NFT royalties are reshaping how creators benefit financially from their work, shifting from one-time sales to ongoing revenue. Sandbox has embraced this concept and revolutionized the marketplace to promote fair and automatic redistribution of royalties.
Mechanism of NFT Royalty
Once an NFT is minted, its creator sets a royalty rate, entitlement to a portion of future sales from NFT resales. This mechanism protects the intellectual property rights of creators and ensures continuous compensation. Some platforms have integrated royalty systems, while others rely on selective royalty payments and some do not enforce royalties at all, leaving creators without secondary market revenue.
Implementing a fair loyalty system in the sandbox
The Sandbox’s philosophy focuses on supporting the global creator economy by redistributing a portion of secondary market royalties to the original NFT creators. This approach aims to promote long-term monetization of creators’ work. The Sandbox team developed an internal solution that automatically redirects a portion of ASSET’s secondary market royalties to the original creator’s wallet. Launched on December 14, 2023, the feature aims to allow creators to profit directly from secondary sales of their assets.
Redistribution of Royalties in the Sandbox Marketplace
In The Sandbox, ‘ASSET’ is a voxel asset for adding content to various experiences, including games developed in LAND. In addition to its functional use, ASSETs can be collected, monetized, and traded.
Until now, The Sandbox has received a 5% royalty on secondary sales of ASSET. With the upcoming feature, these royalties will be split equally between The Sandbox and the original NFT creator, each receiving 2.5%. This change will ensure that creators automatically receive a fair share of secondary market sales. According to Sandbox, this mechanism will also be compatible with other marketplaces that adopt the ERC-2981 standard, and this accessibility is planned for 2024.
Creators who utilize the Sandbox Marketplace can have confidence that secondary market royalties will be reliably executed and deposited directly into their wallets. This development by The Sandbox marks another step forward in ensuring fair compensation for creators in the NFT market. By facilitating the automatic and equitable redistribution of royalties, The Sandbox sets a precedent for how a platform can support its community of creators in the evolving world of digital art and assets.