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3. Royalties

Pre-Web3 Royalties

In the physical world, a royalty is an amount paid by a third party to a product or patent owner for the right to use the product or an idea.

The terms of when the royalties and who should pay them are stipulated in the licensing agreement between the original product owner and a third party wishing to use it legally. The most common examples of traditional royalties include:

  1. Book royalties - paid to the authors by the publishers for every sold book.
  2. Performance royalties - received by the musicians for playing their songs on the radio or the movie studios for showing their creations in the world cinemas.
  3. Patent royalties - received by the manufacturers' inventors using their know-how in producing goods.
  4. Franchise royalties - paid by the franchisees using existing technologies (such as Mcdonald's) to the franchisors who developed and popularized the technology.
  5. Mineral royalties - paid by the mineral extractors to the governments or the land owners where the resources have been found.

Web3 Royalties

In WEB3, royalties is a term used to denote the percentage of the sales price paid to the content creator and is usually applied to non-fungible token sales via the NFT marketplace.

The beneficiaries and the percentage can be stored globally for the entire smart contract or individually for each NFT in ERC-721 and ERC-1155. In ESDT, they are always set per NFT at the moment of minting. While most other token standards support royalties, they can only be set once per collection.

Royalties in the XP.NETWORK Bridge v3.0

In v3.0 of the Bridge, automatic deployment of the destination smart contracts has become available. If the original smart contract has no logic supporting royalties, the target contract will not support royalties either. The royalty rate on the target contract equals the rate of the original contract.

Since the format of the address of the original royalty receivers can be incompatible with the royalty receivers on the destination chain, there's a set of addresses designated for each chain to receive the royalties on behalf of the original NFT creators. The collection teams will be able to check royalties on the corresponding chains from the addresses listed below and claim them from XP.NETWORK. The royalties from the target contracts are transferred to the collection creators twice a month.