Fee Comparison
| Marketplace | Platform Fee | Royalty Enforcement |
|---|---|---|
| OpenSea | 2.5% | Optional (0.5% min) |
| Blur | 0.5% | Optional |
| Magic Eden | 2% | Enforced |
| Rarible | 1% | Enforced |
| Foundation | 5% | Enforced |
Maximizing Royalty Income
- Set competitive royalty rates (2.5-10% is standard)
- Build community to drive secondary sales
- List on platforms that enforce royalties
- Use EIP-2981 royalty standard for compatibility
Tax Considerations
NFT royalty income is typically taxable. Keep records of all royalty payments and consult a tax professional familiar with cryptocurrency taxation.