NFT Royalties Explained: How Creator Fees Actually Work

Creator royalties on NFT resales are set on-chain via EIP-2981, but paying them is voluntary, and many marketplaces make them optional or skip them.

What EIP-2981 actually standardizes

EIP-2981 is the common technical standard NFT contracts use to describe a royalty. A contract that implements it exposes a single function, royaltyInfo, which takes a token ID and a sale price and returns two things: the address that should receive a royalty, and the amount owed on that sale at the collection’s set rate.

That is the entire technical scope of the standard. It gives every marketplace a consistent, machine-readable way to ask “who gets paid, and how much” for any token that implements it, instead of every collection inventing its own format. NFT valuation basics covers how the same ERC-721 token structure that makes this possible also makes each NFT individually priced rather than fungible.

What EIP-2981 does not do is move any money. The standard’s own text describes the royalty payment as voluntary, because the specification cannot know whether a given transfer is a real sale, a wallet-to-wallet gift, or a bridge deposit, and it has no way to compel a marketplace’s smart contract to route funds anywhere. It is a signal, not a payment rail.

Why “on-chain royalty” doesn’t mean “enforced royalty”

A blockchain enforces the rules written into the specific transaction being executed. It cannot reach into a marketplace’s own sale contract and add a royalty transfer that the marketplace’s code did not include. That gap is why a token can carry a royalty rate in its metadata while a given sale pays the creator nothing at all.

Marketplace policy fills that gap, and policy has shifted. OpenSea launched an on-chain filtering tool in November 2022 that let creators block sales through marketplaces that did not honor royalties, then discontinued it by the end of August 2023 after competing marketplaces routed around the filter and after weighing creator objections to the restriction itself. Other marketplaces have made royalty payment optional for the buyer, letting a buyer choose to pay a reduced rate or none, which understandably drove royalty revenue toward zero on the sales where buyers chose the lower cost.

Warning: A royalty rate listed on a collection’s minting page or contract explorer is a maximum, not a guarantee. The rate that is actually paid on any given resale depends on which marketplace hosts the sale and that marketplace’s current policy, which can change without the token contract changing at all.

Worked example: where a resale’s proceeds actually go

Suppose you resell an NFT for a hypothetical 1.5 ETH, with ETH at $2,000, for a sale value of $3,000. The collection has a 5% creator royalty, the marketplace charges a 2.5% fee, and the sale costs $10 in gas.

The seller keeps $2,765.00, or 92.17% of the sale value. The royalty alone is $150, exactly double the marketplace fee in this example, which is a useful reminder that royalties are frequently the largest single deduction on an NFT sale, not a rounding error next to the marketplace’s own cut.

Now suppose the same sale happens on a marketplace that makes royalty payment optional and the buyer opts out. The seller’s net proceeds become $3,000 − $75 − $10 = $2,915.00, a full $150 more than in the royalty-paying scenario. The token, the price and the marketplace fee are identical in both cases; only the royalty outcome changes, and it changes the seller’s result by the exact size of the royalty the creator did not receive. Our maker, taker and spread fees guide walks through how trading fees work on the exchange side of crypto, which follows a similar logic of costs stacking on top of a headline price.

Comparing what a royalty actually costs across scenarios

Because the royalty rate, marketplace fee and sale price all move independently, the dollar impact of a royalty is easiest to see side by side across a few resale prices at the same 5% rate and 2.5% marketplace fee.

The royalty and fee both scale directly with price, so the seller’s share of proceeds stays the same percentage (92.5% before gas) at any sale value once a marketplace does pay the royalty. What changes across marketplaces is not the math; it’s whether the royalty line in that table gets paid at all. Before assuming a collection’s stated rate applies, our fee comparison tool can help you line up marketplace fees and royalty assumptions against each other for a specific sale you’re planning.

What this means when you’re buying or selling

If you create or hold a collection that relies on royalty income, treat the rate in your contract as a ceiling that depends entirely on where your buyers choose to trade, not a guaranteed revenue stream. If you’re buying or selling, a royalty is simply another cost that reduces what a seller nets and, indirectly, what a rational buyer is willing to pay, alongside the wash trading risk that can distort the volume and prices you’re comparing against in the first place.

For collections split into fractional shares, fractionalized NFT ownership adds another layer, since a royalty on the underlying token interacts with however the fraction’s own marketplace handles trading fees. And because royalty income has no fixed relationship to a collection’s floor price or market cap, a high stated royalty rate says nothing on its own about how much a creator is actually collecting.

Common mistakes when thinking about NFT royalties

1. Assuming a listed royalty rate is always paid. It’s the rate a contract requests, not a guarantee any given marketplace pays it in full.
2. Forgetting the royalty when estimating resale proceeds. A 5% royalty is often larger than the marketplace’s own fee, as in the example above.
3. Expecting royalty policy to travel with the token. The same NFT can pay a royalty on one marketplace and none on another.
4. Treating “on-chain standard” as “on-chain enforcement.” EIP-2981 standardizes how a royalty is reported, not how it is paid.
5. Ignoring gas as a separate cost from the royalty. Both reduce net proceeds, but only one of them is a percentage of the sale.

The bottom line

EIP-2981 gave the NFT ecosystem a shared way to report a royalty rate and recipient on-chain, but reporting a rate and paying it are different things, and no blockchain standard can force a marketplace to do the second. Whether a creator actually collects a royalty on any given resale depends on that marketplace’s policy at the time of sale, so treat a stated royalty rate as a maximum to verify, not a number to assume.

This content is for education only and is not financial, investment, tax or legal advice. Crypto assets are volatile and you can lose money. Examples use hypothetical numbers. See our disclaimer and editorial policy.