NFT creators have earned $1.8 billion in royalties to date: Galaxy Digital

A new research report out today Mike NovogratzGalaxy Digital found it Ethereum NFT creators have been paid a total of $1.8 billion in royalties from secondary sales on marketplaces such as OpenSea.

IN reportGalaxy Digital researchers Sal Qadir and Gabe Parker also found that NFT creator royalty rates on OpenSea – the top marketplace by trade volume – have doubled over the past year on average, jumping from a reduction of 3% of sales to 6%.

The researchers also discovered a concentration of royalties among just 10 entities, data that suggests the NFT economy may be more centralized than some might have thought.

The top 10 took home nearly half a billion dollars in royalties, equivalent to 27% of all Ethereum NFT royalties earned. According to the report, which relies on data from Flipside Crypto482 NFT collections collectively earned 80% of all market royalties.

NFTs– unique blockchain tokens meaning ownership – is usually first”imprinted” or sold on a third-party website developed by the NFT creators, or via a dedicated launch platform available from certain marketplaces. After the mint, NFTs can then be resold through marketplaces such as Open seaMagic Eden, LooksRare and second.

Bored Ape Yacht Club Creator Yuga Labs takes the top spot on the list with the most NFT royalties earned. The $4 billion startupwhich has expanded its focus to develop blockchain game, has brought in well over $147 million from royalties alone. That’s not surprising, considering Yuga is massive The other side metaverse land coin earlier this year resulted in 561 million dollars total sales in just 24 hours.

While new NFT marketplaces still appear regularly, OpenSea still accounts for the lion’s share of all NFT resale, according to data from Dune Analytics and the Galaxy Report, which states that OpenSea accounts for over 80% of all Ethereum NFT marketplace volume.

When minting NFT projects through OpenSea, creators can select the percentage of royalties they wish to receive from secondary sales. These creators have collectively earned $76.7 million to date in royalties from such sales. Measured together, it is enough for third place on Galaxy’s list.

Other notable NFT creators on the list include Chiru Labs (Azuki), Proof (Moonbirds and Proof Collective), and the teams behind The Sandbox, Doodles, and Gary Vaynerchuk’s VeeFriends.

Citing a separate data set Focusing only on legacy brands, Galaxy highlighted Nike as the top earner with $91.6 million worth of revenue. This listing includes various non-Nike branded NFT offerings from RTFKT, a digital studio that Nike acquired in 2021. Other brands on the list include Dolce & Gabbana, Gucci and Adidas.

Royalty rumbles

Historically, royalties have been praised as one important part of the NFT ecosystem, providing a steady stream of revenue for creators continue to develop different plans on their project “roadmap,” whether it’s making a video game, hosting token-gated parties, or hiring more community moderators, for example.

Qadir and Parker call royalties a “core value proposition for NFTs,” but also admit that royalties cannot currently be enforced on-chain without sacrificing some principles of decentralization and self-storage – values ​​that many crypto supporters hold dear.

On-chain royalty enforcement arguably triggers a new kind of blockchain trilemma not unlike the one Ethereum founder Vitalik Buterin has discussed at length, and rival platform Algorand claims it resolves. Rather than on-chain enforcement, it has historically been up to centralized NFT marketplaces to choose to enforce creator-imposed royalties.

NFT royalties have been the subject of much debate this month. Pseudonymous Solana NFT creator Frank made the decision to eliminate royalties from his DeGods and y00ts profile picture NFT collections until October 9, calling the move an “experiment”.

His move came after an increase in Solana marketplaces, either ignoring royalties for creators or letting merchants choose whether or not to pay them. By not paying royalty fees to creators, NFT sellers typically avoid paying a 5% to 10% cut of the secondary selling price.

Ultimately, top Solana marketplace Magic Eden announced last week that it would follow suit and make payment of royalties optional afterwards lose significant market share to competing platforms. “We understand that this move has serious implications for the ecosystem,” the marketplace so on Twitter, adding that they hope “to see new standards that protect royalties” developed.

Some on Twitter have criticized Magic Eden for their decision, calling it “way against the grain worst decision” and a “desperate grip for market share.” Metaplex, the creator of Solana’s current NFT standard, said Thursday that it is developing a new standard that can enforce royalties on the chain.

While the debate over NFT fees rages, one thing is certain: Abandoning royalties means creators will part with a significant source of passive income – potentially leaving millions on the table.