Royalties

Royalties are a percentage of each NFT resale that is paid to the original creator, on top of the sale price. They are meant to let artists keep earning as their work changes hands on secondary markets — something that is difficult to arrange with physical art but easy to express in software.

For example, an artist might set a 5% royalty on a collection; when a collector later resells a piece for 1 ETH on a marketplace, 0.05 ETH is routed to the artist's address as part of the sale. The royalty rate is usually declared in the NFT contract or in marketplace settings.

A common misconception is that royalties are enforced by the blockchain itself; in most cases they are enforced by marketplaces, not the token contract, so a direct wallet-to-wallet transfer or a marketplace that ignores royalties can skip the payment entirely. This became a major industry debate when some marketplaces made royalties optional to compete on price, cutting creator income sharply. Some projects respond with allowlists that only permit trading on royalty-honoring platforms, while others accept royalties as a social norm rather than a guarantee. When assessing a project's economics, treat royalties as conditional income, not a fixed revenue stream.