NFT Royalties Explained: How Creators Earn from Resales

What Are NFT Royalties?

An NFT royalty is a percentage of the sale price that is automatically directed to the original creator (or a designated wallet address) each time the NFT is sold on the secondary market. Typical royalty rates range from 2.5% to 10%, with 5% being the most common.

For example, if an artist mints an NFT collection with a 5% royalty and a collector resells one of those NFTs for 1 ETH, the artist receives 0.05 ETH from that sale. If the next buyer later resells it for 10 ETH, the artist receives 0.5 ETH — even though they had no involvement in the transaction.

This model was designed to align creator and collector incentives: artists benefit when their work appreciates in value, giving them a reason to keep building community and producing work that supports the collection's long-term desirability.

How Royalties Work Technically

The technical implementation of royalties differs depending on the blockchain and the standards used.

On Ethereum

Ethereum NFTs typically use the ERC-721 or ERC-1155 token standards, neither of which includes native royalty enforcement at the protocol level. Instead, royalties were historically enforced by marketplaces voluntarily. When a creator deployed a collection, they would set a royalty percentage in the collection's metadata or through a marketplace-specific configuration, and the marketplace would honor that percentage when processing sales.

In 2022, the EIP-2981 standard was introduced to provide a standardized on-chain royalty information interface. This standard allows any NFT contract to declare its royalty recipient and percentage in a way that any marketplace can read. However, EIP-2981 is informational — it tells marketplaces what the creator wants, but it does not force payment. Enforcement still depends on the marketplace choosing to respect it.

To address this, OpenSea introduced the Operator Filter Registry in late 2022, which allows collections to block transfers on marketplaces that do not honor royalties. Collections that adopted this filter could effectively enforce royalties by preventing sales on non-compliant platforms. This approach was controversial because it restricted where tokens could be traded.

On Solana

Solana's NFT ecosystem initially relied on the Metaplex Token Metadata standard, which included a royalty field (seller_fee_basis_points) in the on-chain metadata. Like Ethereum's early approach, enforcement depended on marketplace cooperation.

In 2023, Metaplex introduced Programmable NFTs (pNFTs), a new token standard that enforces royalties at the protocol level. With pNFTs, royalty payments are mandatory — the transfer itself fails if royalties are not paid. This represented a significant shift toward on-chain enforcement, and major Solana marketplaces like Magic Eden adopted pNFTs as the default standard for new collections.

On TON

The TON blockchain handles NFTs through its own set of smart contract standards (TEP-62 for NFTs, TEP-66 for metadata). Royalty information is typically embedded in the collection's smart contract. The Getgems marketplace, the primary NFT trading platform on TON, reads and enforces royalties for sales conducted through its platform.

Because TON's NFT ecosystem is closely tied to the Telegram user base and the Getgems marketplace, royalty enforcement tends to be more centralized but more consistent within that ecosystem. Peer-to-peer transfers outside of Getgems, however, do not automatically trigger royalty payments — just as direct wallet-to-wallet transfers on any blockchain bypass marketplace royalty logic.

The Royalty Enforcement Debate

The question of whether NFT royalties should be mandatory or optional has been one of the most contentious debates in the space.

The Creator Argument

Creators argue that royalties are essential to sustainable digital art and content creation. Without ongoing revenue from secondary sales, creators rely entirely on primary sales, which can be unpredictable and insufficient to fund long-term projects. Royalties give artists and teams a financial stake in the ongoing success of their collections, incentivizing continued development, community engagement, and ecosystem building.

The Collector Argument

Some collectors and traders argue that mandatory royalties increase friction and cost, making NFTs less liquid and less competitive with traditional assets. They point out that once an item is purchased, the buyer should have full property rights — including the right to resell without additional fees. Zero-royalty or optional-royalty marketplaces emerged specifically to serve this demand, attracting volume away from royalty-enforcing platforms.

Where Things Stand

The market has largely settled into a middle ground. Most major marketplaces now honor creator-set royalties by default, especially for collections that use enforceable standards (like Solana's pNFTs or Ethereum's Operator Filter). However, the era of assuming 100% royalty compliance across all platforms is over. Creators launching new collections are increasingly choosing enforceable standards from the start, while legacy collections without enforcement mechanisms have seen their effective royalty collection rates decline.

Royalty Rates: What Is Standard?

There is no universal royalty rate, but market norms have developed across chains:

• 2.5% — Common minimum, used by projects that want to support creators without significantly impacting resale economics.
• 5% — The most widely used rate. It is the default on many marketplace setup flows and represents a balance between creator revenue and buyer costs.
• 7.5–10% — Used by some projects, particularly those with ongoing development costs or those that distribute royalty revenue to token holders or DAOs. Rates above 10% are rare and can deter secondary market activity.
• 0% — Some projects intentionally set zero royalties as a selling point, positioning themselves as maximally collector-friendly.

When evaluating an NFT purchase, the royalty rate is a real cost to consider. A 10% royalty means the token needs to appreciate more than 10% (plus any gas or platform fees) before a resale becomes profitable. For traders who flip frequently, even small royalty percentages add up across many transactions.

How Royalties Affect Your NFT Strategy

For Collectors

Before buying an NFT, check the royalty percentage. Most marketplaces display this information on the collection page. Factor royalties into your break-even calculation: if the royalty is 5% and the marketplace fee is 2.5%, you need the price to increase by at least 7.5% to break even on a resale — before accounting for gas fees.

Also consider whether the royalties fund active development. Collections where royalty revenue visibly supports new features, events, or community growth can be more sustainable long-term than projects where royalties flow to inactive creators.

For Creators

Choose a royalty rate that balances your revenue needs with market competitiveness. A 5% royalty on a thriving, liquid collection generates more total revenue than a 10% royalty on a collection that trades infrequently because buyers avoid the high fee.

Use enforceable royalty standards where available. On Solana, deploy as pNFTs. On Ethereum, implement EIP-2981 and consider the Operator Filter for additional enforcement. On TON, ensure your collection contract specifies royalty parameters that Getgems can read.

Be transparent with your community about how royalty revenue is used. Collectors are more willing to support royalties when they can see the funds driving tangible value — development updates, community events, or ecosystem improvements.

Checking Royalties in Your Portfolio

When managing NFTs across multiple chains, keeping track of royalty structures helps inform your buying, holding, and selling decisions. Tools like NFT Bowl let you view your entire Ethereum, TON, and Solana portfolio in one place, so you can review collection details and make informed decisions about which tokens to hold, sell, or list — with royalty costs as one of several factors to consider.

Understanding royalties is part of understanding the true cost of ownership. An NFT is not just its purchase price — it includes the royalty you will pay on exit, the gas fees for the transaction, and the marketplace commission. Factoring all of these in leads to better-informed collecting and trading decisions.

Conclusion

NFT royalties represent a fundamental innovation in how creators can benefit from the ongoing appreciation of their work. While the enforcement landscape has evolved — and continues to evolve — across Ethereum, Solana, and TON, the underlying concept remains powerful: aligning creator and collector interests through shared economic incentives.

For collectors, understanding royalties means understanding the true cost of buying and selling NFTs. For creators, it means choosing the right technical standards and rates to build sustainable revenue streams. As the ecosystem matures and enforceable royalty standards become the norm, royalties are likely to remain a core feature of the NFT economy rather than an optional add-on.