NFT Royalties on Secondary Sales

Hello everyone,

I’m developing an NFT contract and would like to clarify the intended design and enforcement of creator royalties on secondary sales.

My main question concerns the relationship between NEP-178 approval mechanisms, NFT transfers, and royalty distribution through marketplaces.

When an NFT is minted with royalty recipients defined in its metadata or contract state, how can the original creator ensure that these recipients receive their royalties when the NFT is resold by subsequent owners?

I understand that NEP-178 approval authorizes a designated account, such as a marketplace contract, to transfer an NFT on behalf of its current owner. However, this approval mechanism does not, by itself, appear to enforce royalty payments or prevent transfers that bypass a marketplace.

I would appreciate clarification on the following points:

• Initial sale and approval: Is there any reason to approve the buyer during checkout, or should approval be granted exclusively to the marketplace contract when the current owner lists the NFT for sale?
• Secondary sales and royalty enforcement: Given that the NFT may subsequently be transferred or resold by its new owner, what is the recommended architecture for ensuring that royalty recipients are paid on each secondary sale? Is the intended enforcement entirely dependent on marketplace implementations using mechanisms such as nft_payout?
• Resales outside marketplaces: Is there a protocol-level mechanism that enforces royalties when an NFT is transferred or sold directly between accounts, without going through a marketplace? If not, what limitations should developers consider when designing royalty systems?
• Buyer intent and checkout: Would asking the buyer during checkout whether they intend to resell the NFT have any technical value, or would this be merely informational, with no effect on subsequent royalty enforcement?

My current understanding is that approval should be granted to the marketplace rather than the buyer, and that royalty distribution on secondary sales depends on the third marketplace’s implementation. However, I would like to confirm whether this understanding is correct and whether NEAR provides a recommended approach for addressing sales that bypass marketplaces.

I will attach the dialogue with the NEAR Docs Assistant that led to these questions for additional context.

does make sense to sell a nft and give the buyer account approved simultaneously?

NEAR Docs Assistant
If by “approved” you mean NEP-178 approval, that authorizes an account to transfer the NFT on the owner’s behalf. It’s commonly used to approve a marketplace for a listing, not the buyer. When the sale completes, the NFT can be transferred to the buyer with nft_transfer; the docs don’t specify whether approval and sale should happen simultaneously.

11 minutes ago
how the NFT contract owner will get its royalties on subsequently sales without approve the buyer who is a potential seller consequently?

NEAR Docs Assistant
The creator’s royalty recipients are recorded with the NFT, and should receive their share when it is sold through a marketplace. The marketplace handles that payout; the current owner approves the marketplace to transfer the NFT, not the buyer. The docs don’t say royalties are enforced for sales outside marketplaces.

3 minutes ago
how to discriminate if the buyer have intend to sell the nft futurely?

NEAR Docs Assistant
You can’t determine a buyer’s future intent from the NFT approval mechanism. Approval only authorizes a specified account, such as a marketplace, to transfer the NFT on the current owner’s behalf; it doesn’t indicate whether the buyer plans to resell it.1

2 minutes ago
make sense to ask the buyer during checkout if he has the this intention?

NEAR Docs Assistant
The NEAR docs don’t say whether you should ask buyers about plans to resell. They describe royalties as being paid to listed recipients when the NFT is sold in a marketplace, but don’t present a checkout question as a way to ensure that happens

Thank you for your time and insights.

This was covered at one time in the documentation. It appears to have been removed. The marketplace may or may not call nft_transfer_payout.

It works on the honor system. Consider adding a blacklist or whitelist to the approval mechanism if this concerns you.

isn’t a concern at all, after all, what actually matters won’t be encrypted (which brings up that another question, by the way). The intend is just to take more understanding over the ecossystem

thanks for you reply