A look at Art Blocks, an NFT marketplace for generative art that enforces 5% royalty fees and whose sales fell from $587M in August 2021 to $6.5M in April 2023
Context & Ripple Effects
Art Blocks was one of the breakout venues of the 2021 NFT boom, when generative-art drops drove monthly volumes near $600M. The downturn since has been broad and well-documented: weekly NFT sales fell more than 70% through mid-2022 per The Block's tracking, and the royalty economy built on top of that volume has collapsed even faster, with Nansen measuring a 98% drop in creator royalty payouts between January 2022 and July 2023.
What makes Art Blocks distinctive in this arc is that it still enforces a 5% royalty fee on trades — a policy most large marketplaces abandoned under competitive pressure, which is precisely why payouts hit a two-year low in June 2023. Its sales falling to $6.5M in April 2023 is therefore not just a demand story but a test of whether enforced-royalty curation can survive at a fraction of its former scale.
First-order effects
- Art Blocks' own take — 5% of every secondary sale — shrinks roughly in line with its volume, so the enforced-fee policy now yields a fraction of what it did at the August 2021 peak.
- Generative artists who minted on Art Blocks specifically for its enforced royalties see their residual income fall with the platform's sales, even though the policy itself hasn't changed.
Second-order effects
- Curated marketplaces competing for creators must now choose between Art Blocks' enforced-fee model and the royalty-optional approach that pulled volume away from incumbents like OpenSea, which had earlier touted $1.1B in cumulative 2022 creator earnings.
- As long as buyers can trade royalty-free elsewhere, enforced fees put Art Blocks at a price disadvantage on identical assets, pressuring it to justify the 5% through curation and provenance rather than network effects.
Third-order effects
- If enforced-royalty venues settle into niche volumes while optional platforms capture the bulk of trading, ongoing creator compensation becomes a feature of curated art markets rather than a default of NFT infrastructure — a structural reversal of the 2021-22 model that funded thousands of independent artists.
- The divergence sets up a longer-term sorting of NFT marketplaces into commodity trading layers competing on fees and premium venues competing on guaranteed artist economics, with collectors effectively deciding which model survives.
The trend: Enforced creator royalties are collapsing from an industry default into a differentiator for small curated NFT venues, as marketplace fee competition outpaces the demand decline itself.