How do royalties work on an NFT?

Learn about royalties, how they work, and start earning a percentage on all future sales.

What are NFT royalties?

NFT royalties are like a commission that the original creator of the NFT receives on every trade that happens on the secondary market. This commission, defined as a percentage, is automatically enforced by the underlying smart contract.

How do NFT royalties work?

Creators can set a fixed royalty percentage on their collections. That means that every time an NFT from their collection is sold to a new owner, the underlying smart contract will automatically deduct the creator royalty from the sales proceeds and transfer them to the original creator’s wallet, allowing for potentially perpetual residual income to be earned.

How to set royalties on Dropspot?

Setting royalties on Dropspot is easy. In addition to creator royalties, Dropspot gives you the flexibility to include additional royalty recipients at your discretion. This is easily set up within the Create Collection process, allowing you to enter a maximum of 10% across all royalty recipients.

Important Note: Setting the royalty rate too high may deter potential buyers or collectors from purchasing the NFT, as they may feel that the royalty component of the purchase price is too steep. This can reduce the overall demand for the NFT and impact its market value. Additionally, setting a high royalty rate may also make it difficult for the NFT to gain widespread adoption, as collectors may prefer NFTs with lower royalty rates or no royalties at all.

To set royalties on Dropspot, you do so when creating your collection. To get started:

Set Royalty

That's it! You can now start earning a percentage on all future sales in the secondary market. 😃