As the NFT market continues to grow, artists and creators are increasingly looking for ways to ensure they are compensated fairly for their work over time. One of the most significant advantages of NFTs is the ability to earn royalties on secondary sales, providing an ongoing stream of income. In fact, according to a report, the total value of NFT royalties paid in 2021 was over $1 billion, demonstrating a substantial opportunity for creators and businesses alike!
Platforms like Royal.io and Sound.xyz have become key players in the NFT royalties space.
Royal.io, a platform that allows musicians to tokenize their music and receive royalties directly from their fans, raised $55 million in funding and has already distributed over $2 million in royalties to creators.
Sound.xyz, on the other hand, allows artists to sell NFTs of their music with built-in royalties for both initial and secondary sales. In 2022, Sound.xyz processed over $20 million in NFT sales, with a significant portion of that going to artists through royalties and splits.
Developing an NFT royalties and splits platform requires a solid understanding of both blockchain technology and the nuances of digital asset ownership. In this blog, we’ll break down the key components involved in building a seamless NFT royalties and splits platform, from smart contract development to integrating a user-friendly interface for creators and partners.
What is a NFT Royalties and Splits Platform?
An NFT Royalties and Splits Platform is designed to automate the distribution of revenue from NFT sales, ensuring fair and transparent payments to multiple stakeholders. NFT royalties enable creators to earn a percentage from secondary sales, while split contracts allow multiple recipients to share earnings seamlessly. These platforms eliminate manual intervention, making revenue management efficient for artists, teams, and DAOs.
Overview of Split Contracts
Split contracts enable the automatic distribution of NFT revenue based on predefined percentages. These smart contracts are widely used in DAOs, NFT projects, and creative teams where multiple stakeholders are involved. For example, if an NFT sale generates 10 ETH, a split contract can distribute 50% (5 ETH) to the creator, 30% (3 ETH) to developers, and 20% (2 ETH) to the marketing team without manual intervention.
Setting Up a Split Contract
Platforms like thirdweb.com simplify the setup process by offering user-friendly tools to deploy split contracts on networks such as Ethereum, Polygon, Phantom, and Avalanche. The process involves:
- Entering wallet addresses of all recipients
- Assigning percentage splits that add up to 100%
- Deploying the contract to generate a unique contract address for revenue distribution
Practical Applications
- DAO Revenue Management: DAOs can allocate a portion of NFT sales revenue to a community treasury while distributing the remaining funds among contributors.
- Team-Based Revenue Sharing: Teams can use split contracts to ensure fair payouts based on individual contributions. Founding members may receive a higher percentage, while newer members get a smaller share.
Integrating with NFT Drops
NFT creators can link their split contract address to their NFT drop settings, ensuring that revenue from both primary and secondary sales is automatically processed. Industry-standard royalty percentages for secondary sales range between 2.5% and 10%, helping artists and developers earn long-term income.
For instance, if an NFT sells for 1 ETH on a secondary market with a 5% royalty fee, the contract ensures that 0.05 ETH is automatically sent to the creator’s wallet.
Fund Distribution
Once revenue is generated, users can access their split contract dashboard to withdraw funds according to predefined percentages. This automated system enhances efficiency, transparency, and fairness in revenue sharing for NFT projects, DAOs, and creative teams.
Key Market Takeaways for NFT Royalty Platforms
According to GrandViewResearch, the NFT market is booming, with its value expected to hit $26.9 billion in 2023 and grow at a rapid pace—34.5% annually from 2024 to 2030. A big part of this growth is driven by the increasing popularity of digital art and collectibles and the way NFTs are helping creators monetize their work through royalties.
Source: GrandViewResearch
Platforms that manage NFT royalties and splits are becoming essential in this ecosystem, providing artists with a steady stream of income from secondary sales and boosting their financial sustainability.
So, why are these royalty platforms gaining so much attention? The key factor is the use of smart contracts in NFTs. These contracts let creators bake royalty fees directly into the tokens, ensuring they automatically earn a cut from any future sales. This is a game-changer for artists who used to miss out on secondary sales in traditional art markets. For example, popular collections like Bored Ape Yacht Club use these royalty features to provide creators with continuous earnings as their NFTs get traded.
