In recent months, the enforcement of non-fungible token (NFT) royalty payments has sparked tension between platforms and creators. However, data analytics platform Nansen’s latest report reveals that NFT royalty payments plummeted to a two-year low in June.
This decline has been further exacerbated by the rise of royalty-optional marketplace Blur and OpenSea’s policy. While the practice of paying optional royalties remains uncommon, some prominent collections have still managed to rake in millions in royalty payments since their inception.
Nansen analysts Javier Cerdan and Edward Wilson explain that competition between marketplaces has led to the drive to keep royalty payments low while incentivizing trading. The report highlights a significant decline in royalties since February, with Blur gradually capturing a larger share of the royalties paid, thereby bringing it on par with OpenSea. Surprisingly, in the past two weeks, Blur has dominated the share of royalties paid, signaling a shifting landscape in the NFT marketplace.
Despite the overall drop in royalty payments during June, several blue-chip collections have garnered substantial earnings since their launch. Yuga Labs, a prominent NFT behemoth, has amassed nearly $166 million in collective royalties across its collections, including Bored Ape Yacht Club, Mutant Ape Yacht Club, and Otherdeed for Otherside. Chiru Labs, another notable NFT collective, has grossed over $58 million in royalties through its flagship Azuki collection and derivative projects BEANZ and Elementals.
Interestingly, Nansen’s report indicates that the decline in royalty payments began before the Bored Ape Yacht Club’s floor price fell to a 20-month low and ahead of Azuki’s flawed Elementals mint. This suggests that the drop in royalties may be attributed to broader market dynamics and trends rather than specific incidents affecting individual collections.
The conversation surrounding the enforcement of NFT royalties gained traction in October, with Blur’s launch of a zero-fee marketplace that aimed to attract professional NFT traders, directly challenging OpenSea.
However, after facing criticism from creators and collectors, Blur adjusted its approach, allowing collections to choose whether to enforce creator fees. Similarly, other NFT marketplaces such as X2Y2 and Magic Eden have also recently altered their royalty enforcement policies after initially experimenting with zero fees.
June witnessed a significant decline in NFT royalty payments, reaching a two-year low. This decline can be attributed to the rise of Blur, which has competed with OpenSea while vying to keep royalty payments low. Nonetheless, some prominent collections have still managed to generate millions in royalty earnings.
The ongoing debate surrounding NFT royalties and the evolving marketplace dynamics continue to shape the landscape of the NFT industry. As the market matures, finding a balance between incentivizing trading and ensuring fair compensation for creators remains a challenge that platforms and collectors must address collaboratively.