CIP 102

CIP 102, Royalty Datum Metadata, introduces a new standard to enhance royalty handling on Cardano, particularly for CIP 68 tokens.

This standard proposes a method to ensure trustless on-chain royalty validation by utilizing the metadata patterns established in CIP 68. By addressing some of the limitations of the previous royalty management system under CIP 27, CIP 102 aims to provide greater flexibility, security, and efficiency for NFT creators and collectors. CIP 102 allows for the storage of royalty information (who gets paid, the percentage, etc.) with the ability to customize royalty distributions among multiple addresses. The new standard is designed to support multiple royalty policies within a single collection, applicable at the level of individual tokens. It’s also designed to be backward compatible with existing standards and minimizes storage requirements by utilizing efficient data structures.

Example Use Case:

Consider a digital art project where artists collaborate on collections and require a flexible royalty distribution system. Using CIP 102, they can specify unique royalty rates and payout addresses for each piece, which are then embedded in the Royalty NFTs. When a piece is sold, the Cardano blockchain automatically handles the royalty split, ensuring each artist receives their share according to the predefined terms.

An overview of how it works in practice:

• The project mints a special single NFT with royalty details locked within its datum.

• Each regular NFT is minted (or updated) to include a "royalty flag" in its metadata, pointing to the Royalty NFT.

• When an NFT is sold, the marketplace's smart contract looks for the royalty flag, finds the Royalty NFT, and reads the rules stored inside.

• The smart contract calculates and distributes royalty payments as programmed within the Royalty NFT's data.

CIP 102 Key Points:

• Royalty info is on the blockchain and can't be easily changed without permission.

• Supports complex royalty distribution schemes, including splitting royalties among multiple addresses, which caters to collaborative projects and partnerships.

• Minimizes the need for creators and marketplaces to manually manage or adjust royalties, as these details are embedded within the NFTs themselves and handled by the protocol.

• If they opt into the standard, marketplaces and wallets can easily find the Royalty NFT, decode its information, and process royalties automatically.

• Builds upon the existing CIP-68 standard to keep it familiar to NFT projects.