CIP 27

CIP 27, the CNFT Community Royalties Standard, provides a straightforward way to ensure creators get royalties on Cardano NFTs, without requiring complex smart contracts. It's built for ease of use, leveraging metadata alone, but it can be used with smart contracts if needed.

CIP 27 introduces a new metadata tag, "777," dedicated to royalty information. This tag marks a new metadata entry on a minted asset, capturing the royalty percentage and the payment address for royalties. The "rate" field denotes the royalty percentage, ranging from 0.0 to 1.0, and the "addr" field specifies the address where royalty payments are to be sent.

The CIP's process flow starts with the creation of an asset policy, followed by minting a "no-name" token that contains the royalty metadata, and then potentially burning this token to free up the UTxO space, though burning is not mandatory. Thereafter, assets can be minted under this policy, with all markets instructed to recognize the first minted asset under the policy as the authoritative source for royalty information.

One of CIP 27's central tenets is the immutability of royalty terms once they are set, ensuring buyers and owners can foresee the resale value of their assets.

CIP 27 allows artists and creators to be compensated fairly in the ongoing value exchange associated with their work. It underscores the Cardano community’s commitment to fostering a creator-friendly ecosystem where artists are duly rewarded for their contributions.

CIP 27 Key Points:

This standard establishes a clear, metadata-based method for setting and tracking royalties on NFT sales.

• No smart contracts required. By including special metadata tags within the transaction, royalties work without complicated extra code.

• "777" specific tag. When marketplaces see this tag, they know this contains the royalty information.

• The metadata under the "777" tag specifies:

• rate: The royalty percentage (e.g., "0.10" for 10%)

• addr: The address where the royalties should be sent (this could even be a smart contract for complex distribution rules)

• To avoid last-minute changes, only the first asset minted under a policy is considered the official royalty definition.

How to implement CIP 27:

• Start with a fresh token policy for the NFTs that will have royalties.

• Mint a single token with no name, using the new policy, and including the "777" metadata with the royalty details.

• Now, you can create the actual NFTs under this same policy.

• Marketplaces will automatically look at that first token, recognize the "777" tag, and enforce the royalty as the NFT is resold.