What is the best creator/royalty fee?

Is 2.5% best? Is 10% too much?

Interesting discussions on Twitter made me look at the data.

This Tweet prompted me to dig deeper.

https://twitter.com/CapetainTrippy/status/1499973462907142144?s=20&t=UXe7tuaE6p1pCL5MadSzdQ

Then I researched other discussions and found interesting insights.

If the fee is too high, is that bad for the market and slows down trading? Or does it give more funds back to the project to re-invest into more growth? From a business and entrepreneurial standpoint, higher % fee makes sense but only if you know what to do with it and it’s a legit project.

If the fee is too low, it might be a good signal for the community as not a cash-grab but the team might be hurting themselves if their funds are not increasing. Low fee projects would need some other advantage like innovation, momentum, being early, connections, etc, to set a low % and still succeed.

Those are just a few discussion points, there are many more. By the way, any project can have success if they set it at 0% or 25%, so just use this data for fun if you are creating or supporting a project to have a higher chance and “predict” what their volume or floor might do.

Ultimately I pulled the data and very quickly did some sloppy analyses to see if there are general trends.

950+ collections were included. I’m lazy so the main metrics I looked at are a bit biased since they represent a snapshot on March 5th, 2022. Whichever floor prices, age of projects, volume last 30 days (in ETH), and the current royalties % set on this day (creators may have changed this setting), is what the pattern supports. I didn’t exclude uncommon projects (1 item in collection, etc.)

Also a bias to mention is that I didn’t run proper statistical analyses (even though that’s why I did daily years ago for my Ph.D.). In otherwords, ignore 100% of everything in this article haha! This is simply to spot major patterns or not, and simplify showing it visually. I split up the data into main categories of common % fee’s that are set for secondary sales.

Summary: The middle category seems to be the best. That’s where the fee is between 5.01% and 7.49%. Basically everything in between, but excluding 5% and 7.5%.

That doesn’t mean you should set your % in some weird number like 5.55% fees. Although some of you weirdos probably will :) The 2nd and 3rd category are best after that, which do include 5% and 7.5%.

Overall I would say the sweet spot does seem to be in the area of 5%-7.5%. There are many exceptions, off course, with some doing extremely well at 2.5% as BAYC did, and setting at 10% is on the higher end with some tradeoffs for project that go that route.

If the project needs extra funds to re-invest into the team, community, marketing, dev, the project itself, etc, higher percentage makes sense. If there is more experience or innovative advantage, a lower % might make more sense.

Credit to interesting Twitter posts or comments that made me think how to approach this analysis and article, even simple tweets gave me ideas to test in the data… (Thanks NFT peeps BobbyBananasNFT, DiscoverXnft, Rroiie, BoredApe1000, Gee__Gazza, NathanHeadPhoto, and HunterOrrell for creating old and recent discussions on the topic). I’m sure they know more about this if the data makes sense or not. There is more data/table I can share if anyone asks, but keeping this a simple one-image post.

Again, lots of exceptions to the pattern here but it’s cool anyway.

Thanks for reading!

Yev

@Doctoryev