While enforcing non-fungible token (NFT) royalty payments have been a source of tension between platforms and creators for months, it appears that collectors have continued to forgo paying optional royalties.
According to a report from data analytics platform Nansen released Wednesday, NFT royalty payments sunk to a two-year low in June. Royalty payments reached their peak in April 2022, contributing to 28,000 ETH, or nearly $76 million, in one week of creator earnings. Meanwhile, June’s peak week saw creators collectively earn 2,000 ETH, or about $3.8 million.
The sharp decline in creator payouts has been exacerbated by the rise of royalty-optional marketplace Blur, as well as leading platform OpenSea’s policy. Currently, in order for creator earnings to be enforced on OpenSea, collections need to include an on-chain enforcement method in their smart contract, otherwise the royalty fee defaults to a minimum of 0.5%. On the other hand, Blur enforces minimum 0.5% royalties. In both cases, collectors can choose to contribute more to creator royalties, though it appears that the practice is uncommon.
Nansen analysts Javier Cerdan and Edward Wilson told CoinDesk that the competition has seen both marketplaces vying to keep royalty payments low while incentivizing trading.
“Royalties have been declining since February and Blur took a bigger share of royalties paid to be on par with OpenSea,” said Cerdan and Wilson. “Funny enough, in these last two weeks, Blur has been dominating the share of royalties paid.”
Despite a drop in June, Nansen reported that several blue-chip collections have raked in millions in royalty payments since their inception.
As of July 4, NFT behemoth Yuga Labs has raked in nearly $166 million in collective royalties across its collections, including Bored Ape Yacht Club, Mutant Ape Yacht Club, and Otherdeed for Otherside. Additionally, NFT collective Chiru Labs has grossed over $58 million in royalties for its flagship Azuki collection, and derivative projects BEANZ and Elementals, according to Nansen.
The report specified that the dropoff of royalty payments began before Bored Ape Yacht Club’s floor price fell to a 20-month low and ahead of Azuki’s botched Elementals mint.
The conversation about whether to honor NFT royalties began to heat up in October, when Blur launched its zero-fee marketplace to court professional NFT traders, challenging leading marketplace OpenSea on its first day. After criticism from creators and collectors, Blur began allowing collections to opt in or out of enforcing creator fees.
Other NFT marketplaces, like X2Y2 and Magic Eden, have also recently changed their royalty enforcement policies after temporarily switching to zero-fee.