NFT royalties are payments creators receive each time their work is resold on the secondary market. If an artist sets a 5% royalty, every later sale routes 5% of the price back to the original creator, in theory forever. This model promised lifelong income for artists, something traditional art markets rarely offer. But since 2023, royalties have shifted from near-universal to largely optional, driven by a fierce fee war between marketplaces. This guide explains how NFT royalties actually work, the difference between on-chain and marketplace-enforced royalties, why enforcement collapsed, and what the landscape looks like for creators today.
Key takeaways
- NFT royalties are a percentage of secondary (resale) sales paid back to the original creator, typically 0–10%.
- Most royalties are not enforced by the blockchain itself; they are enforced (or ignored) by marketplaces.
- A 2022–2023 marketplace fee war made royalties optional on many platforms, sharply cutting creator earnings.
- Solutions like on-chain enforcement tools and transfer restrictions exist but each has trade-offs.
- Creators should understand that “royalty” settings are a request, not a guarantee, unless backed by technical enforcement.
What Are NFT Royalties?
A royalty is an ongoing payment tied to the resale of an asset. In the NFT world, when a creator mints a collection, they can specify a royalty percentage, commonly between 2.5% and 10%. The intent is that whenever the NFT changes hands on the secondary market, a slice of the sale price flows back to the creator’s wallet.
This is fundamentally different from the primary sale. The primary sale is the first time an NFT is sold, usually directly from the creator to a buyer. Royalties only apply to subsequent sales between collectors. For a popular collection that trades thousands of times, royalties can theoretically generate far more revenue than the original mint.
The appeal is obvious. A painter who sells a canvas once never sees a cent when it later resells at a gallery for ten times the price. NFT royalties were pitched as fixing that imbalance by giving creators a permanent stake in the value they create.
How NFT Royalties Work Technically
Here is the part most people misunderstand: royalties are usually not paid out automatically by the blockchain. Understanding why requires separating two concepts.
On-chain royalty metadata
When a creator sets a royalty, that information is often stored as metadata associated with the smart contract or the token standard. Standards like EIP-2981 on Ethereum provide a uniform way for a contract to signal what royalty it expects and to which address it should be paid. Crucially, EIP-2981 only tells a marketplace the intended royalty. It does not force payment.
Marketplace enforcement
Because the royalty signal is just information, the actual payout depends on whoever processes the sale, almost always a marketplace. When you list an NFT on a platform, that platform’s contract handles the transfer of funds. If the marketplace chooses to honor the royalty, it splits the buyer’s payment and sends the creator’s cut. If it chooses not to, the creator gets nothing.
This is the core tension. A peer-to-peer transfer, or a marketplace that ignores royalties, can move an NFT without paying the creator a single token. The blockchain records the ownership change either way. Royalties, in most implementations, live or die by marketplace policy.
On-Chain vs Marketplace-Enforced Royalties
The distinction between these two enforcement models is the most important thing to grasp.
- Marketplace-enforced royalties rely on the platform voluntarily honoring the creator’s stated percentage. This was the default for years. It works only as long as the marketplace cooperates, and it breaks the moment a competitor offers royalty-free trading.
- On-chain enforced royalties attempt to bake payment into the smart contract logic so that any transfer must pay the creator, or be blocked. These require more sophisticated contract design, such as transfer hooks or allowlists of approved marketplaces, and they can restrict where and how an NFT can be traded.
True on-chain enforcement is technically possible but comes with friction. If a contract only allows transfers through royalty-honoring marketplaces, it limits liquidity and can frustrate collectors who want to move assets freely between their own wallets. There is an inherent trade-off between guaranteeing creator income and keeping NFTs freely transferable.
The 2023 Royalty Wars: Why Royalties Became Optional
For most of the early NFT era, marketplaces honored royalties as a norm. That consensus shattered during a competitive scramble for trading volume.
New marketplaces emerged offering zero or near-zero trading fees and, critically, made creator royalties optional for buyers. Blur, a marketplace built for professional NFT traders, gained rapid market share partly by letting traders pay minimal or no royalties. To compete for that volume, OpenSea, the long-dominant incumbent, eventually moved to a model where it stopped fully enforcing royalties on many collections and made them optional in various contexts.
The logic was brutal but simple. Traders flock to whichever platform is cheapest. If one marketplace lets them skip royalties, volume migrates there, and any platform that insists on enforcing royalties bleeds market share. The result was a race to the bottom on royalty enforcement, with marketplaces using royalty policy as a competitive weapon.