Partnerships are also helping to expand the reach and functionality of these platforms. A good example is Mintable, which, supported by entrepreneur Mark Cuban, allows users to create and sell NFTs with integrated royalty features, making sure artists continue to benefit from their work even as it changes hands.
A Perfect Time to Invest in Developing NFT Royalty Platform
The market for NFTs has experienced explosive growth in recent years, and one of the key areas that’s still ripe for innovation is royalty management. Creators and collectors are increasingly seeking better, more efficient ways to manage and track royalties in a decentralized and transparent manner, which is exactly where an NFT royalties platform can step in. Traditional royalty systems often fall short of meeting the needs of NFT creators because they aren’t built with blockchain technology in mind.
By creating a platform that automates royalty splits, tracks payments in real-time, and lets creators customize their earning structures, you could tap into a rapidly expanding niche that’s currently underserved.
NFT royalty platforms are already showing strong revenue potential. Platforms like Royal.io, which raised $4.5 million in seed funding, charge transaction fees or offer premium services to help creators manage their earnings.
Zora has also proven the demand by facilitating over $80 million in sales, offering creators more control over their revenue streams.
With the continued growth of Web3 and more collaboration between creators and IP holders, the demand for efficient royalty management tools will only increase. Early movers have a significant opportunity to build a scalable, profitable solution that empowers creators while capturing value as the NFT market expands.
Key Features of a NFT Royalties and Splits Platform
An NFT royalties platform plays a crucial role in ensuring that earnings from NFT transactions are distributed fairly among all involved parties. Here are the key features that enhance user experience and functionality,
1. Customizable Royalty Structures
Creators should have the flexibility to set their royalty rates when minting NFTs. This customization allows them to adapt their earnings according to changing market conditions. For example, Rarible enables creators to define their royalty rates, offering them control over how much they earn from every resale of their NFT.
2. Automated Payment Splits
Collaborations can involve multiple stakeholders, so it’s essential to have automated payment splits. Platforms like Manifold simplify this process by automatically distributing royalties to all involved parties according to predefined percentages whenever an NFT is sold. This ensures that creators, collaborators, and other contributors receive their fair share without manual intervention.
3. Integration with Multiple Marketplaces
To ensure that royalties are always honored, an NFT royalties platform should integrate with various marketplaces. Zora exemplifies this by embedding royalties directly into the NFT itself, so creators are guaranteed a portion of future sales regardless of which platform the NFT is sold on. This cross-platform integration helps protect the creator’s earnings across the decentralized marketplace ecosystem.
4. User-Friendly Interface for Revenue Management
A seamless, intuitive interface is key for managing royalties and revenue. For example, OpenSea, one of the most popular NFT marketplaces, offers a user-friendly dashboard that allows creators to manage their royalty settings easily and track their earnings in real time. The platform also lets creators withdraw their earnings with minimal hassle, making it simpler to stay on top of their financials.
5. Support for Fractional Ownership
For projects involving multiple creators or investors, fractional ownership can be a game changer. Platforms like Metropoly facilitate fractional ownership of real estate through NFTs, enabling several creators to share ownership and split royalties based on their contributions. This feature promotes collaboration and allows for a more democratic distribution of profits.
Development Steps for a NFT Royalties and Splits Platform
Here are the steps to develop a NFT royalties platform,
1. Define the Platform’s Objectives
A clear vision is essential for developing an NFT royalties and splits platform. The platform should focus on seamless royalty distribution, automated payments, and transparent transaction tracking. Identifying the target audience, such as artists, musicians, and content creators, ensures the right features are implemented.
2. Choose the Blockchain Network
Selecting a suitable blockchain is crucial for smart contract functionality and security. Ethereum, Solana, and Polygon are popular choices due to their smart contract capabilities. The blockchain should support royalty enforcement, low transaction fees, and high scalability to enhance user experience.
3. Develop Smart Contracts for Royalties and Splits
Smart contracts automate royalty distribution by executing predefined rules. They should include parameters such as percentage allocation, beneficiary addresses, and payment triggers. Ensuring compatibility with NFT standards like ERC-721 and ERC-1155 is necessary for broad marketplace integration.
