NFT Royalties: The Web3 Game Changer No One's Talking About

Let's cut to the chase. We're building a new world with Web3. We’re discussing decentralization, creator empowerment, and a new economic paradigm. There's a gaping hole in the conversation, a silent killer threatening the very foundation of this revolution: NFT royalties.

Far too many are focused on the play-to-earn hype, the mind-blowing graphics of Illuvium or the land grabs taking place on Decentraland. They're missing the point. Royalties are the underrated rockstars, the stealthy back-office driver of dynamic fiscal, economic, and environmental growth. They're the real game changer.

Royalties are Creator's Lifeline

Then, you might retort, imagine you’re a developer pouring your heart, soul—and a ton of money!—into crafting a truly disruptive Web3 game. Imagine the sleeplessness, the thousands of lines of code, the unparenthetical creative artistry. Your game has in-game assets that will be NFTs as well – characters, weapons, parcels of land, the works. Players buy and trade these NFTs. Now, here's the magic: every time one of your NFTs changes hands on a secondary market, you, the creator, get a percentage of the sale. That's the royalty.

This isn't just some feel-good handout. It's economic oxygen. It's what allows you to keep the lights on, pay your team, and, most importantly, continue building and improving your game. Without any sort of royalties, you’re admittedly just betting on that first sale. That’s the equivalent of a chess player planning just one move in advance. It's unsustainable.

Additionally, I’ve been fortunate to witness first hand how important royalties are in empowering creators, particularly those from underrepresented communities in areas like South Asia. This new opportunity gives them the chance to compete — and win — on more equal footing. In doing so they can create doubly sustainable businesses, and show their diverse, independent, creative visions to the world. Remove royalties from the picture, and you’re drowning out these voices. You’re just recreating the centralized old power structures that Web3 is claiming to disrupt.

Undermining Royalties Is Economic Treason

Other platforms are making a mad dash to escape or abolish royalties entirely. They might try to say that it’s about reducing transaction costs or increasing trading volume. They call it "innovation." I call it economic treason.

In their pursuit of profits, these platforms are putting short-term profit before the long-term sustainability of the platform. Their relentless pursuit of high fees is causing massive harm to the Web3 ecosystem. It would be like a farmer consuming all the seeds instead of sowing them for the next crop.

• Short-Term Gain: Increased trading volume (maybe).
• Long-Term Pain: Less incentive for creators, lower quality games, unsustainable ecosystem.

Then they lure users in with the bait of lower prices. They’re eating away at the bedrock of creator economies. They’re writing a dangerous race to the bottom where only the wealthiest and most well-funded projects survive.

This isn't just about money. It's about fairness. It’s about showing creative work the respect it deserves. It’s about creating the conditions under which creators can thrive.

Enforcement is the Web3's Checkmate

We need industry-wide standards for NFT royalties. And perhaps most importantly, we need robust mechanisms for enforcing these standards. Right now, it's the Wild West. This puts the burden on the platforms to decide if they want to honor royalties without any real accountability.

Smart contracts offer a potential solution. We can write royalty enforcement functionality directly into the code. This ensures that creators are automatically paid their fair share every time one of their NFTs is resold. This would recognize a level playing field and stop platforms from continuing to freeload off the work of others.

Think about it like this: in chess, you can't just decide to ignore the rules. There are consequences. Just as in Web3, we will have to establish new rules that keep creators’ interests safe while fostering a thriving ecosystem.

It’s past time to go beyond the empty platitudes of decentralization and fulfill the promise with practical, usable solutions that inspire and empower creators. First, we must insist that platforms pay respectable royalties. We won’t have projects that focus on creator sustainability unless we fund those projects.

This isn't just about Web3 gaming. It's about the future of creative work. It’s about creating a future where creators and coders alike can get a fair shake on their works. Up until now, we’ve waited too long to go from conversation to implementation. The future of Web3 depends on it.