NFT Fees - The cost of buying, selling and minting NFTs
There are a number of fees associated with buying, selling and minting NFTs that can be split into three categories:
- Fees paid to miners / the network (a.k.a gas fees)
- Platform or exchange fees
- Creator royalties
Fees paid to miners / the network (a.k.a gas fees)
Otherwise known as gas fees, miners are compensated for validating transactions on the blockchain. Most NTFs are traded on the Ethereum blockchain. Prices will vary significantly with demand on the network. Typically bullish periods in the NFT market are accompanied by higher levels of market demand and therefore higher gas prices.
Gas is named because the network requires 'gas' to run, in the same way a car does.
The amount of gas required for each transaction depends on the complexity of the transaction. Bitinfocharts shows the average price per NFT transaction in USDs.
Network capacity, and therefore gas, is also required when minting NFTs. Minting refers to the act of tokenizing artwork on a blockchain. More specifically, it is the act of publishing a unique instance of your ERC-721 token on the blockchain. It can now be traded and ownership validated.
Platform or Exchange Fees
NFTs are typically sold on platforms such as OpenSea. Such platforms charge a commission on all sales (OpenSea currently charges 2.5% to the seller). Other platforms such as Rareible also charge the buyer a fee in addition to the agreed price with the seller. On many platforms the 'primary sale', or first sale of the NFT incurs a higher rate of commission than subsequent sales.
Cryptocurrency, typically Etherium, is required to pay for NFTs. Much like when buying any currency, exchanges will make a slight margin when selling the currency to you, and may in some cases also charge a service fee. Fees will vary based upon payment method, ordersize, and market conditions such as volatility levels.
NFT royalties are automatic payouts to the author as a percentage of sale value made on secondary sales of the asset. These terms are built into the smart contract and come out of the total value the seller receives.
Currently Royalties are only platform specific so as soon as the NFT that was created moves off its the platform it was first listed on, royalties are no longer collected.
An Ethereum Improvement Proposal (EIP-2981) is currently being developed to solve this.