Royalties, you may know what they are in relation to music or films, but they can be a bit trickier when it comes to NFTs. Let’s talk about what they are, how they vary in different marketplaces, and what they have to do with being verified.
Royalties are fees that the NFT smart contract owner receives for every secondary sale that is made from one party to another for the ongoing use of their assets. NFT royalties give you a percentage of the sale price each time your NFT creation is sold on our Venly Market or any other NFT market that facilitates royalty payments. No matter how many secondary sales occur, the royalties will always be paid back to the original contract owner.
Despite what’s generally assumed, royalties are not automatically distributed at the smart contract level. How royalties are collected and distributed, depends on the market in which the sales transactions take place.
If you are an NFT creator and want to be thorough when it comes to collecting royalties, you will need to set your royalties on each market individually. This process usually coincides with the verification process but they are not necessarily dependent on each other. (You can be verified without collecting royalties if you choose.)
Something to know about this is that there are two main types of markets.
- Markets that only post collections that have actively been listed by their contract owners (eg Venly Market)
- Markets that automatically “scan” the blockchain for collections and publish them all (eg OpenSea)
On the Venly Market, for example, when a contract owner lists their NFTs and wants to set royalties, we help them with that. A byproduct of this is that we can also verify them, resulting in the project and user getting that blue checkmark. You can get the process started with this form. If the Venly team approves your collection, we will configure the Venly Market royalties and the royalties will be paid out in USDC to the balance of your Venly Market account.
However, on OpenSea, the project may appear without any input from, and sometimes without the knowledge of, the contract owner. If you haven’t set royalties, they will not be automatically collected during the purchase process. Once your collection is minted on the blockchain and you want to collect royalties on OpenSea, you connect your wallet (the one which is set up as the “contract owner wallet” on the smart contract level) to your OpenSea profile and OpenSea will automatically detect your wallet as being the rightful recipient for any royalties.
There is hope for an easier future though, a smart contract in the works that will have the royalties information built in so the contract owner would not need to get verified on each market.
If you have any questions about launching your own collection with royalties on the Venly Market you can fill out this form and we will be happy to answer any questions. Otherwise, join our Discord to learn more!