Try Quests to earn crypto[Ethereum] - Flash Bounty: NFT Royalty Comparison
Bounty Question: Which platform is the king of NFT royalties? Compare royalty payouts of 3 NFT marketplaces. Then choose at least 2 additional metrics to evaluate the impact of royalties on NFT market activity. Bonus : Share your findings on Twitter and tag @flipsidecrypto
What Is a Royalty?
A royalty is a legally binding payment made to an individual or company for the ongoing use of their assets, including copyrighted works, franchises, and natural resources. An example of royalties would be payments received by musicians when their original songs are played on the radio or television, used in movies, performed at concerts, bars, and restaurants, or consumed via streaming services. In most cases, royalties are revenue generators specifically designed to compensate the owners of songs or property when they license out their assets for another party's use.
How do NFT royalties work?
One of the unique features of non-fungible tokens (NFTs) is the ability to distribute royalties from resales. When the digital artist Beeple’s NFT piece “Crossroads” was resold on the secondary market for $6.6 million in February at more than 100 times the original sale price, Beeple himself netted a 10% royalty from the transaction. NFTs are smart-contract based digital assets that can facilitate and enforce the terms and conditions of the transaction. How does the royalty structure work in NFTs and to what extent are they customizable, and what are the legal limitations of such “smart contracts”?
First Step: Overview
🤨 Methodology
> The following basic query was used for all parts of this bounty:
>
> sql > SELECT > PLATFORM_NAME, > block_timestamp, > TX_HASH, > NFT_ADDRESS, > PROJECT_NAME, > TOKENID, > PRICE_USD, > CREATOR_FEE_USD, > (CREATOR_FEE_USD/PRICE_USD*100) as royalty_percent > FROM ethereum.core.ez_nft_sales > WHERE block_timestamp < current_date > and block_timestamp < '{{Last_Day}}' > and PRICE_USD > 0 > >
> In the first step, all marketplaces were examined for the following parameters in the overview evaluation: > > * Number of Sales > * Total Creator Fee (USD Amount) > * Average Creator Fee (USD Amount) > * Total Sale Volume (USD Amount) > * Average Sale Volume (USD Amount) > * Average Royalty Percent > > Note: Due to the fact that in three of the seven existing marketplaces (i.e. sudoswap, larva labs and nftx), no creator fee had been paid, they were excluded from the further reviews.
> In the second step, 4 other marketplaces (i.e. opensea, looksrare, x2y2 and rarible) were checked daily. In this evaluation, the following parameters were calculated: > > * Daily Sales > * Daily Sale Volume > * Daily Creator Fee (USD) > * Average Daily Creator Fee (USD) > * Average Daily Sale Amount (USD)
> In the third step, the marketplaces were checked monthly. In this evaluation, the following parameters were calculated: > > * Monthly Sale Count > * Monthly Sales Volume > * Monthly Creator Fee Volume
> In the fourth step, the distribution of creator fee in transactions was evaluated. In this evaluation, two parameters were checked: > > * Creator Fee Distribution > * Creator Fee Distribution by Marketplaces
> In the fifth step, the top collections were evaluated in terms of the creator fee paid for them. In their case, the following parameters were also checked: > > * Creator Fee | Top Collections > * Average Creator Fee Top Collections > * Average Sales Volume | Top Collections > * Sale Volume | Top Collection > * Average Royalty Percent | Top Collections
> In the sixth step, the top 10 transactions were evaluated in terms of the highest creator fee paid in one transaction.
> In the seventh step, it was evaluated what distribution the top 250 transactions have in terms of the highest paid creator fee. For this purpose, two scatter diagrams were drawn for the following parameters: > > * Top Transactions and Their Royalty Percentage > * Top Transactions and Marketplaces
> In the eighth and final step, the 10 largest creator fee payers were also evaluated. Paid fees, number of purchases, and average creator fee per NFT purchase by them were all simultaneously plotted on a bar chart (and on a logarithmic scale) to more clearly compare these top payers. .
👀 Observations
📌 Number of Sales:
> * The superiority is so much with OpenSea that it leaves no room for doubt. The fact that 9 out of 10 NFTs== sold on the Ethereum network are sold on OpenSea is a good indication of the dominance of this marketplace over other competitors.
> * The second place in this respect belongs to X2Y2. In terms of sales, OpenSea is about 14.5 times that of this marketplace.
📌 Total Creator Fee:
> * Here too, the advantage of OpenSea increases even more than the previous section. 94.7%== of the total fees paid to creators on the Ethereum network were from OpenSea. (with a figure of around $1.04b) From here, OpenSea can be called the royalty king of NFTs. ==But== is this all the story? Wait a little and be with me.
