Fighting for NFT Royalties 💫


Metaversal is a Bankless newsletter for weekly level-ups on NFTs and the onchain frontier

Dear Bankless Nation,

Royalty rates have been on the decline around the NFT ecosystem over the past couple of years. 

Unfortunately, that’s taken a lot of money off the table for indie artists. 

The good news? There’s a new player shaking things up, Highlight, which is introducing a new NFT secondary marketplace that’s doubling down on royalties. 

Let’s unpack what you need to know here for today’s post!

-WMP

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  • Highlight is an NFT creator suite that allows artists to release collections on their own smart contracts and via customizable mint pages

  • The platform offers bespoke infra for generative art releases and supports mints across Ethereum, Arbitrum, Base, Optimism, Polygon, and Zora

  • Today, Highlight is notably expanding by launching a secondary NFT marketplace that prioritizes artists and rewards collectors.

  • The idea? Help stem the tide of declining royalties by creating a marketplace where artists can earn more and collectors can enjoy rewards for their support. 

Actual NFT royalties paid have broken down since May 2022.
  • To coincide with its marketplace release, Highlight published a new report, Blockchain Royalties: State of the Market.

  • The report and its associated Dune dashboard spotlight the significant decline in effective royalty rates for Ethereum ecosystem NFTs over the past two years—the average rate now is around 0.8%, a stiff 84% drop from the average 5% rate seen in 2021

  • Highlight estimates this reduction led to creators missing out on ~$37 million worth of payouts in December 2023 alone compared to royalty rates from two years prior. 

  • The bottom line then? Popular platforms like Blur and OpenSea moving to optional royalties has significantly impacted artist earnings. And while OpenSea still enforces royalties for some projects, it plans to ax these enforcements by the end of February 2024, likely pushing average royalties closer to Blur’s minimum 0.5% rate. 

  • Despite this overall decline, art NFTs have fared better than other project types here, with effective royalty rates for cryptoart currently being significantly higher than in other categories like profile picture (PFP) collections, indicating a strong desire among some collectors to support NFT artists.

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  • Amid this backdrop, Highlight is launching a secondary marketplace that will enforce a minimum royalty rate of 2%—an artist’s preferred rate will be enforced by default, but it can’t be edited lower than 2%, a floor that’s four times higher than Blur’s 0.5%. 

  • The aim is to considerably raise the base of the effective royalties paid to artists in the contemporary Ethereum and Layer 2 (L2) NFT scenes. 

  • On the other side of things, Highlight plans to honor collectors who buy and list NFTs on its marketplace with rewards, starting with early access to curated NFT drops from artists like Kim Asendorf, Nahiko, and beyond. 

  • Other key offerings include Artist Profiles, which provide a unified page for easy discovery of artists’ bodies of work, and the ability for collectors to delve into the original algorithms of generative art releases rather than just their outputs. 

  • Remember, Highlight currently supports six different Ethereum Virtual Machine (EVM) chains, so if you have ETH (or in Polygon’s case, MATIC) on any of these networks, then you’re ready to start exploring the platform’s new marketplace. 

  • To get started, go to highlight.xyz and connect your wallet.

  • If you want to browse and buy from secondary NFT listings, click on a collection page you’re interested in and press its “View on Marketplace” button to start surfing. If you see a listing you want, make an offer or proceed through the checkout flow and approve the final transaction with your wallet to finish up. 

  • If you want to list NFTs for sale on Highlight, click on your account name and then press the “Profile” button to review the available NFTs in your “Collected” tab. Click on your desired NFT, input your listing parameters in the provided interface, and approve the listing with your wallet. In your “Collection” tab, you’ll also be able to review and accept any available offers on your NFTs via Highlight, Blur, and OpenSea.  

  • The downtrend in NFT royalties is something I’ve been bemoaning in this newsletter for a while. 

  • As an NFT creator myself and as someone who’s personally and professionally come up through the art scenes of the Ethereum ecosystem, I’ve watched firsthand how the drying up of automated royalties—previously one of the biggest draws of artists to crypto—has demoralized many creatives here.

  • All that said, I applaud Highlight’s new creator-set default royalties approach and its plans to reward pro-royalties collectors as great steps in the other direction. 

  • The thing is, the current royalty approaches of the biggest NFT marketplaces cater just to traders. What I like and think is smart about the Highlight Marketplace is that it’s aiming to strike a better balance that can work for artists, collectors, and traders at the same time.

  • We’ll see what happens from here, but if this new platform can go on to gain significant traction, it may influence other popular NFT marketplaces to reconsider their royalty policies or launch their own rewards for pro-royalties collectors, which are possibilities worth rooting for. 

  • If you’re interested in diving deeper into making your own NFT releases through Highlight, be sure to check out the project’s Knowledge Base, which offers walkthroughs and a FAQ.

  • If you’re keen on staying current with the project’s latest features and updates, give them a follow on Twitter and track their Mirror blog

  • I’ve been collecting from releases on Highlight since last year—e.g. Fini Cards, Scale 1440, and UNICURSE—and I’ve been impressed by the range and caliber of the artists that have embraced the platform so far. If Highlight can continue to become a go-to destination for NFT creatives and collectors, then it’s got a shot at resetting the standard for how NFT marketplaces operate!

William M. Peaster is the creator of Metaversal—a Bankless newsletter focused on the emergence of NFTs in the cryptoeconomy. He also serves as a senior writer for the main Bankless newsletter.

Kraken NFT is one of the most secure, easy-to-use and dynamic marketplaces available. Active and new collectors alike benefit from zero gas fees, multi-chain access, payment flexibility with fiat or 200+ cryptocurrencies, and built-in rarity rankings. Learn more at Kraken.com/nft

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Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.

Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.



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