If you’ve been on crypto Twitter this week, you’ve likely seen outrage around the discussion of crypto royalties, particularly for art NFTs. As far as I can tell, this was sparked by a marketplace called Sudoswap which set artist royalties at 0%. But this discussion around royalties doesn’t only affect art, but gaming assets too!

https://twitter.com/beeple/status/1558573319347179520

In this article we will cover the following:

• What Is a Royalty?
• Are Royalties Evil? 
• How to Stay Safe

What Is a Royalty?

Simply put, a royalty is a fee, usually a percentage, that is paid to the creator of any particular asset that you sell, in this case, NFTs. Depending on the blockchain that you use, you may or may not be aware that royalties are common for the resale of NFTs. On WAX, for example, it is clearly shown when you place an NFT for sale what percentage you will have to pay to WAX, to the marketplace, and to the creator upon sale of your NFT. Usually, it amounts to 2% for Wax, 2% for the marketplace, and somewhere in the range of 6-12% for the creator. This last percentage is set by the creator, so it can vary wildly.

Are Royalties Evil?

No, royalties are not evil. In fact, without them, projects you love might cease to exist altogether. They allow projects to continue to receive an ongoing revenue stream without having to do additional NFT sales. This means games aren’t continually diluted by excess NFTs entering the market. I understand getting taxed on the NFTs you sell can sometimes feel unfair, but that’s the importance of doing your own research.

If you are somebody who is trying to circumvent the royalty system then you are the problem. Offering trades with backed NFTs or sending assets outside of a marketplace doesn’t allow the creator to earn their royalties. Essentially, you are stealing from the creator. If you are invested in a project that you love, then you should be fully willing to contribute your small royalty fee to the creator to allow them to continue producing great content for users like you.

Stay Safe & DYOR

If you are shocked that your NFT sale netted you less of a return than you were expecting, then you didn’t do enough research. We say this all the time, but it is incredibly important that you fully do your own research for projects you are getting into. Knowing a game’s royalty fee is an important factor in that research, especially if your goal is to make an ROI (Return on Investment).

Additionally, I’d encourage you to only trade through marketplaces, otherwise, you open yourself up to risk. Anyone can say they will send you their asset if you send your crypto first, but nothing is forcing them to do so. Trading through a marketplace ensures both parties get their agreed-upon assets, and the developer is compensated for their work.

Let us know what you think about royalties in the Token Gamer Discord!