Crypto glossary
NFT royalties (creator fees)
NFT royalties are fees paid to a collection's creator on secondary sales, typically a percentage of each resale; most marketplaces now make them optional.
One of the early promises of NFTs was that artists would earn not just from the first sale but every time their work changed hands. Creators set a royalty, often 5% to 10%, and marketplaces paid it out automatically when items resold. The ERC-2981 standard lets a contract announce the royalty rate, but it cannot force a marketplace to pay it.
Royalties became a battleground in 2022 and 2023. New marketplaces competing for volume reduced or removed them, traders migrated to zero-royalty venues, and in 2023 OpenSea made creator fees optional on new and many existing collections. Creators responded with contracts that restrict transfers to royalty-respecting marketplaces, and some chains introduced token standards with enforceable rules.
Enforcement through transfer restrictions limits composability and can block NFTs from DeFi protocols or other apps. Without it, royalties depend on marketplace policy and buyer goodwill. Royalties are also not copyright: owning an NFT and paying royalties does not grant rights to the underlying work unless the licence says so.
Example
An artist sets a 7.5% royalty; an NFT bought for 1 ETH resells for 3 ETH, and the artist receives 0.225 ETH only if the sale happens on a marketplace that honours the fee.