NFT Creator Royalties Explained Quiz

1. What are NFT royalties?

• NFT royalties are payments made by buyers directly to previous owners of NFTs.
• NFT royalties are proceeds that are automatically sent to the original creators of NFTs whenever they are sold or resold in marketplaces.
• NFT royalties are fees paid to platforms for listing NFTs for sale.
• NFT royalties are penalties imposed on creators for not selling their NFTs.

2. How are NFT royalties encoded?

• NFT royalties are embedded in the image file itself.
• NFT royalties are encoded in smart contracts and are tracked on-chain.
• NFT royalties are stored in a traditional database.
• NFT royalties are recorded in physical paper contracts.

3. What percentage range do NFT royalties typically fall in?

• 5–10%
• 25–30%
• 15–20%
• 1–3%

4. How are royalty rates programmed into NFTs?

• Royalty rates are determined by the marketplace where the NFT is listed.
• Royalty rates are set by the buyer before the transaction occurs.
• Royalty rates are manually updated by the creator each time an NFT is sold.
• Royalty rates are programmed into the NFT’s smart contract when the NFT is minted.

5. What happens to the royalty payment when an NFT is resold?

• The royalty payment is deducted from the transaction amount and sent to the creator’s digital crypto wallet.
• The royalty payment is optional and not guaranteed for the creator.
• The royalty payment is lost and not tracked after the initial sale.
• The royalty payment goes to the marketplace operator instead of the creator.

6. How are royalty payments calculated?

• Royalty payments are fixed amounts that do not vary with the sale price.
• Royalty payments are calculated by taking the specified percentage from the sale price of the NFT.
• Royalty payments are averaged over the total sales made by the NFT.
• Royalty payments are determined by the number of owners an NFT has had.

7. What happens if an NFT is sold on a platform that does not honor royalties?

• The creator receives full royalties regardless of the platform`s policy.
• The creator may not receive their royalty payment if the platform does not honor the contract.
• The buyer will pay double the amount to the creator.
• The NFT will be permanently deleted from the platform.

8. How do smart contracts facilitate royalty payments?

• Smart contracts store credits for future sale royalty payments until requested by the creator.
• Smart contracts require approval from marketplaces to process any royalty payments for NFTs.
• Smart contracts execute the royalty provision automatically when an NFT is sold, ensuring the creator receives their payment.
• Smart contracts manually calculate royalties based on the NFT`s initial price and creator`s request.

9. What is the role of marketplaces in NFT royalty payments?

• Marketplaces pay royalties only to top-selling creators based on performance.
• Marketplaces do not handle royalty fees and solely profit from sales.
• Marketplaces take all sales proceeds and give a fixed sum to the creator.
• Marketplaces typically take the royalty fee from the buyer and pass it to the creator.

10. Can creators change the royalty percentage after minting an NFT?

• No, royalty terms can be changed freely.
• Yes, creators can set different royalties for each sale.
• Yes, creators can adjust the royalties anytime after minting.
• No, once the royalty terms are locked into the smart contract, they cannot be changed.

11. How do creators benefit from NFT royalties?

• Creators earn a percentage of the sale price each time their NFT is resold.
• Creators get one-time payments when they initially mint the NFT.
• Creators receive a flat fee every time their NFT is sold.
• Creators are paid annually based on the total sales of their NFTs.

12. What is the significance of including royalty terms in the smart contract?

• Including royalty terms in the smart contract eliminates the need for digital wallets.
• Including royalty terms in the smart contract prevents any future sales of the NFT.
• Including royalty terms in the smart contract makes it impossible to change the NFT`s owner.
• Including royalty terms in the smart contract ensures that creators receive their payments automatically and transparently.

13. How do creators select the royalty percentage?

• Creators choose the royalty percentage after the NFT is sold and updated on the blockchain.
• Creators determine the royalty percentage based on audience feedback and social media trends.
• Creators select the royalty percentage when minting the NFT and embedding it into the smart contract.
• Creators set the royalty percentage randomly without any specific criteria during the minting process.

14. What happens if an NFT is resold multiple times?

• The NFT becomes worthless after being resold multiple times.
• The creator receives a royalty payment each time the NFT is resold, based on the specified percentage.
• The creator loses all rights to the NFT after the first sale.
• The NFT can only be sold without any royalties applied thereafter.

15. How are royalty payments recorded on the blockchain?

• Royalty payments are never recorded, and creators have to rely on trust.
• All transactions and royalty payments are recorded on the blockchain, providing transparency and immutability.
• Only original creators keep track of their royalty payments off the blockchain.
• All payments and transactions are handled only by the marketplaces, not on the blockchain.