4. Implement a Secure Payment System
A secure payment gateway ensures smooth transactions for creators and collaborators. Integration with crypto wallets like MetaMask, Trust Wallet, and Coinbase Wallet enhances accessibility. Multi-chain payment options can increase adoption by providing users with flexibility in choosing their preferred network.
5. Build a Transparent and Efficient Revenue Tracking System
A real-time revenue tracking system provides detailed insights into royalty earnings and transactions. Blockchain explorers and dashboard analytics help users monitor earnings, transaction history, and pending payments. Transparency boosts trust among users and enhances platform credibility.
6. Develop a User-Friendly Interface
A well-designed interface simplifies royalty management for creators and collaborators. The platform should include features like royalty settings, split percentage adjustments, and earnings withdrawal options. A mobile-responsive design ensures accessibility across devices.
7. Ensure Compliance and Security Measures
Regulatory compliance is vital to protect user funds and prevent legal issues. Smart contract audits, KYC verification, and adherence to financial regulations enhance platform security. Implementing multi-factor authentication and encryption safeguards user data.
8. Integrate with Leading NFT Marketplaces
Seamless integration with NFT marketplaces like OpenSea, Rarible, and Foundation expands the platform’s reach. APIs and SDKs help automate royalty collection across multiple marketplaces, ensuring creators receive payments regardless of where their NFTs are resold.
9. Test, Launch, and Optimize
Comprehensive testing identifies potential vulnerabilities in smart contracts, payment processing, and user interactions. Beta testing with real users helps refine platform functionality. A phased rollout strategy ensures a stable launch, while continuous updates improve performance and user experience.
Cost of Developing a NFT Royalties and Splits Platform
Category | Task | Description | Cost Range ($) |
I. Research & Planning | Market Research | Analyzing competitors, user needs, and feature requirements. | $500 – $2,000 |
Technical Feasibility Study | Evaluating blockchain integration, scalability, and platform architecture. | $500 – $3,000 | |
Total for Research & Planning | $1,000 – $5,000 | ||
II. UI/UX Design | Wireframing & Prototyping | Creating layout structures and user flow diagrams. | $500 – $2,500 |
UI Design | Designing an intuitive and visually appealing interface. | $1,500 – $7,500 | |
Total for UI/UX Design | $2,000 – $10,000 | ||
III. Front-End Development | Core Features | Developing the user interface and integrating it with backend APIs. | $2,000 – $15,000 |
Advanced Features (Optional) | Interactive NFT galleries, advanced search filters, and profile customization. | $1,000 – $5,000 | |
Total for Front-End Development | $3,000 – $20,000 | ||
IV. Back-End Development | API Development | APIs for authentication, NFT handling, and royalty management. | $2,000 – $15,000 |
Database Setup & Management | Storing user and transaction data securely. | $1,000 – $7,500 | |
Blockchain Integration | Connecting the platform with a blockchain network and smart contracts. | $1,000 – $7,500 | |
Total for Back-End Development | $4,000 – $30,000 | ||
V. Smart Contract Development & Audit | Smart Contract Development | Writing smart contracts for NFT minting, ownership transfers, and royalty distribution. | $1,000 – $10,000 |
Security Audit | Hiring an audit firm to check for vulnerabilities. | $1,000 – $5,000 | |
Total for Smart Contract Development & Audit | $2,000 – $15,000 | ||
VI. Royalty Management System | Royalty Calculation Logic | Implementing the logic for splitting and distributing royalties. | $500 – $5,000 |
Reporting & Analytics | Tracking royalty transactions and generating reports. | $500 – $2,500 | |
Total for Royalty Management System | $1,000 – $7,500 | ||
VII. Testing & Quality Assurance | Functional Testing | Ensuring all platform features work correctly. | $500 – $3,000 |
Security Testing | Identifying and fixing security vulnerabilities. | $500 – $2,000 | |
Total for Testing & QA | $1,000 – $5,000 | ||
VIII. Deployment & Maintenance | Server Infrastructure | Setting up and maintaining servers for hosting. | $500 – $5,000 per year |
Ongoing Maintenance & Updates | Fixing bugs, adding new features, and providing support. | $500 – $2,500 per year | |
Total for Deployment & Maintenance | $1,000 – $7,500 per year | ||
IX. Project Management | Team & Timeline Management | Coordinating development efforts and ensuring on-time delivery. | $1,000 – $5,000 |
Total for Project Management | $1,000 – $5,000 |
Total Estimated Cost Range: $10,000 – $100,000
Factors Affecting the Development Cost of a NFT Royalties and Splits Platform
Several factors can significantly influence the overall cost of developing an NFT platform. Beyond general software development considerations, some factors are particularly unique to this type of project:
- Blockchain Choice: The chosen blockchain (e.g., Ethereum, Solana, Polygon) directly impacts transaction fees, development complexity, and smart contract deployment costs. Ethereum, while popular, has higher gas fees, potentially increasing user costs and platform maintenance expenses.
