I remember the afternoon in 2021 when the Savanna Voices NFT collection minted. Ten Kenyan artists, a DAO-governed royalty system, and 1,200 items sold in 48 hours. The joy was electric—not from the ETH, but from the promise that every secondary sale would send 70% back to the creator. That promise felt like a new social contract. Then OpenSea changed its royalty policy in 2023, making royalties optional. The silence that followed told me everything. The creator economy on-chain was not broken; it was deliberately abandoned.
Context: The Royalty Architecture That Never Was
Royalties were not a feature of the original ERC-721 standard. They emerged as a market convention, enforced by marketplace agreements. When I audited the ZEIP-20 standardization in 2017, I saw how token standards could enshrine ethical obligations. The ERC-2981 standard, proposed later, attempted to embed royalty logic at the contract level, but it remained optional. Marketplaces like OpenSea, Rarible, and LooksRare initially enforced royalties as a social norm. Creators built their livelihoods on this trust. The 2021 bull run saw artists, musicians, and writers minting PFPs, 1/1s, and generative collections, relying on the 5–10% royalty streams to sustain their practice. By mid-2022, OpenSea reported that over $1 billion in royalties had been paid to creators. It was a fragile ecosystem, but it worked.
Then came the market downturn. Trading volumes dropped. Marketplaces began competing for liquidity. The Blur marketplace pioneered the move to zero royalties, attracting traders who cared only about floor prices. OpenSea, facing loss of market share, caved. In February 2023, it announced that royalties would become optional for new collections and that existing collections would require a manual opt-in. The effect was immediate. Creators saw their residual income evaporate. According to data from the NFT market tracker, the average royalty rate for top collections fell from 5% to 0.3% within six months. The message was clear: the marketplace valued volume over integrity.
Core: The Technical and Ethical Collapse
To understand why this is fatal, we must examine the smart contract architecture. Royalties are enforced at the marketplace level via a call to a royaltyInfo function as defined in ERC-2981. This function returns a royalty amount and a recipient address. However, the marketplace has no obligation to call it. In the original OpenSea protocol, the royalty was enforced by the contract’s transferFrom function, but that was removed in favor of a universal seaport that allowed buyers to set a consideration field. The seaport design gave buyers the power to bypass royalty payments by simply not including the royalty item in the consideration array. This was not a bug; it was a design choice that prioritized composability over creator rights. The architecture itself was built to be violable.
When I taught this in my DeFi Library sessions in Nairobi, I would show students how a simple modifier on the transferFrom function could enforce a minimum royalty. But the industry refused. The reason is not technical; it is philosophical. The market decided that the freedom to trade an asset is more important than the creator’s right to ongoing compensation. This is a values choice dressed in code.
The ethical dimension is even more troubling. Royalties are the only mechanism that allows creators to participate in the appreciation of their work. In traditional art, the artist sells once and rarely sees the secondary market gain. NFTs promised a new model: the artist becomes a permanent stakeholder. By abandoning royalties, the marketplaces reverted to the old model, but with a digital veneer of progress. The creator becomes a factory, not a partner. I have seen this firsthand. The Savanna Voices artists, after the initial hype, saw their secondary sales drop. The royalty payout that once funded their next projects dried up. One artist, a painter from Kisumu, told me: "I thought I had a piece of the future. Instead, I have a piece of a lie."
Contrarian: The Case Against Royalties
Some argue that royalties are economically unsustainable. They claim that imposing royalties reduces liquidity, that buyers are unwilling to pay a premium for secondary sales, and that the market should decide. They point to the success of Blur, which grew to dominate trading volume without royalties. They say that creators should monetize through primary sales, merchandise, or community tokens. This argument has a surface logic: if you want a liquid market, you need frictionless trading. But this logic confuses liquidity with health. A market that trades only floor prices is a commodity market, not a cultural economy. The art becomes a slot machine, not a story.
Furthermore, the liquidity argument ignores the fact that royalties were a small fraction of the transaction cost. The average royalty of 5% is negligible compared to the gas fees and slippage that traders accept. The real reason for the royalty surrender is not economics; it is the race to the bottom in marketplace competition. When Blur introduced zero royalties, it was a strategic move to attract high-frequency traders. OpenSea followed not because it was inevitable, but because it lacked the conviction to stand for something else. The marketplaces chose to be infrastructure for speculation, not for culture. Building libraries where others build empires.
I should know. During the 2022 bear market, my educational platform faced a 60% drop in donations. I had to downsize to a core team of four. I rewrote 40% of our curriculum to focus on risk management and ethical governance. I learned that survival requires aligning mission with market, but not at the cost of values. OpenSea could have pursued a different path: it could have created a "creator-friendly" marketplace with enforced royalties, charging a small premium for that service. It did not.
Takeaway: The Path Forward
Royalties are not dead; they are sleeping. The next cycle will see a backlash. Creators will start minting on platforms that enforce royalties at the contract level, using custom transfer functions that reject zero-royalty transfers. We are already seeing experiments with on-chain royalty enforcement through new token standards like ERC-721C (by CreatorFi) and the use of blocklists that prevent transfers to non-compliant marketplaces. But these are technical solutions to a cultural problem. The real solution is a shift in mindset: we must value the creator as much as the collector. Ethics is not a feature; it is the foundation.
I believe that the next generation of NFT platforms will be built by creators, for creators. They will embed royalties into the protocol layer, not as an optional callback, but as a mandatory tax that cannot be bypassed. They will use soulbound tokens for curators, and quadratic voting for governance. The marketplaces that survive will be those that remember that the asset is secondary to the story. Preserving the human story in digital ledgers.
As I write this, I am working on a new curriculum for the African AI-Blockchain Ethics Charter. We are drafting guidelines that require any marketplace operating in the region to enforce royalties for local creators. It is a small step, but it is a start. The silence after OpenSea’s surrender was painful, but it also revealed what we truly value. I choose to listen to the silence between the blocks. There, I hear the faint sound of a new covenant being written.