Why On-Chain Royalties Are the Antidote to Platform Capture

Marketplaces like Blur and Magic Eden weaponized optional royalties to siphon volume from incumbent platforms. This created a race to the bottom where creator revenue was the primary casualty.

• Market Share Capture: Blur captured ~80% of NFT volume by undercutting OpenSea on fees.
• Revenue Collapse: Creator royalties on major collections fell by over 90% post-optional enforcement.

Smart contracts, not marketplace policy, must be the source of truth. Projects like Manifold's Royalty Registry and EIP-2981 embed payment logic directly into the NFT, making royalties non-optional and platform-agnostic.

• On-Chain Sovereignty: Royalties become a property of the asset, not a feature of the venue.
• Universal Compliance: Any marketplace or aggregator interacting with the asset must adhere to its encoded rules.

The battle has shifted to execution environments. Base, zkSync, and app-specific chains like Aevo are implementing native royalty enforcement at the sequencer or protocol level, creating jurisdictional moats.

• Infrastructure-Locked Value: Creators choose chains that guarantee their business model.
• Platforms Become Tenants: Marketplaces must operate within the chain's rule set, inverting the power dynamic.

Static percentages are primitive. The endgame is dynamic, composable revenue streams enabled by standards like 0xSplits and Royalty Finance modules. This turns NFTs into programmable equity.

• Real-Time Distribution: Automatically split revenue among creators, DAOs, and referrers.
• Financial Primitives: Enables royalty-backed lending, futures, and cash flow securitization.

The Problem: Artists are forced onto platforms that can rug their royalty terms.\nThe Solution: A protocol where creators deploy their own immutable, on-chain storefronts. Royalty logic is baked into the contract, not a platform policy.\n- Creator-owned contracts bypass aggregator fee sniping.\n- ~$1B+ in secondary sales volume processed.\n- Enables direct integration with any front-end.

The Problem: A fragmented ecosystem with no universal way for a contract to declare its royalty rules.\nThe Solution: A simple, gas-efficient ERC standard that returns royalty recipient and fee to any marketplace that queries it.\n- Adopted by major chains (Ethereum, Polygon, Arbitrum).\n- Backwards compatible with existing ERC-721/1155.\n- Creates a clear, on-chain expectation for payment.

The Problem: Platforms that ignore royalties force creators into a losing game of whack-a-mole with blocklists, harming collectors.\nThe Solution: Hard-coded, transfer-restricting logic in the NFT contract itself (e.g., Art Blocks, 0xSplits).\n- Transfers fail if royalty isn't paid to the designated split.\n- Shifts enforcement cost from creator (manual ops) to violator (failed tx).\n- Aligns with ERC-721C for configurable transfer security.

The Problem: Treating royalties as an afterthought on generic marketplaces.\nThe Solution: Building the entire music NFT experience—minting, discovery, playback, splits—around immutable, on-chain economic rules.\n- Protocol-level revenue splits for collaborators.\n- Royalty logic is the product, not a feature.\n- Demonstrates that superior UX can be built on sovereign financial rails.

Royalty-bearing assets become illiquid ghosts if major marketplaces defect. Without deep, permissionless liquidity, the royalty model collapses.

• Blur's 0.5% optional royalty set a dangerous precedent, capturing ~80% NFT market share.
• Seaport's policy-agnostic design means platforms, not protocols, control enforcement.
• The solution requires protocol-level liquidity hooks that make royalty circumvention more expensive than compliance.

Enforcement via code is not yet recognized as legal enforcement. Smart contract logic is brittle against real-world legal attacks.

• DMCA-style takedowns are ineffective against decentralized frontends and aggregators.
• Creator class-action lawsuits against non-compliant platforms are costly and uncertain.
• The path forward is hybrid legal-tech frameworks where on-chain proof serves as admissible evidence in contract law.

In a multi-chain, multi-L2 future, royalties fragment. Each new execution environment becomes a new vector for capture and avoidance.

• Layer 2s like Base and Arbitrum have their own sequencer/MEV policies that can ignore royalty directives.
• Intent-based systems (UniswapX, CowSwap) abstract away settlement, making royalty interception architecturally complex.
• Survival depends on universal royalty standards (e.g., ERC-7641) baked into shared infrastructure like EigenLayer AVSs or cross-chain messaging layers.