- Smart Contract Complexity: The intricacy of the royalty logic, including customizable splits, tiered royalties, and handling different token types, affects development and auditing costs. More complex logic requires more development time and thorough security reviews.
- Security Audits: Smart contract security is paramount. The cost of a reputable security audit depends on the complexity of the smart contracts and the auditor’s reputation. Multiple audits may be necessary for highly secure platforms, increasing costs.
- On-Chain vs. Off-Chain Data Storage: Storing NFT metadata and royalty information on-chain offers greater transparency but is more expensive than off-chain storage. The choice impacts both development costs and ongoing operational expenses.
Most Successful Business Models for NFT Royalties and Splits Platforms
The world of NFTs has come a long way, and with it, different ways to make money from them have popped up. Let’s dive into the types of business models that have really taken off,
1. NFT Marketplaces with Transaction Fees
NFT marketplaces like OpenSea and Rarible make money by charging a small fee (usually 2.5% to 5%) on every transaction that happens when someone buys or sells an NFT. The idea is to capitalize on the high volume of trades happening every day.
- OpenSea, the giant in the NFT world, charges a 2.5% fee per sale. In 2021, the NFT market reached a whopping $41 billion, showing just how much potential there is for these platforms.
- Rarible also uses a similar fee model but adds some fun with governance tokens (RARI), giving the community a say in how things run.
2. Royalty-Based NFT Platforms
These platforms let creators earn royalties from secondary sales of their NFTs. This means whenever someone resells the NFT, the original creator gets a percentage (usually 5-10%) of the sale price. It’s a great way for artists to keep making money off their work long after the initial sale.
- While platforms like Magic Eden have royalty options, some markets have started to make these royalties optional, which has caused some tension in the community.
- Interest in “NFT royalties” really picked up in 2022, as creators started to demand better compensation for their work.
3. NFT Gaming Platforms
NFT gaming is all about players owning, trading, and earning from in-game assets, which are represented as NFTs. These platforms typically take a fee from transactions, like selling or trading game items, and some also have play-to-earn models, where players can earn real-world money through their gameplay.
- Platforms like Axie Infinity have really taken off, with players earning up to $1,000 a month through gameplay and trading.
- The gaming space is expanding fast as more developers integrate NFTs and blockchain tech into their games.
Top 5 NFT Royalties and Splits Platforms in the USA
Here are the top 5 royalties and splits platforms in the USA,
1. OpenSea
OpenSea, founded in 2017, remains the largest and most well-known NFT marketplace globally, offering a wide range of digital assets, including art, music, domain names, and virtual worlds.
- Blockchain Support: Ethereum, Polygon, Klaytn, Solana.
- Royalties: Creators can set royalties of up to 10% on secondary sales.
- Zero Gas Fees: The New Collection Manager feature allows users to mint NFTs without paying gas fees.
- Mobile Accessibility: iOS app for enhanced user experience.
OpenSea has processed over $38 billion in trading volume since its launch and continues to be the go-to marketplace despite newer platforms like Blur emerging.
2. Rarible
Launched in 2019, Rarible is a decentralized NFT marketplace that gives artists and creators governance over the platform through its $RARI token.
- Blockchain Support: Ethereum, Solana, and Tezos.
- Royalties: Creators can set on-chain royalties for secondary sales.
- User Engagement: Community governance allows users to vote on platform decisions.
