> For the complete documentation index, see [llms.txt](https://ipusd.gitbook.io/ipusd-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://ipusd.gitbook.io/ipusd-docs/general/why-royalties.md).

# Why royalties

Royalties are recurring cash flows linked to the use, revenue, or performance of intellectual property and other contracted assets.

They can come from areas such as music, life sciences, media, natural resources, and other industries.

Royalty strategies have historically been used mainly in private-market and institutional portfolios. IP Vault brings a tokenized fund position onchain and makes it accessible through the same product flow as ipUSD.

The underlying strategy combines royalty investments across multiple sectors and deal types.

### Revenue-linked cash flows

Royalty payments can be linked to revenue, usage, production, or other underlying economic activity.

This can give royalty investments return drivers that differ from traditional fixed-income instruments.

### Diversification

The broader royalties strategy spans 53 investments and more than 100,000 royalty streams across five sectors and several royalty structures. This diversified portfolio provides exposure to a range of royalty sources. Music is the largest part of the strategy.

### Different market drivers

Royalty investments can behave differently from public equities and traditional credit because their cash flows are tied to the underlying royalty arrangements rather than only to public-market prices.

The current strategy materials also report relatively low historical volatility for the referenced performance series.

These characteristics describe the broader underlying strategy and its historical portfolio.