2024/02/19 by David Miles Huber, Huber, David, Arran Schlosberg +1
Business, Management and Accounting · Computer Science · Economics, Econometrics and Finance · #91B03 #Accounting Theory and Financial Reporting #Computer Science and Game Theory (cs.GT) #Diverse Specialized Academic Research #FOS: Computer and information sciences #FOS: Economics and business #Mathematics, Computing, and Information Processing #Theoretical Economics (econ.TH)
paper · pdf · doi:10.48550/arxiv.2403.07896
openalex publication_date 2024/02/19 · openalex created_date 2024/03/15 · openalex updated_date 2026/07/28
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.