Rarible has gained popularity due to its easy-to-use interface and strong community focus, attracting many artists who want to retain control over their work.
3. Nifty Gateway
Nifty Gateway, founded in 2018 and now owned by Gemini, is a premium platform known for hosting exclusive drops from major artists and brands.
- Blockchain Support: Ethereum.
- Royalties: Artists receive royalties for secondary sales, ensuring ongoing compensation.
- Auction System: High-profile drops are often sold through auctions, driving exclusivity
Nifty Gateway has made a name for itself by facilitating high-value drops from top-tier digital artists, becoming one of the premier marketplaces for exclusive NFT art.
4. SuperRare
Launched in 2018, SuperRare is a curated NFT platform that focuses on high-quality digital art. It connects top-tier artists with serious collectors.
- Blockchain Support: Ethereum.
- Royalties: Artists earn a 10% royalty on secondary sales.
- Curated Listings: Only select artists can list their work, ensuring that the platform maintains its high-quality standards.
SuperRare has attracted millions of dollars in NFT sales, positioning itself as one of the top platforms for collectors seeking unique, premium digital art pieces.
5. Foundation
Foundation, founded in 2021, is a community-driven platform that emphasizes collaboration between artists and collectors. The platform fosters a sense of belonging among artists and invites them into a curated environment.
- Blockchain Support: Ethereum.
- Royalties: Artists earn a 10% royalty from secondary sales.
- Curated Community: Existing members invite artists to join, promoting a close-knit, high-quality community.
Foundation has gained rapid popularity within the digital art scene due to its focus on quality, collaboration, and community, with numerous high-value sales recorded on the platform.
Conclusion
Building a platform for NFT royalties and splits is a game-changer for creating a fairer, more sustainable digital art ecosystem. It gives artists the power to earn what they deserve through automated royalty distribution, and it makes collaborating on projects easier with clear, transparent revenue sharing.
For businesses, this is a huge opportunity to generate revenue through transaction fees, premium features, marketplace commissions, or even offering specialized royalty management services. By creating an easy-to-use and reliable platform, businesses can attract both creators and collectors, positioning themselves as key players in the growing NFT space and tapping into the increasing need for decentralized tools to manage digital assets.
Looking to Develop a NFT Royalties and Splits Platform?
At Idea Usher, we bring over 500,000 hours of coding expertise to the table, specializing in building strong, scalable blockchain solutions. We’ll create a user-friendly platform that empowers creators with automated royalty distribution, flexible split options and secure smart contract integration. From start to finish, we manage every part of the development process, ensuring your platform is technically solid and set up for success in the fast-paced NFT market. Let Idea Usher turn your vision into reality and help you tap into the growing demand for easy, transparent NFT royalty management.
FAQs
Q1. How to develop an NFT loyalty platform?
A1: To develop an NFT loyalty platform, you’ll need to combine blockchain technology, smart contracts, and user-friendly interfaces. Start by choosing a blockchain (like Ethereum or Solana) to mint NFTs. Then, create rewards systems tied to NFTs, where users earn tokens based on their purchases or engagement. A solid backend to track loyalty points and interactions, plus a secure wallet integration for users to store their NFTs, are also key components.
Q2. How do interior NFT loyalty platforms make money?
A2: Interior NFT loyalty platforms typically make money by charging transaction fees when users buy, sell, or trade NFTs. They may also monetize through subscription models, where businesses pay to join the platform and access their customers. Additionally, some platforms may take a cut of the NFT sales or offer premium features, like enhanced marketing or analytics tools for brands.
Q3. What is the cost of developing an NFT loyalty platform?
A3: The cost of developing an NFT loyalty platform varies based on its complexity. Key factors influencing the cost include the choice of blockchain, the design of the user interface, integration with existing loyalty systems, and the implementation of security measures. Ongoing maintenance, updates, and any additional features you may need could also affect the overall cost.
Q4. What are the features of an NFT loyalty platform?
A4: Key features of an NFT loyalty platform include NFT minting, smart contract integration for reward tracking, wallet support for storing NFTs, a marketplace for users to buy/sell/trade rewards, and gamification elements like badges or milestones. Plus, there should be analytics tools for businesses to track customer engagement and reward redemptions.