How NFT Marketplaces Work: Fees, Royalties, What You Own and How to Verify a Collection

An NFT marketplace looks like a shop and behaves like a message board with an escrow attached. Understanding the difference explains most of the friction people meet: why fees appear where they do, why the same item shows different prices in different places, why a purchase can be genuine and worthless at once, and why verification is entirely the buyer’s job.

This is a mechanical guide. It names no marketplace as best, because the answer changes with chain, collection, fee structure and what protections you actually need. What follows are the criteria to judge one with.

What a marketplace actually does

A marketplace is mostly an interface plus an indexer plus a settlement contract. The interface displays items, listings and history. The indexer reads the blockchain and organises what it finds into collections, ownership records and sales, which is why a newly minted item can take a few minutes to appear — the token exists on-chain immediately; the marketplace’s view of it lags. The settlement contract is the part that matters financially: it takes a seller’s signed offer and a buyer’s payment and performs the swap atomically, so neither side can take the other’s half of the trade and walk away.

Two consequences follow. Listings are usually off-chain signed messages rather than on-chain commitments, which is why listing is normally free while buying costs gas. And because assets live on the chain rather than in the marketplace, the same item can be listed on several venues at once, with a sale on one not automatically cancelling listings elsewhere — a real way people accidentally sell items far below current value after forgetting an old approval.

Fees: at least four, sometimes five

The headline commission is rarely the whole cost. Budget for the following, and check each one before transacting rather than after.

Network fees. Paid to the blockchain, not the marketplace, and varying with congestion. On busy networks these can dominate the economics of low-value items. They are charged for failed transactions too, because the network did the work regardless.

Marketplace commission. A percentage of sale price. Some venues have run promotional zero-fee periods; treat those as temporary.

Creator royalties. A percentage directed to the original creator, discussed below.

Approval transactions. Before a marketplace contract can move your tokens, you grant it permission. That is its own transaction with its own fee, once per collection per venue in most designs.

Currency conversion and bridging. If you need a wrapped token to bid, or must move funds between chains, each step has a cost and a risk.

Add these together and the round-trip cost of buying then reselling an item can be a meaningful fraction of its price. For inexpensive items it can exceed the price. This is the single most common reason a nominal gain turns into a realised loss.

Royalties, and why they became contested

Royalties were presented as automatic and perpetual. In practice, on most chains, royalty payment is not enforced by the token standard — the transfer function does not check whether a creator was paid. What actually happens is that marketplaces choose to honour a royalty figure the creator publishes, deducting it at settlement. Because that is a policy rather than a protocol rule, venues competing on cost can reduce or drop it, and some have. Creators have responded with mechanisms that restrict which contracts may transfer their tokens, which works but permanently narrows where the item can trade.

For buyers the practical checks are simple: find the royalty rate for the specific collection on the specific venue you are using, confirm whether it is applied automatically or left optional, and include it in your cost of resale. Do not assume the rate is the same across venues, and do not assume a project’s advertised royalty income is contractually guaranteed.

What you actually own

Buying an NFT gets you a token: an entry in a smart contract recording that a particular identifier is controlled by your address. That is the thing that transfers. It is worth being precise about what it does and does not include.

The token is not the file. Most tokens store a metadata URI, and the metadata in turn points at the image, video or model. If either pointer resolves to a conventional web server, whoever controls that server controls what your item shows — and can remove it. Content-addressed storage is stronger, because the address derives from the content, so the file cannot be swapped silently; it still does not mean permanently hosted, since someone must keep a copy available. A minority of projects store the asset fully on-chain. Read the token URI directly rather than trusting the marketplace’s rendering.

The token is not the copyright. Rights transfer only if the creator says so, in a licence, in writing. Terms range from full commercial rights, through personal-use-only, to nothing stated at all — and “nothing stated” means the default position of copyright law in the relevant jurisdiction, which typically leaves the creator holding everything. Read the licence before assuming you may print, merchandise or build on the artwork.

The token is not a promise. Roadmaps, future utility, access to things not yet built: none of that is encoded in the token. It exists only as long as a team chooses to deliver it.

Verifying a collection is genuine

Copying an NFT collection is trivial. The images can be downloaded and re-minted under a new contract in minutes, with the same name, the same artwork and a convincing-looking listing page. The token that results is authentic — it is a real token — but it is a real token from the wrong contract. Verification therefore reduces to one question: is this the contract address the project actually uses?

Work through this in order. Start from a source the project controls — its own website, or a link posted by an account whose history you can inspect — and take the contract address from there, never from a search result, an advert or a direct message. Then compare that address character by character, including the last few characters, with the address on the marketplace item page. Verification badges are a weak signal: awarded by a company, applied inconsistently, sometimes granted to collections that later fail.

Then check the contract’s history on a block explorer: when it was deployed, how many holders it has, whether transfers began at a plausible time. A collection claiming a long history from a contract deployed last week is answering the question for you.

Finally, sanity-check the listing. Near-identical duplicate names, a supply that does not match the project’s own documentation, an item priced far below every comparable listing, or a mint page reached through an unsolicited link are all standard patterns. So is the request to sign a message you cannot read: signatures can authorise transfers, not just logins, and a prompt you do not understand should be rejected. And the rule that admits no exception anywhere in this space — no legitimate marketplace, wallet or project support channel will ever ask for your recovery phrase. Anyone asking is stealing.

Choosing a venue

Rather than ranking marketplaces, evaluate them: which chains and standards are supported; total fee structure including whether royalties are enforced; how approvals are scoped and how easily they can be revoked; whether the settlement contract has been audited and whether the reports are public; how aggregated listings from other venues are labelled; and what happens when a trade goes wrong, which for most venues is nothing, because settlement is final.

That last point deserves emphasis. There is no chargeback. Diligence has to happen before the transaction, because after it there is no mechanism to appeal to. Our glossary covers the terminology used above, and the broader NFTs and Web3 section takes the surrounding topics further.