Original: "Most Profitable NFT Projects by Royalty Earnings on Ethereum", Author Nicholas Boey, translated by Odaily Jessica.
This article examines the profitability of top NFT projects on Ethereum based on royalty earnings from launch to July 12, 2023. The analysis only considers royalty income and does not include any other external sources of revenue. Licensing fees are converted to USD based on CoinGecko price data at the time of sale. The study specifically focuses on Ethereum-based NFT collections and yields the following findings:
Most profitable NFT projects on Ethereum
Yuga Labs (BAYC) has the highest profit, bringing in $59.1 million in royalties from April 23, 2021 to July 12, 2023, followed by Otherside with $53.3 million (royalties). Interestingly, 81.2% of the royalties earned by Otherdeed were generated in the same month of May 2022, indicating significant hype surrounding the release of the series.
MAYC is the third highest-earning series, with cumulative royalties of $43.7 million. These three series account for a large portion, totaling 87.3%, of Yuga Labs' overall royalty income.
The second highest-earning project is Nike's fashion platform RTFKT, which has accumulated $83.7 million in royalties from March 3, 2021 to July 12, 2023. The highest-earning series for RTFKT is CloneX, collaborated with renowned artist Murakami, which has generated $37.9 million in royalties. Next are CloneX Mintvial and MNLTH, accumulating $13.9 million and $16.4 million respectively. Despite releasing over 20 series, these three series make up the majority, accounting for 81.5%, of RTFKT's royalty income.
The Azuki development team Chiru Labs ranks third in terms of franchise fee revenue, with a total revenue of 59.2 million dollars from January 12, 2022, to July 12, 2023. Most of Chiru Labs' franchise fee revenue can be attributed to its flagship series Azuki, which accounts for 75.5% of the company's total revenue. Beanz follows closely, earning royalties of 12.4 million dollars. Their latest series, Azuki Elementals, earned 1.5 million dollars in royalties just two weeks after its launch on June 27, 2023.
Top ten Ethereum NFTs in terms of royalty earnings by Footprint
Top 10 highest-earning NFT projects on Ethereum (by Ethereum royalty earnings)
Royalties earned from NFTs on Ethereum each year
2022 is the year with the highest profits for NFT projects on Ethereum, with royalties totaling $330.8 million, accounting for 69.6% of the total royalties earned from March 2021 to July 2023. The highest earners are Yuga Labs and RTFKT, with revenues of $115 million and $57 million respectively. Chiru Labs, an eye-catching newcomer, ranks third among the top-earning NFT projects, earning $53.8 million in licensing fees. Murakami, launched in 2022, also ranks among the top 10 projects in terms of licensing fee revenue.
Meanwhile, sales in 2021 (March 2021 to December 2021) made a significant contribution, accounting for 23.2% of the total licensing fees during the same period, amounting to $110.4 million. Yuga Labs ranked first with $41.7 million, followed closely by RTFKT with $24.7 million, and Parallel with $18.2 million.
However, despite the record-breaking licensing fees of 10 projects in the top-earning NFT projects of 2022, Parallel Alpha experienced a significant decline, earning only $4.8 million in 2022, a decrease of 73.5% compared to its earnings in 2021.
Looking at the sales from January 2023 to July 2023, they only accounted for 7.2% of the total licensing fees during the same period, amounting to $34 million. Yuga Labs maintained its leading position with earnings of $22.1 million, while Chiru Labs surpassed RTFKT, ranking second with $5.4 million. RTFKT followed closely with royalties of $2.1 million.
From this perspective, the top 10 highest-earning NFT projects would need 9.7 times the current licensing fees to reach the earnings of 2022. These figures mark a significant shift in the NFT market, as collectors and traders choose to completely avoid paying royalties, while The overall trading volume decreased from 2022 to 2023.
When is the most profitable time for NFT projects on Ethereum?
The top 10 NFT projects ranked by royalty income on Ethereum have been on the rise in 2021 and 2022, reaching their peak in April and May 2022. The profitability of NFT projects has surged, with the total assets of the top 10 projects reaching $175.5 million in 2022. In contrast, the total investment in these projects for the remaining months of 2022 was $155.3 million.
Yuga Labs and Proof Collective stand out in these projects, as they have launched new collections during this period. Yuga Labs' Otherdeed series stands out, generating royalties of $43.3 million, accounting for 48.3% of the total royalties earned by the top 10 projects in May 2022. Similarly, Proof Collective's Moonbirds series generated royalties of $21.2 million, accounting for 24.7% of the total royalties earned by the top 10 projects in April 2022.
This trend of earning substantial royalties upon release is common in NFT projects. This can be attributed to the surge in trading volume when a project is first launched. Another notable example is Chiru Lab's Azuki series, which debuted in January 2022 and generated royalties of $10.9 million in that month alone. This amount accounted for 24.4% of Azuki's collection revenue in January.
In June 2022, royalty fees for NFT projects plummeted by 88.1%, dropping from the peak of $89.7 million in May 2022 to $10.7 million in June 2022. This reflects the market sentiment following the decline of Terra in May 2022. Terra sparked concerns among investors about potential contagion effects in the NFT space, leading them to become more cautious and reluctant to participate in highly speculative digital assets.
In July 2022, the launch of the decentralized NFT exchange Sudoswap sparked a discussion within the NFT community about the necessity of creator royalties. Subsequently, some NFT marketplaces started adopting optional royalties to attract users to their platforms. OpenSea responded in November 2022 by introducing a tool for on-chain enforcement of creator fees. However, their efforts faced setbacks when vulnerabilities were discovered by Blur in January 2023, prompting OpenSea to revert to optional royalties without on-chain enforcement in February 2023.
Over time, the introduction of the removal of creator royalties resulted in a significant decline in royalty income for top NFT projects. Overall, these projects earned royalties from licensing fees.
The total amount of licensing fees dropped sharply from $303.5 million in the first quarter of 2022 to $27.3 million in the second quarter of 2022, a decrease of 91.0%.
