The Rise of NFT Royalties: Game-changer For Artists & Investors in 2023

It's no secret that art and investing constantly evolve. And with new technologies come new opportunities for artists and investors alike. One such opportunity is the rise of NFT royalties.

Unlike traditional royalties, which are paid out after a work is sold, NFT royalties are paid each time an NFT changes hands. So, if an NFT is sold multiple times, the artist will receive a percentage of each sale.

The payment passing for every sale could be a game-changer for artists, who often struggle to make a living from their work. With NFT royalties, they could earn ongoing income from their artworks – even if they're not actively selling them.

NFT Royalties: An Overview

NFT royalties are a payment that the creators of certain digital assets, such as artwork, videos, or other online content, may receive. These payments are made in exchange for the use of the asset and can be either one-time or recurring. In some cases, NFT royalties can also be earned by those who hold or trade the asset.

Working of NFT Royalties

When an NFT is sold, the creator can include a royalty fee in the smart contract code, a set of rules governing how the NFT is bought, sold, and traded on the blockchain. The royalty fee is usually a percentage of the resale price, ranging from 2.5% to 10%.

Whenever the NFT is resold on a secondary market, the smart contract automatically calculates the royalty fee based on the percentage set by the creator. It transfers the payment to the creator's wallet address. The creator can earn ongoing income every time their NFT is resold, even if they only received payment for the initial sale.

Royalties incentivize creators to continue producing high-quality content, as they can earn a share of the profits from subsequent sales of their work. They also ensure that the value of the NFT is maintained over time, as the creator's ongoing involvement and interest in the work can help to drive demand and increase its overall value.

How to Calculate NFT Royalties?

The calculation of NFT royalties involves multiplying the price of the NFT with the percentage of royalty agreed upon. The resulting amount is paid to the artist whenever someone utilizes the NFT.

To illustrate, an NFT represents a painting sold for 1 ETH with a 10% royalty fee. In this case, the artist would receive 0.1 ETH whenever someone accesses or utilizes the painting. The mechanism guarantees that artists receive adequate compensation for their creations each time they are employed.

Lucrative Benefits of NFT Royalties

Additional Revenue Streams?

• Staking their NFTs for rewards proportional to the number of staked tokens
• Renting out their NFTs for a set period
• Receiving payment based on the rental agreement?
• Contributing to liquidity pools for rewards based on NFT trading volume.?

Also, NFTs with built-in utilities or yield farming can provide profit opportunities.

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