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Tokens, Fees, and Royalties

What is NFT

NFT means Non-Fungible Token. “Non-fungible” more or less means that it’s unique and can’t be replaced with something else. For example, a bitcoin is fungible — trade one for another bitcoin, and you’ll have exactly the same thing.

NFTs on the other hand are one-of-a-kind tokens that represent a unique good or asset which are non-fungible. If you traded it for a different NFT, you’d have something completely different.

NFTs can really be anything digital (such as drawings, music, videos, etc.), but a lot of the current excitement is around using the tech to sell digital art.

Tokens

Rarible Multichain Protocol various token types applicable for certain blockchain:

A full list of supported token types could be found on Features page.

All these contracts support these features:

  • lazy mint
  • Rarible on-chain royalties
  • multiple creators
  • upgradeable
  • supports operators (who can transfer tokens on behalf of users) for the whole smart contract

User-owned contracts use beacon proxies, and these contracts can be updated by Rarible DAO. Rarible common contracts can be upgraded too.

Fees

Rarible Multichain Protocol supports the following types of fees that are applicable to token operations:

  • Protocol fees — are charged on both sides of the transaction
  • Origin fees — set for each order. It may differ for two orders
  • Royalties — the author of the work will receive a part of each sale

Here is an example, how do we calculate fees for Ethereum for each side of the transaction:

Protocol architecture

  • If there is ETH on any side of the transaction, it is used
  • If there is no ETH, we check if there is an ERC-20 and use it
  • If there is no ERC-20, check if there is an ERC-1155 and use it
  • Otherwise, no fee will be charged. (e.g., if two ERC-721 are involved in the transaction)

When computing the total amount of the asset:

  • The protocol fee is added on top of the filled amount
  • The fee for sending the buyer's order is also added on top

If the buyer uses the ERC-20 token for payment, he must approve the calculated number of tokens.

If the buyer uses ETH, they must send the calculated amount to ETH along with the transaction.

Royalties

Rarible Multichain Protocol supports two types of royalties:

  • RoyaltiesV1 — defines an interface to query royalties from a contract. This is implemented on the standard Rarible token contracts.
  • RoyaltiesV2 — the exchange contract interacts with the Rarible royalties implementation indirectly through a Royalty Registry. The registry checks if the NFT contract supports the expected interface, and if so, queries for the Rarible royalties array.
  • EIP-2981 — allows contracts, such as NFTs that support ERC-721 and ERC-1155 interfaces, to signal a royalty amount to be paid to the NFT creator or rights holder every time the NFT is sold or re-sold. This is intended for NFT marketplaces that want to support the ongoing funding of artists and other NFT creators.

For RoyaltiesV1, contract exposes getRoyalties method, which expects an ID as input (usually tokenId) and returns an array of accounts & basis points.

RoyaltiesV2 allows for Rarible to support different royalty standards for different collections.

Rarible Multichain Protocol Supports on-chain royalties. These are handled in the ExchangeV1 contract by the royalties array, which is needed to execute the mint function.

This tuple is made up of two variables, fees.recipient and fees.value:

  • fees.recipient — refers to either the item owner (by default) or an address where the royalties will be received.
  • fees.value — the royalties percentage. By default, this value is 1000 on Rarible, which is a 10% royalties fee. This is done using basis points. More information regarding basis point can be found here.