The royalties earned by non-fungible token (NFT) projects have recently hit their lowest point in two years, as reported by blockchain analytics firm Nansen. The data reveals a decline in NFT royalties, influenced by both the decreasing floor price of Bored Ape Yacht Club (BAYC) NFTs and the controversy surrounding the launch of the Azuki Elementals collection.
In April 2022, NFT royalties reached their peak, with creators earning an estimated $75.7 million in royalties within a single week. Yuga Labs, the creators of BAYC, generated a total of $165.5 million in royalties across their portfolio of NFT collections. Additionally, RTFKT earned $79.9 million from its collections, including CloneX, while Azuki collected $58.2 million from its zuki, Beanz, Elemental Beansa, and Elementals collections. Proof, the studio behind Moonbirds, made $35 million in revenues, and Doodles accumulated $27.4 million from its Doodles, Space Doodles, Genesis Box, and Dooplicato collections. Pudgy Penguins secured $8.3 million in revenue from its Pudgy Penguins, Lil Pudgys, and Pudgy Rods drops.
NFT royalties serve as a crucial indicator of a studio’s financial foundation for ongoing development, playing a significant role in generating revenue. Until 2023, OpenSea was primarily responsible for distributing royalty payments to NFT projects. However, the introduction of a new policy by rival marketplace Blur changed this landscape. Blur implemented a minimum requirement of 0.5% royalties, unless projects opted out or enforced different percentages. OpenSea gave buyers the choice to pay royalties unless projects had explicitly opted out or set their specific percentage.
Nansen’s data also reveals that the top 10 NFT collections have earned over $345 million in royalties, with Yuga Labs accounting for 44% of this sum with $150 million in royalties. Notably, only 20 NFT projects have earned more than $10 million in royalties to date.
The decline in Ethereum NFT royalties highlights the impact of market dynamics on creators and studios within the ecosystem. As NFTs continue to evolve and face challenges, the financial sustainability of projects becomes increasingly important for ongoing development and innovation.