For creators, the impact was significant. Collections that once earned steady secondary income saw royalty revenue drop sharply as trading shifted to platforms where buyers could opt out. The promise of perpetual, automatic creator income proved far more fragile than the early hype suggested.
Tools creators used to fight back
In response, several technical countermeasures appeared:
- Transfer-restriction tools that block transfers to or from marketplaces known to ignore royalties, effectively allowlisting cooperative platforms.
- On-chain enforcement registries maintained by some ecosystems and tooling providers to help contracts identify and exclude royalty-skipping venues.
- Higher primary mint prices, with creators front-loading revenue at mint rather than relying on uncertain future royalties.
None of these fully solved the problem. Allowlisting can be circumvented, and aggressive restrictions reduce an NFT’s appeal to collectors who value flexibility.
What NFT Royalties Look Like in 2026
The current landscape is mixed and chain-dependent. The key realities for creators and collectors today:
- Royalties are widely treated as optional or negotiable on many of the largest Ethereum marketplaces, especially for high-volume trading.
- Some chains and ecosystems have stronger cultural or technical norms around honoring royalties than others, so creator outcomes vary by where a collection lives.
- Creators increasingly rely on a combination of fair primary pricing, optional on-chain enforcement, and community goodwill rather than assuming royalties will be paid.
- Collectors should check whether a given marketplace honors royalties before assuming a creator is being compensated on their purchase.
The broader lesson is that “royalty” on an NFT listing is best read as an intended rate, not a guaranteed one. Whether it gets paid depends on the smart contract design, the chain, and the marketplace.
Royalties vs Other Crypto Income Models
It helps to place NFT royalties alongside other ways people earn in crypto. Unlike yield from DeFi protocols, which comes from lending, liquidity provision, or staking and is enforced by protocol code, NFT royalties depend on social and marketplace conventions. DeFi yield is paid by smart contracts that execute regardless of anyone’s goodwill; royalty payment, in most cases, is not. This is why DeFi income streams are often more predictable in their mechanics, even though they carry their own smart-contract and market risks.
For creators, this means treating royalties as a bonus rather than a foundation. Sustainable NFT businesses in 2026 tend to diversify income: primary sales, brand partnerships, utility, and community membership, rather than betting everything on perpetual resale cuts.
Practical Tips for Creators and Collectors
If you are a creator
- Price your primary sale assuming royalties may be partially or fully bypassed later.
- Research the royalty enforcement reputation of the chain and marketplaces your collection will trade on.
- Consider whether on-chain enforcement is worth the liquidity trade-off for your specific collection.
- Be transparent with your community about your royalty rate and how income is used.
If you are a collector
- Understand that buying on a royalty-optional marketplace may mean the creator earns nothing from your purchase.
- If supporting the artist matters to you, choose platforms that honor royalties or pay the optional amount.
- Keep your assets in a secure wallet and protect your seed phrase, since royalty disputes are minor compared to losing the NFT entirely to theft.
FAQ
Are NFT royalties guaranteed to be paid?
No. In most implementations, royalties are a request stored in metadata, not an automatic blockchain payment. Whether a creator actually receives their cut depends on the marketplace processing the sale. Since the 2023 royalty wars, many large platforms treat royalties as optional, so a resale can occur with no royalty paid to the creator at all.
What is a typical NFT royalty percentage?
Royalties commonly range from around 2.5% to 10% of each secondary sale, with 5% to 10% being frequent choices. The creator sets this rate when minting. Remember that the stated percentage is the intended rate, not a promise; the amount actually paid depends on whether the marketplace and smart contract enforce it.
Why did marketplaces stop enforcing royalties?
Competition for trading volume drove it. Platforms like Blur attracted traders by making royalties optional, and OpenSea responded by relaxing enforcement to keep market share. Because traders gravitate to the cheapest venue, royalty enforcement became a competitive disadvantage, triggering a broad shift toward optional royalties across many Ethereum marketplaces.
Can royalties be enforced on-chain so they always get paid?
Partially. Smart contracts can use transfer restrictions or marketplace allowlists to force payment through cooperating venues, but this reduces liquidity and can frustrate collectors who want to move NFTs freely. There is a genuine trade-off between guaranteeing creator income and keeping the asset easily transferable, and no approach has fully resolved it.
Crypto is volatile and risky; this is education, not financial advice. Do your own research.
