Four Strategies for NFT Creators to Combat Royalty Declines

With the development of the NFT ecosystem, trading platforms with zero or low fees are continually emerging, leading to a gradual decrease in secondary sale royalty income for many creators. In this new environment, creators face the challenge of how to generate sustainable income.

Fortunately, NFT creators can adopt various strategies to compensate for the declining trend in royalty income. This article will explore four feasible methods to help creators better position themselves in the ever-changing NFT royalty landscape.

NFTs are essentially decentralized digital assets that can circulate directly between individuals without interference from centralized intermediaries. Recently, the NFT space has been striving to address the declining trend of royalty payments, and some centralized strategies have been proposed, such as preventing transfers and destroying tokens of non-royalty payers. However, these methods undermine the fundamental value proposition of NFTs as decentralized assets.

Nevertheless, NFT creators still have various options to deal with the issue of declining royalties:

1. Control Supply

Creators or project teams may consider retaining a portion of the NFT supply for themselves. These reserved supplies can be used for primary sales after the project develops, whether for gradual financing or as part of a broader IP transaction.

This strategy has two variants: retaining the unminted supply ( as a demand-based minting series ) or retaining the minted supply ( by pre-minting a batch of NFTs ) from the smart contract. It is worth noting that retaining supply does not mean completely giving up royalty income.

2. Become a Liquidity Provider

In the NFT field, more and more automated market maker (AMM) protocols are emerging, allowing creators to provide NFTs to earn trading fees. By adding NFTs to liquidity pools, projects can earn a share when trades occur, generating income without the need for primary sales.

Some projects have successfully adopted this strategy, earning substantial income by providing liquidity for their NFTs on specific platforms. More advanced methods include using emerging NFT valuation protocols for liquidity provision.

3. Establishing a Proprietary Market

Faced with the difficulties of enforcing royalties, more and more projects are choosing to launch their own local markets, concentrating trading activities on controllable platforms. Fortunately, some NFT infrastructure projects are making it easier for creators to deploy custom, royalty-supporting markets.

This approach allows projects to set their front end according to their own wishes while relying on mature infrastructure to handle actual market behavior.

4. Incentive Royalty Payment

Although royalties are on a downward trend, direct incentives can still be used to encourage payments. Projects can implement an indexing system to identify collectors who have paid royalties over the past year, and then offer these supporters unique benefits such as whitelist access, NFT airdrops, exclusive chat groups, and more.

The advantage of this approach is that it can be combined with other strategies to guide NFT holders to become more active and helpful community members.

By adopting these strategies, NFT creators can find new sources of income in the current challenging environment while maintaining the long-term sustainability of their projects.