Royalty-Friendly Digital Asset Exchanges on Blockchains

Abstract

The distribution of royalties associated with the exchange of digital assets, especially Non-Fungible Tokens (NFTs), is now more than ever a strong point of contention. Between conceptual disagreements and technical limitations, actors have implemented a variety of solutions tailored to their needs. In the process, creators and buyers have lost the possibility of transparent, trusted, and interoperable exchanges of said assets, often having to compromise to connect with the rest of the community. This study deals with the automatic distribution of royalty payments. We first investigate the current day limitations, and formally state their underlying requirements, before advancing a royalty-friendly NFT marketplace-agnostic trading framework. The advanced solution, referred to as the RM-TLSC– Royalty Management Token-Level Smart Contract, establishes synergies between the token and Smart Contract paradigms, thus ensuring royalties are managed throughout the life cycle of the asset. A comprehensive, open-source software implementation is provided for the Ethereum blockchain, while the generality of the approach is cross-checked by an open-source proof of concept for the Tezos blockchain. The effectiveness of the results is illustrated through a case-study related to ISO 21000–23 Smart Contracts for Media standard.

Keywords

• Backward compatibility
• blockchain
• Ethereum
• interoperability
• intellectual property rights
• marketplace