NFT royalties are a percentage of the sales that original creators of the NFTs get every time someone subsequently sells their digital assets on the market. For many NFT projects, whenever an NFT is sold on to different buyers over multiple transactions, a percentage of each sale still goes back to the original creator. This has become a relatively common practice for NFTs as a standardized way for creators to financially benefit from their work. DeGods NFTs, one of the most successful NFT projects built on the Solana blockchain, made the bold announcement on October 9 that they would be opting to have 0% royalties.
NFT royalties usually range somewhere between 5-10% but there is no enforced rule of how much they should be. DeGods royalties were 9.99% before this announcement was made. The announcement sparked a debate in the NFT industry about how people should approach royalties. Some people question how creators will be able to earn money without a sufficient royalty scheme, which would decrease the incentive for people to create NFT projects in the first place. Others think the 0% royalty cut might increase the attractiveness of people buying DeGods NFTs, which should still accrue benefits to the overall price of the NFTs and the original team, who has already made several million dollars in sales.
DeGods did not provide any in-depth explanation or thought leadership on the topic apart from their official statement on Twitter, “We believe this is the best decision for our business at this time. It’s about time we take a new approach.” The DeGods team is also behind other NFT projects y00ts and t00bs, which many expect to soon be updated with 0% royalties.
How NFT projects monetize beyond the first sale of their NFT is an interesting question with many potential answers. The most straightforward way the major NFT projects have monetized is through secondary sales, which seems like an obvious way to financially reward the original artists. How people begin to experiment with royalties and NFT monetization will have an impact on how buyers, sellers, and creators approach the new economy of digital assets.