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Misalignment of incentives across artists and speculators.
Artists are rewarded for future appreciation of their work but the speculators who bet on artists have no reward. Speculators assume financial risk and contribute to eventual price discovery.
There is a need to align the incentives.
Recursive royalties are royalties that are paid not only to the original creator or owner of an NFT, but also to subsequent owners who have received the NFT through a transfer or resale. This can create a complex network of royalty payments that can be difficult to manage manually.
Tools for marketplaces to support recursive royalties. They may enforce royalties on already minted NFTs.
The upside from sales should be distributed across everyone who contributed to price discovery.
The tool should identify the transactions in which an NFT is transferred or sold, and calculate the appropriate royalty amount for each party involved. The tool can also give an estimate of royalties for the parties involved based on various scenarios.
The tool could be integrated into an NFT marketplace or used as a standalone application.
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