Only 10 NFT issuers collectively have 27% of all creator royalty income. However, this wealth concentration raises questions about centralization as well as opportunity.
Today’s Galaxy Digital research found that ETHML1_ NFT creators were paid $1.8 billion in royalties through secondary sales on platforms like OpenSea.
The report by Galaxy Digital researchers Sal Qadir & Gabe Parker found that NFT creators’ royalty rates on OpenSea, the top overall marketplace according to trading volume, have doubled in the past year, jumping from a 33% reduction in sales to 6%.
Researchers also found a concentrated concentration of royalties between just 10 entities. This suggests that the NFT economy might be more centralized than one might think.
The top 10 received nearly half a million dollars in royalties. This represents 27% of all Ethereum NFT royalty income. The report is based on data from flipside Crypto. It shows that 482 NFT collections earned 80% of all market royalties.
NFTs–individual tokens which signify ownership–are usually first ” minted”, or sold via a third party website created by the NFT creators or via a dedicated launchpad from certain marketplaces. NFTs can be resold via marketplaces such as OpenSea and Magic Eden.
Bored Ape Yacht Club creator Yuga Labs is the number one spot on the list for the highest amount of NFT royalties. The $4-billion-dollar startup has now expanded its focus to blockchain gaming. It has earned well over $147million in royalties. This is not surprising considering Yuga’s huge Otherside land mint this year generated $561,000,000 in sales in 24 hours.
OpenSea continues to dominate NFT resales despite the new NFT marketplaces popping up all the time, according to data from Dune Analytics, and the Galaxy report. This report states that OpenSea accounts for more than 80% of all Ethereum NFT marketplace volume.
When minting NFT projects, OpenSea allows creators to choose the percentage of royalties they wish to receive from secondary sales. These creators have collectively made $76.7 million in royalties from these sales to date. This is enough to rank third on Galaxy’s Top 100 List.
Other notable NFT creators include Chiru Labs Azuki, Proof ( Moonbirds) and Proof Collective, as well as the teams behind the Sandbox and Doodles and Gary Vaynerchuk’s VeeFriends.
Galaxy cited , a separate data set that concentrated on legacy brands. It highlighted Nike as the highest earner with $91.6 million in earnings.
This listing also includes non-Nike-branded NFT offerings by RTFKT, a digital company Nike purchased in 2021. Dolce & Gabbana and Gucci are among the other brands included on the list.
Parker and Qadir call royalties “core value propositions of NFTs”, but they also acknowledge that royalties cannot be enforceable on-chain at the moment without having to sacrifice some principles of decentralization, ownership, and other values many crypto proponents cherish.
The enforcement of on-chain royalty is a brand-new type of blockchain problem, not unlike the one that Vitalik Buterin created. We have discussed this for years, and Algorand claims it solves. It’s typically up to the centralized NFT markets to decide how to enforce creator-imposed royalties, instead of on-chain enforcement.
This month, NFT royalties have been the topic of much discussion. Frank, pseudonymous creator of NFT Frank, decided to remove all royalties from his DeGods/y00ts collections on October 9, calling it an “experiment.”
After a rise in Solana markets either refusing to pay creator royalty fees or allowing traders to choose whether to pay them, he decided that he would make the move. NFT sellers avoid having to take a cut of the secondary sales price by not charging creator royalty fees.
After losing substantial market share to other platforms, Magic Eden decided last week it would follow its lead and make royalties voluntary. The marketplace stated that “we understand this move has serious consequences for the ecosystem” and added that it hopes to see “updated standards that protect royaltyties” created.
Twitter users have criticised Magic Eden’s decision. They called it “by far the most terrible decision ” as well as a ” desperate grasp to market share .” Metaplex, which created Solana’s current NFT standard on Thursday, stated that it is working on a protocol standard that will allow royalties to be enforced on-chain.
While the NFT royalties debate continues, one thing is certain: if creators decide to abandon royalties, they will lose a significant source of passive income and potentially millions.