16. What platforms commonly support NFT royalty payments?

• eBay, Etsy, and Amazon
• OpenSea, Rarible, and Foundation
• Netflix, Hulu, and Spotify
• Facebook, Twitter, and Instagram

17. How do creators ensure they receive their royalties?

• Sending invoices to buyers after every sale
• Contracting legal representatives for each transaction
• Using smart contracts to automate payments
• Relying on direct bank transfers from buyers

18. What is the typical range for royalty percentages in NFTs?

• 2–4%
• 5–10%
• 0–1%
• 15–20%

19. How do creators set up royalty payments during minting?

• Creators design the royalty payments based on the buyer`s preferences during the sale.
• Creators calculate the royalty payments as they resell the NFT to the new owner.
• Creators set up royalty payments during minting by embedding the royalty percentage into the smart contract associated with the NFT.
• Creators automatically receive payments from the marketplace without any setup during minting.

20. What happens if a marketplace does not enforce royalty payments?

• The marketplace will automatically pay the creator without contracts.
• The creator may not receive their royalty payment if the marketplace does not enforce the contract.
• The creator will receive a flat fee instead of royalties.
• Royalty payments will be doubled for the creator out of marketplaces` profits.

21. How are royalty payments calculated when an NFT is sold for a different price than its initial sale?

• Royalty payments are ignored if the sale price changes.
• Royalty payments are only calculated from the initial sale price.
• Royalty payments are calculated by taking the specified percentage from the sale price of the NFT at the time of resale.
• Royalty payments are fixed amounts determined at the time of minting.

22. What is the role of blockchain in NFT royalty payments?

• The blockchain replaces traditional art galleries as the primary sales medium for creators.
• The blockchain guarantees that all buyers will pay the same price for NFTs in every transaction.
• The blockchain records all transactions and royalty payments, ensuring transparency and immutability.
• The blockchain dictates the resale price of NFTs, determining profit margins for creators.

23. How do creators benefit from perpetual royalties?

• Creators receive no additional payments after the initial sale of their NFT.
• Creators benefit by earning a percentage of the sale price each time their NFT is resold, which can increase their earnings over time.
• Creators only earn once at the time of minting their NFT.
• Creators must renegotiate royalties with each buyer for additional earnings.

24. What happens if an NFT is traded on a platform that does not respect royalty terms?

• The creator will receive full payment regardless of the platform`s policies.
• The creator may not receive their royalty payment if the platform does not respect the royalty terms.
• The transaction will be canceled automatically by the blockchain.
• The buyer will pay additional fees to cover the creator`s royalties.

25. How do smart contracts guarantee royalty payments?

• Smart contracts guarantee royalty payments by requiring buyers to pay in cash to the creator directly.
• Smart contracts guarantee royalty payments by only allowing the original creators to determine transaction amounts.
• Smart contracts guarantee royalty payments by executing the royalty provision automatically when an NFT is sold.
• Smart contracts guarantee royalty payments through manual approval by sellers after each transaction.

26. What is the significance of transparency in NFT royalty payments?

• Transparency makes NFTs immune to market fluctuations.
• Transparency ensures that creators can track royalty payments accurately.
• Transparency allows anyone to modify NFT royalty terms.
• Transparency guarantees higher prices for NFTs at resale.

27. How do creators ensure they receive their royalties on all future sales?

• Creators list their NFTs only on platforms that promise royalty payments.
• Creators rely on social media to inform buyers of their royalties.
• Creators negotiate with buyers directly to ensure royalties are honored.
• Creators embed the royalty percentage into the smart contract associated with the NFT.

28. What happens if an NFT is sold for a higher price than its initial sale?

• The creator loses all rights to the NFT upon sale.
• The creator receives a higher royalty payment based on the new sale price.
• The initial buyer must pay the creator again.
• The NFT becomes worthless after the first sale.

29. How do marketplaces handle royalty fees?

• Marketplaces charge a flat fee to sellers, regardless of the sales price, with no consideration for royalties.
• Marketplaces keep all royalty fees for themselves and do not distribute them to creators.
• Marketplaces typically take the royalty fee from the buyer and pass it to the creator, but some may allow buyers and sellers to bypass royalties[2][4].
• Marketplaces do not handle royalty fees and leave it entirely up to creators to enforce payment.

30. What is the difference between traditional art sales and NFT sales in terms of royalties?

• NFT royalties are paid only once when the NFT is minted.
• NFT sales have no royalties for the artist in any subsequent transactions.
• Traditional art allows artists to earn only from the first sale, while NFTs provide ongoing royalties from every resale.
• Traditional art sales provide artists with royalties for every resale through galleries.