> * The second place in this respect belongs to LooksRare. In terms of paid creator fees, OpenSea has more than $987m more creator fees than LooksRare.
📌 Total Sale Volume
> * This is where the data gets very interesting. Imagine that although 90% of the NFTs sold on the Ethereum network were through OpenSea, the first place in the volume of sales of NFTs is not held by this marketplace. With ==more than $27b==, ==LooksRare== accounts for about 54% of the total volume of NFTs sold, which is ==1.41 times== the volume of NFTs sold on ==OpenSea==.
📌 Average Sale Volume:
> * Statistical averages come into game to tell us that if competitors face each other in equal conditions, which one has the upper hand? The highest average sales volume per sale is provided by Larva Labs Marketplace, where each NFT sold was worth over ==$188k== on average. But this parameter is slightly more than ==85k$ for LooksRare== Marketplace and ==1.045k$ for OpenSea.
> * The average volume per sale in ==LooksRare== is about 81.5 times the value of the same parameter in ==OpenSea==. On the other hand, the number of sales in OpenSea is about 57.5 times the value of this parameter in LooksRare. These differences justify the larger sales volume of the LooksRare marketplace.
📌 Average Creator Fee:
> * In LooksRare, an average of $164.6 per sale has been paid as a creator's fee, which is 2.35 times the value of this parameter in the Rarible marketplace (with $70.07 per sale) and 2.9 times the value of the parameter in the OpenSea marketplace. (with $56.89 per sale).
> * ==Question==: If LooksRare was competing with OpenSea on equal terms, would it still be possible to say that OpenSea is the king? This is the point.
📌 Average Royalty Percent:
> * The royalty percentage is obtained by dividing the creator's fee by the purchase cost of NFT and multiplying the result by 100. Among these 4 marketplaces examined, Rarible had the highest average royalty percentage. (with about 8%) followed by OpenSea, which is second with an average of 6.6%. The third place with an average of 3.78% belongs to LooksRare and finally X2Y2 is in the fourth place. (with an average of 1.72%)
> * Question: Has this percentage of royalties had an effect on the buying and selling of NFTs in the marketplaces? A clear relationship cannot be observed. If the creator fee was supposed to play a prominent role in buying and selling NFTs, it would not allow OpenSea to dominate the Ethereum network NFTs market like this.
Second Step: Daily Review
📌 Daily Sales
> * OpenSea, LooksRare and Rarible marketplaces have all passed a great peak and these days, they have significant distances from their busy peak days. But the situation is different for X2Y2. The increasing number of sales in this marketplace is very impressive. Within 6 months, the daily sales of this marketplace have increased between 4 and 6 times.
> * OpenSea peaked in early 2022, LooksRare peaked in May 2022, and Rarible peaked in April 2021. The state of Rarible's sales numbers compared to the other two shows no hope of a return to the good old days. Its long-term downward trend also reinforces this feeling.
📌 Daily Sale Volume
> * From the beginning of 2022, we are witnessing heavy and intense competition between LooksRare and OpenSea in terms of sales volume. The daily records that LooksRare set at the beginning of 2022 will not be achieved anytime soon (including more than $842.5m of NFT sales in a single day).
> * The situation of the sales volume of all 4 marketplaces has been difficult in recent weeks. Rarible has gone from multi-million dollar days to less than $10k a day and practically can no longer be considered as a player in this game. But is the creator's fee higher than other marketplaces the reason for this drastic drop? OpenSea data is exactly the opposite of this theory.
> * At OpenSea, the brilliant daily sales volume in the first half of 2022 did not continue in the second half of the year, and we see a continued downward trend in this area. In the first half of 2022, there are many days in OpenSea where the daily sales volume exceeds $100m, but in recent weeks, it is rare to see a day where the daily sales volume exceeds $20m.
> * LooksRare, after its incredible uproar at the beginning of 2022, could not even reach half of the records it had set, and from the middle of May, it faced a sharp decrease in daily sales volume, and still after several months, it has not been able to do anything. show a positive sign of return.
📌 Daily Creator Fee
> * In OpenSea, the daily volume chart of paid creator fee is very similar to the daily sales volume chart. An item that is not seen in any of the other three marketplaces. (Of course, some similarity can be seen in Rarible).
> * In Rarible, except for May, June and July 2021, there are many similarities between the two charts. What happened in this three-month period that the creator fee paid daily has decreased to such an extent is a point that can be an interesting research topic.
> * At LooksRare there is little similarity between the charts. LooksRare behaves like its title and looks rare. Because it has really shown ups and downs performance.
