Introduction:

The most controversial topic on Solana over the past month has been NFT royalties. After platforms like Yawww and Solanart moved to 0% creator royalties, and eventually Magic Eden followed, the market has been in a chaotic state. Magic Eden had cited that almost all funds for a project are coming from the mint, not royalties: \n

Questions:

Magic Eden had cited that almost all funds for a project are coming from the mint, not royalties: .

Is this accurate, or a misrepresentation of how successful NFT projects have been operating?
What projects have been more reliant on NFT royalties than others?
What collections were wallets pivoting towards using 0% royalties more frequently? Higher royalty percentages? Higher floor volumes?
Are flowing royalties a sign of project health and sustainability?
How much volume from 0% royalty sales can be accounted for by wash trading rather than actual user interest?
Was this actual user demand, or were decisions made based on inflated data?
Compare the rise of 0% royalty market behavior on Solana to on Ethereum. Are users less likely to pay royalties on Solana?

What is royalty fee?

A royalty is an amount paid by a third party to an owner of a product or patent for the use of that product or patent. The terms of royalty payments are laid out in a licensing agreement.

What are NFT royalties?

Once the NFT is minted, the royalties occur automatically. Royalties received from the NFTs give its creator a percentage of the selling price each time the artwork is sold on a marketplace. The average NFT royalty typically ranges from 5-10%. However, some of the marketplaces are still in the process of integrating royalties systematically.

Revenue from royalty Vs. mint:

In this part, I tried to compare the revenue from royalty and mint for Solana projects. As you know, every NFT project can earn money in two ways:

The first is the initial sale, which is called Mint. Projects usually announce their mint time in advance and consider a fixed cost for the mint of their collections when releasing their NFTs for the first time. Of course, there are also free mints.
The second is the revenue from secondary sales, which is called royalties. Royalty is usually a percentage of the price that an NFT has when it is sold. Of course, some projects consider other conditions.

In the following charts, you can see the weekly volume from each type of revenue (mint or royalty). The purpose is to figure out which of the methods generates more income and does Magic Eden's claims that almost all funds for a project are coming from the mint, not royalties is accurate or not.

According to the daily chart, until the middle of February 2022, the royalty income was less than Mint, but after that, the story changed. So that in some weeks the income from royalties was 18 times the income from Mint. You can see the dominance of royalties on Mint in the revenue share chart.
So far, 72.6% of the revenue of NFT projects on the Solana platform has been through royalties.

In the bottom left chart, you can see the 10 Solana collections that had the highest revenue from royalty. The right chart shows the 10 collections that had the highest revenue from Mint. All revenue is in SOL.

Okay Bears as the top collection in terms of revenue from royalty makes nearly 1M SOL while Transdimensional Fox Federation as the top collection in terms of revenue from mint makes only 140K SOL.
Between the top 10 of each group, only Primates is common. This collection makes 190K SOL from royalty and 39K from mint.
A high total royalty of a collection usually indicates that the selling price of that collection was higher. Also, the high price of mint does not guarantee high income from royalties.

Now we tried to find out what percentage of the total income Solana NFTs make from royalties. The following charts show this case.

Well, we come to the most exciting part of this dashboard. We want to check whether the claim of Magic Eden is true or not. The claim was: almost all funds for a project are coming from the mint, not royalties.

For this purpose, I tried to make a table exactly like the one claimed by Magic Eden and compare the results.

As you can see, the results are far from each other. for example, Magic Eden claims 90-100th percentile make at least 66% of their revenue from mint but based on my analysis, this amount is around 1.5%.

Also, based on Magic Eden's data, the 90-100th percentile makes 7394 SOL in the median from mint but based on my analysis, this amount is around 38 SOL.

Seems Magic Eden has not considered some collections. For example, those that were free Mint or those that were scammed after Mint. In my opinion, for the analysis to be more acceptable, we should include a wider range of collections.

0% marketplaces Vs. royalty marketplaces

In this part, we compared the weekly volume, transactions, and unique buyers on marketplaces with royalties system and with 0% royalties.

marketplaces with royalties system are: opensea, magic eden v1, solana monkey business marketplace, magic eden v1.

marketplaces with 0% royalties are: yawww, solanart, hadeswap, solport, coral cube

Degan Ape and Thugbirdz are common among the top 10 collections in terms of volume on both 0% and royalty base marketplaces.
The volume of collections on marketplaces with 0% royalty is more than on marketplaces with royalties system.

