The Future of Royalties: Enforceable Across Every Chain

Today, royalties are a marketplace policy, not an on-chain primitive. This creates a race to the bottom where aggregators and alternative marketplaces bypass fees to undercut prices.

• Fragmented Enforcement: Rules differ per chain and per marketplace (e.g., OpenSea vs. Blur).
• High Compliance Cost: Creators must manually blacklist non-compliant platforms.
• Value Leakage: Estimated $300M+ in creator royalties were bypassed in 2023 alone.

Make royalties an immutable, verifiable property of the token itself via smart contract hooks. This shifts enforcement from policy to protocol.

• ERC-721C: Introduces a configurable royalty enforcement hook that validates payments before a transfer settles.
• ERC-2981: A standard interface for royalty info, enabling universal discovery.
• Composability: These standards allow wallets, indexers, and bridges to natively understand and respect fees.

A token's royalty rules must be verifiable and enforceable wherever it travels. This requires a secure cross-chain state layer.

• LayerZero & CCIP: Securely pass royalty policy and payment verification messages between chains.
• Wormhole & Axelar: Provide generalized cross-chain state attestations that a marketplace on Chain B can trust.
• Intent-Based Settlers: Protocols like UniswapX and Across could bundle royalty payment as a precondition for cross-chain NFT swaps.

Enforcement becomes a paid infrastructure service. Protocols profit by guaranteeing settlement, creating aligned incentives.

• Fee Markets: Enforcers (like Manifold's Royalty Registry) could stake to provide service and earn a share of fees.
• Slashing Conditions: Enforcers that validate non-compliant trades lose stake.
• New Revenue Stream: Transforms royalties from a voluntary gratuity into a programmable cash flow for creators and infrastructure providers.

Royalties are a legal right, not a protocol suggestion. Manifold's ERC-721C introduces on-chain, configurable royalty enforcement with transfer validation, making it a contract-level obligation.

• Creator-Controlled: Deployers set rules (allow/deny lists, percentages) that are immutable and chain-agnostic.
• Marketplace Agnostic: Enforcement logic is in the NFT contract itself, removing reliance on marketplace goodwill.
• Legal Bridge: Provides a clear on-chain record for legal recourse, moving beyond social consensus.

Fragmented liquidity across OpenSea, Blur, and Sudoswap means no single marketplace can enforce rules. Rarible Protocol aggregates order flow to apply royalty policies across all major venues.

• Aggregator Leverage: By routing trades through its protocol, it can mandate royalty payment on fill.
• Dynamic Policies: Supports tiered royalties (e.g., 10% for first sale, 5% thereafter).
• Cross-Chain Indexer: Tracks provenance and payments across Ethereum, Polygon, and Solana to unify creator payouts.

The most effective enforcement is a closed-loop system with aligned incentives. Sound built a full-stack music NFT platform where royalties are non-negotiable by design.

• Captive Marketplace: Artists mint, sell, and set royalties on Sound; the platform's economic model depends on enforcing them.
• Social Enforcement: Strong community norms and artist-fan relationships create social pressure that complements technical measures.
• Proof of Concept: Demonstrates that for specific, high-value verticals, a dedicated platform can solve the problem where generalized marketplaces fail.

True cross-chain royalties require universal state synchronization. LayerZero's omnichain fungible tokens (OFT) and non-fungible tokens (ONFT) standards provide the primitive for native cross-chain assets.

• Single Source of Truth: An NFT's royalty configuration lives on a home chain and is verified via LayerZero messages on any connected chain.
• Native, Not Bridged: ONFTs are native assets on each chain, eliminating wrapped asset complexity and centralization risk from bridges.
• Foundation for Protocols: Enables projects like Manifold and Rarible to build truly universal enforcement layers.

Most cross-chain royalty enforcement relies on a centralized oracle or relayer to attest to on-chain sales. This creates a critical vulnerability.

• Censorship Risk: A malicious or compromised oracle can censor royalty payments.
• Data Manipulation: Incorrect price feeds or sale attestations can underpay creators.
• Systemic Collapse: If the oracle fails, the entire cross-chain royalty system halts.

Traders will exploit price differentials between chains with and without enforcement, eroding the fee model.

• Wash Trading: Fake volume on non-enforcing chains to devalue collections, then bridge assets.
• Liquidity Fragmentation: Marketplaces will compete by offering "zero-royalty" chains, forcing a race to the bottom.
• Slippage for Creators: Royalties become a voluntary tax, paid only by uninformed users.

Enforcement relies on smart contract code as law, but real-world legal systems may not recognize it.

• Jurisdictional Nightmare: Which chain's legal framework governs a cross-chain sale?
• DAO Governance Capture: Treasury-controlled enforcement parameters can be voted against creator interests.
• Upgrade Risks: A protocol upgrade to fix bugs could inadvertently break royalty logic for legacy NFTs.

Universal standards (e.g., ERC-721C) require adoption by every major chain, wallet, and marketplace—a near-impossible coordination problem.

• Fragmented Adoption: A chain like Solana or Bitcoin L2s may reject Ethereum-centric standards.
• Bridge Exploits: Vulnerabilities in cross-chain messaging layers (LayerZero, Wormhole, Axelar) can intercept or block royalty payments.
• Performance Overhead: Adding royalty logic to every transfer increases gas costs and complicates simple swaps.

Royalty logic is siloed per chain, creating enforcement deserts. A collection on Ethereum with royalties has no claim on its Solana or Polygon derivatives. This fractures the creator's revenue stream and market integrity.

• Market Impact: Creator revenue leakage estimated in the hundreds of millions annually.
• Technical Debt: Each new L2 or appchain requires a bespoke, often weaker, enforcement mechanism.

A dedicated protocol acts as a cross-chain state coordinator and arbiter. It doesn't hold assets but broadcasts and verifies royalty policies across all connected chains, similar to how LayerZero passes messages or Axelar manages general message passing.

• Core Mechanism: Policy states are anchored on a secure chain (e.g., Ethereum), with light clients or optimistic verification on others.
• Automated Enforcement: Marketplaces and DEXs query this layer; non-compliant trades can be invalidated or flagged.

Move beyond simple fee extraction. Royalties become programmable intents that can route, split, and react. This mirrors the user-centric design of UniswapX and CowSwap, but for creator economics.

• Dynamic Logic: Royalties can auto-convert to ETH, fund a DAO treasury, or reward loyal holders.
• Composability: Royalty streams become a primitive, integrable by DeFi protocols for streaming or collateralization.

Voluntary enforcement failed. The solution makes compliance the path of least resistance and maximal profit. A unified standard reduces integration overhead for marketplaces like Blur, Magic Eden, and Tensor, while protecting their liquidity.

• Network Effect: First major marketplace to adopt gains a monopoly on premium, royalty-respecting collections.
• Data Advantage: Cross-chain royalty tracking provides unparalleled insights into collection health and creator value.

Bad actors will exploit latency in cross-chain state updates. Without careful design, enforcement can be front-run, similar to DEX arbitrage MEV. Spoofing a fake policy state is a critical attack vector.

• Mitigation: Requires fast finality chains, optimistic or ZK-verification schemes, and economic slashing for false claims.
• Reference: Learn from bridge security models like Across's bonded relayers and Chainlink CCIP's risk management.

The NFT or token is the sovereign entity, carrying its own immutable economic rules. The chain it's on becomes an execution environment, not a jurisdiction. This flips the current paradigm.

• True Portability: Assets move freely; their royalty policy is as inherent as their token ID.
• Legacy Integration: Enables ERC-721 and SPL assets to interoperate under a single economic rule set, unlocking compound value.