> * In the case of X2Y2, it is not possible to see a precise relationship between the relative stability of the daily paid creators' fee and its hilly sales volume in the same period.
Third Step: Monthly Review
📌 Monthly Review:
OpenSea:
> In terms of sales numbers: April, July and February 2022 > > In terms of sales volume: January, February and April 2022 > > In terms of creator fees paid: January, April and February 2022
> \
LooksRare:
> In terms of sales numbers: May, April and January 2022 > > In terms of sales volume: January, February and April 2022 > > In terms of creator fees paid: May, April and January 2022
> \
X2Y2:
> In terms of sales numbers: September, August and July 2022 > > In terms of sales volume: May, July and June 2022 > > In terms of creator fee paid: May, June 2022
> \
Rarible:
> In terms of sales: March, April and June 2021 > > In terms of sales volume: March, April and May 2021 > > In terms of creator fee paid: March, April and February 2021
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>
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> Everything shows that in all parameters, the main boom occurs in the first half of the year, especially around May.
Fourth Step: Distribution of Creator Fee in Transactions
👀 Observation:
> * In about 86.8% of all NFT purchases, less than 100 USD is paid as creator fee. Now if we take 1000 USD as the limit, in 98.9% of all NFT purchases, an amount less than 1000 USD is paid as creator fee. > >
> * Considering that the price of many NFTs is not high and the percentages of rubalty are generally below 10%, these results are quite reasonable. > >
> * In the $100k+ paid creator category, there are only two marketplaces: ==OpenSea== and ==LooksRare==. > >
> * OpenSea has the upper hand in all categories, which, of course, considering the number of sales of 90% of the total sales of Ethereum network NFTs in this marketplace, this result was not far from mind.
Fifth Step: Top Collections
👀 Observation
In terms of the size of the paid creator fee:
> * art blocks > * opensea > * boredapeyachtclub > * the other side
In terms of the number of purchases:
> * opensea > * art blocks > * parallel > * sandbox land
In terms of average creator fee paid:
> * veefriends > * moonbirds > * boredapeyachtclub > * rtfkt
👀 Observation
In terms of sales volume:
> * boredapeyachtclub > * mutantapeyachtclub > * opensea > * art blocks
Average royalty percentage:
> * prime ape planet > * Adidas > * rtfkt > * veefriends
Sixth Step: Top 10 Transactions
👀 Observation:
> * The highest amount ever paid as a creator fee is related to a transaction on January 21, 2022, in which more than $1.2m was paid as a creator fee. (The royalty percentage is 5): > > 0x117543cdde6f19fb801754a01ac5de90b8d27d8934579908e46d0e496b33119e > >
> * Of these top 10 transactions, the first two were on LooksRare and the other eight were on OpenSea. > >
> * Half of these 10 transactions were with a royalty percentage of 7.5. > >
> * Half of these 10 transactions were related to art blocks collection.
Seventh Step: Top 250 Transactions
Eighth Step: Top Creator Fee Payers
👀 Observation
>
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> The address with which the highest creator fee has been paid:
>
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> 0x55faf0e5e6e532b1c5799bdeec1a0f193e54a92d
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> He has paid this amount of $2.36m in 69 transactions. That means he has paid an average of $34,206k creator fee per transaction. In terms of average, this address ranks first (among the current 10):
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> 0xa6e3bd38f3399037fa75088516a3935bbb08ad16
>
>
> He has paid 1.04m$ as creator fee with only 3 transactions. That means $346.77k on average, which is at least 10 times larger than the average creator fee paid per purchase by any other user!
>
> \
📋 Conclusion
References
> * Royalty Image > >
💥💥Twitter💥💥
> * My Twitter Account > >
> > * My Last Thread About This Bounty
> * OpenSea accounts for over 90% of NFTs sold and over 94% of paid creator fees. > >
> * LooksRare: Has hosted the largest volume of NFTs sold on the Ethereum network ---> Amount: Over $27 billion > >
> * LooksRare: Highest average creator fee paid per sale > >
> * Rarible: Highest average royalty percentage > >
> * X2Y2: Unlike the other three marketplaces, there is an upward trend in the number of sales > >
> * LooksRare: Bright days at the beginning of 2022 > >
> * The first half of the years: the boom days of the NFT market > >
> * 87% of creator fees less than $100, 99% under $1000 > >
> * LooksRare and OpenSea host large sales transactions. > >
> * art blocks are one of the most important collections for which about 100 million dollars have been paid for their creator's fee. > >
> * Most top transactions with 7.5% royalty percentage