The volume, transactions, and unique buyers on marketplaces with royalty system was more than on marketplaces with 0% royalty during Oct 2021 and Feb 2022.
Before Oct 2021 and after Feb 2022 the volume and transactions, and unique buyers on marketplaces with 0% royalty was more than on marketplaces with royalty system.
The charts above show attention has recently been drawn to marketplaces with 0% royalties.

Among marketplaces with royalties system, dominance was with Magic Eden until the end of March 2022, but with the arrival of OpenSea, the market share was taken from it.
Among marketplaces with 0% royalties, dominance in every period of time has been with a marketplace.
- Until April 18, the main volume was in Solanart.
- Until Jul 4th, the main volume was in Coral Cube.
- Until Sep 26, the main volume was in Yawww.
- then, the main volume was in Hadeswap.

Wash sale activity on 0% Marketplace:

References:

royalty calculation part
wash trading part

The volume, transactions, and unique buyers on marketplaces with 0% royalty made as normal trading is much more than wash trading.
Wash volumes were mostly absent or low up until August of this year. After that a little increased.
Between 1% and 7% of the volume on marketplaces with 0% royalties, were wash trading per week since Sep 2022.
Wash trading is made by a few wallets.

Ethereum marketplaces: 0% marketplaces Vs. royalty marketplaces

The volume on marketplaces with 0% royalties was more than on marketplaces with royalties system during Jan and Feb 2022 and also since Jun till now.
The transactions and unique buyers on marketplaces with royalties system were more than on marketplaces with 0% royalties all over time.
It can be said that buying and selling in marketplaces with 0% royalties is mostly done by whales because the volume of transactions is high but the number is small.

Among marketplaces with royalties system, dominance was with OpenSea all over time.
Among marketplaces with 0% royalties, dominance in every period of time has been with a marketplace.
- Until Jan 3rd, OpenSea and Larva Labs are in competition with each other.
- Until May 2nd, the main volume was in Looksrare.
- Until Oct 24th, the main volume was in X2Y2.
- then, the main volume was in Blur.

Board Ape Yacht Club is common among the top 10 collections in terms of volume on both 0% and royalty base marketplaces.
The volume of collections on marketplaces with 0% royalty is more than on marketplaces with royalties system.

Conclusion:

Until mid-Feb 2022, the royalty revenue was less than Mint, but after that, the story changed. 72.6% of the total revenue of NFT projects on the Solana platform has been through royalties, so far.
Okay Bears as the top collection in terms of revenue from royalty makes nearly 1M SOL while Transdimensional Fox Federation as the top collection in terms of revenue from mint makes only 140K SOL.
The top 10 collections in terms of percentage of revenue from royalties make more than 99% of their revenue from royalties and all of them are among the prominent projects of Solana.
My analysis contradicts the authenticity of Magic Eden's tweet. Seems Magic Eden has not considered some collections. For example, those that were free Mint or those that were scammed after Mint.
The volume, transactions, and unique buyers on marketplaces with royalties system were more than on marketplaces with 0% royalty during Oct 2021 and Feb 2022. Before and after this period, the volume and transactions, and unique buyers on marketplaces with 0% royalty were more than that. Also, we can say attention has recently been drawn to marketplaces with 0% royalties.
The volume, transactions, and unique buyers on marketplaces with 0% royalty made as normal trading is much more than wash trading. Wash volumes were mostly absent or low up until August of this year. After that a little increased.
The volume on marketplaces with 0% royalties was more than on marketplaces with royalties system during Jan and Feb 2022 and also since Jun till now. The transactions and unique buyers on marketplaces with royalties system were more than on marketplaces with 0% royalties all over time. It can be said that buying and selling in marketplaces with 0% royalties is mostly done by whales because the volume of transactions is high but the number is small.

It might be interesting to see which of the collections had the highest percentage of revenue from royalties.

All of these collections make more than 99% of their revenue from royalties.
All of them are among the prominent projects of Solana.

More than 60% of collections make more than 25% of their revenue from royalties.
More than 43% of the collections make more than 50% of their revenue from royalties.

In my opinion, there are many scams among that 40% who make less than 25% of royalties.

none of the collections are common among the top 10 collections in terms of count on 0% and royalty base marketplaces.
The number of sales on both marketplaces is close together.

none of the collections are common among the top 10 collections in terms of count on 0% and royalty base marketplaces.
The number of sales on royalties base marketplaces are more.

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