SIP | Gotta Collect All the Rare

Governance Discussion
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  • Author: Kyle Olney, Director of Product @ SuperRare Labs
  • Status: Temperature Check
  • Type: Governance
  • Implementer: SuperRare Labs
  • