Four Strategies for NFT Creators to Tackle Royalty Declines

As the NFT ecosystem continues to develop, zero or low-fee trading platforms are emerging, and many creators are facing the challenge of reduced secondary sales royalty income. In this new environment where royalty payments are on the decline, how to generate sustainable revenue streams has become a key issue.

This article will share four viable strategies to help NFT creators better position themselves in this changing royalty environment.

1. Control Supply Volume

Creators or project teams may consider retaining a portion of the NFT project supply for themselves. This retained supply can be used in the future for primary sales, either through gradual release for further financing or as part of a broader IP transaction for overall sale.

There are two common variants of this strategy:

1. Reserve Unminted Supply: For certain on-demand minted series, a portion of the maximum supply is still reserved for special occasions.

2. Retain minted supply: For example, some projects have pre-minted a batch of NFTs in the smart contract and gradually sell them over time.

It is worth noting that adopting this strategy does not mean completely giving up royalty income. Projects can flexibly choose whether to collect royalties and how to balance supply retention and royalty income.

2. Become a Liquidity Provider

The NFTfi field is witnessing the emergence of more and more NFT automated market maker ( AMM ) protocols. Creators or projects can add their own NFTs to the liquidity pool, allowing them to earn a share when users trade through that liquidity. A unique advantage of this strategy is that it allows project teams to generate revenue from their own NFTs without the need for primary sales.

Some projects have successfully adopted this strategy. For example, a well-known NFT project team began providing liquidity for their 50 NFTs on a certain DEX in August 2022, and to date, they have earned thousands of dollars in revenue through trading fees.

A more advanced approach is to provide liquidity in certain emerging protocols focused on NFT valuation. This method not only generates income but also provides accurate pricing for all NFTs in the pool.

3. Build Your Own Trading Platform

In the face of the challenges of enforcing royalties, more and more projects are choosing to launch their own local trading platforms, concentrating trading activities in a controllable environment. This can avoid reliance on mainstream platforms that currently do not support royalties adequately.

Fortunately, some NFT infrastructure projects are providing increasingly convenient customized trading platform deployment solutions for creators and collectors. These solutions often support aggregated NFT listings and allow project parties to customize the front-end interface, while the underlying trading functions are handled by the infrastructure providers.

4. Incentive Royalty Payment

Although recent NFT royalties have generally been on a decline, we can still encourage royalty payments through direct incentives. Project teams can adopt various methods to achieve this goal:

• Establish an indexing system to identify collectors who paid royalties in the past year.
• Provide unique benefits for collectors who support royalties, such as whitelists, NFT airdrops, exclusive communities, etc.
• Hold leaderboard competitions to reward users with outstanding royalty payment performance.

The advantage of this approach is that it can be combined with other strategies, such as controlling supply, concentrating trading on self-built platforms, etc. It not only helps maintain royalty income but also fosters a more active and supportive community atmosphere.

By flexibly applying these strategies, NFT creators can carve out new revenue streams in the current challenging royalty environment while maintaining the long-term sustainability of their projects.