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| Main Authors: | , |
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| Format: | Preprint |
| Published: |
2024
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| Subjects: | |
| Online Access: | https://arxiv.org/abs/2403.07896 |
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| _version_ | 1866929273857638400 |
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| author | Huber, David Schlosberg, Arran |
| author_facet | Huber, David Schlosberg, Arran |
| contents | The secondary market for Ethereum non-fungible tokens (NFTs) has resulted in over $1.8bn being paid to creators in the form of a sales tax commonly called creator royalties. This was despite royalty payments being enforced by no more than social contract alone. Predictably, such an incentive structure led to zero-royalty alternatives becoming abundant and payments dwindled. A purely programmatic solution to royalty enforcement is hampered by the prevailing NFT standard, ERC-721, which is ignorant of sale values and royalty enforcement therefore relies on (potentially dishonest) third parties. We thus introduce an incentive-compatible mechanism for which there is a single rationalisable solution, in which royalties are paid in full, while maintaining full ERC-721 compatibility. The mechanism constitutes the core of ERC-7526. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2403_07896 |
| institution | arXiv |
| publishDate | 2024 |
| record_format | arxiv |
| spellingShingle | SACRÉ BLEU: Self-Assessed Creator Royalties Énforced by Balancing Liquidity Estimation & Utility (A formal definition and analysis of Ethereum Request for Comment ERC-7526) Huber, David Schlosberg, Arran Computer Science and Game Theory Theoretical Economics 91B03 The secondary market for Ethereum non-fungible tokens (NFTs) has resulted in over $1.8bn being paid to creators in the form of a sales tax commonly called creator royalties. This was despite royalty payments being enforced by no more than social contract alone. Predictably, such an incentive structure led to zero-royalty alternatives becoming abundant and payments dwindled. A purely programmatic solution to royalty enforcement is hampered by the prevailing NFT standard, ERC-721, which is ignorant of sale values and royalty enforcement therefore relies on (potentially dishonest) third parties. We thus introduce an incentive-compatible mechanism for which there is a single rationalisable solution, in which royalties are paid in full, while maintaining full ERC-721 compatibility. The mechanism constitutes the core of ERC-7526. |
| title | SACRÉ BLEU: Self-Assessed Creator Royalties Énforced by Balancing Liquidity Estimation & Utility (A formal definition and analysis of Ethereum Request for Comment ERC-7526) |
| topic | Computer Science and Game Theory Theoretical Economics 91B03 |
| url | https://arxiv.org/abs/2403.07896 |