When you buy an NFT, the creator usually gets a cut every time it's resold through NFT royalties. But what if that cut isn't guaranteed? That's the heart of the debate between optional and mandatory royalties.
NFT royalties are payments made to original creators for every secondary sale of their digital assets, typically ranging between 5-10% of the sale price. The average royalty rate across major platforms is 6%, but creators set this percentage when they first mint the NFT using smart contracts.How Royalties Work Technically
ERC-721 and ERC-1155 are the main token standards for NFTs. ERC-2981 specifically handles royalty payments. It lets smart contracts calculate and enforce royalties automatically during transactions. But here's the catch: these standards don't force marketplaces to honor royalties. Some platforms read the royalty data but let buyers skip paying it.
Optional Royalties: The Buyer's Choice
Blur is a marketplace that lets buyers set royalty percentages to zero. This means even if a creator set a 6% fee, traders can ignore it completely. Blur claims this boosts trading volume-over $1 billion in weekly trades-but creators often earn less.
Why do buyers prefer this? They argue mandatory fees inflate prices and slow down sales. On Blur, you can trade NFTs without extra costs, making it easier to flip assets quickly. But for artists, this means inconsistent income. Digital artist Beeple summed it up: "There is zero way to force royalties technologically, so creators will have to build a collector base that wants to honor these royalties. It's really that simple."
Mandatory Royalties: Enforced Payments
OpenSea is the largest NFT marketplace and enforces royalties on-chain. They block transactions from platforms like Blur that skip fees. This ensures creators get paid, but some traders avoid OpenSea because they can't negotiate payments.
OpenSea's approach protects creators' revenue, but it comes with trade-offs. Lower trading volume on enforced platforms means fewer sales overall. For example, a high-value NFT might sell once a month on OpenSea but ten times a week on Blur. Creators must weigh reliable income against market reach.
Legal Uncertainties
Here's the kicker: smart contracts aren't legally binding. Adam Chernichaw and Prat Vallabhaneni of White and Case law firm explain: "Smart contracts are not really contracts so to speak." This means if a buyer skips royalties, creators have no legal recourse. Courts don't recognize these digital agreements as enforceable contracts. Your only leverage is community trust.
Market Impact and Trade-offs
Platforms with optional royalties see higher trading activity but lower creator earnings per sale. Mandatory enforcement means fewer transactions but more consistent income. A 2025 study showed that on optional platforms, creators earned 40% less on average despite higher sales volume. On mandatory platforms, earnings per sale were 25% higher, but total volume dropped by 30%.
| Feature | Optional Royalties | Mandatory Royalties |
|---|---|---|
| How it works | Buyers can skip payments | Smart contracts enforce payment |
| Marketplace examples | Blur | OpenSea |
| Trading volume | Higher | Lower |
| Creator earnings | Lower per sale | Higher per sale |
| Legal enforceability | Not enforceable | Not enforceable |
The Future of NFT Royalties
New hybrid models are emerging. Some platforms let creators choose between optional and mandatory settings. Others build "ethical trading" features where buyers see a clear breakdown of royalties before purchasing. Regulatory bodies might step in soon-countries like Switzerland and Singapore are already exploring NFT-specific laws. Until then, the debate continues: is royalty enforcement about technology, ethics, or market forces?
Can creators legally sue for unpaid royalties?
No. Current legal systems don't recognize smart contracts as binding agreements. As lawyers Adam Chernichaw and Prat Vallabhaneni confirm, "smart contracts are not really contracts so to speak." Creators rely on community trust, not courts, for enforcement.
Which marketplace should I use as a creator?
It depends. If you want consistent income, choose a mandatory platform like OpenSea. If you prioritize volume and are okay with variable earnings, try Blur. Many creators list on multiple platforms to balance both approaches.
Do mandatory royalties hurt trading volume?
Yes. Data shows mandatory platforms see 30% lower trading volume because buyers avoid fees. But creators earn 25% more per sale. For high-value art, this trade-off often works. For mass-market NFTs, optional models may be better.
What's the average royalty rate?
6% is the standard across most platforms. Some creators set it as low as 2.5% or as high as 10%, but 6% is the typical benchmark for digital art and collectibles.
Are royalties the same for all NFTs?
No. Royalties are set by creators during minting. Game items might have 5%, while fine art NFTs often use 10%. Some platforms let buyers override these settings if the model is optional.
Paul Gariepy
February 6, 2026 AT 20:38Crreatirs are gettin' screwed by optional royalties. Platforms like Blur let buyers skip payments, which means artists earn way less. The smart contracts aren't legally binding, so there's no recourse. This needs to change. We need better enforcement mechanisms. It's not just about technology-it's about ethics too! I've been in this space for years and this is a major issue. Many artists rely on these royalties for income. Without them, it's hard to sustain. But some argue mandatory fees slow down trading. Still, the current system is broken. We need to find a balance. Maybe hybrid models? Or regulatory action. Either way, creators deserve fair compensation!!!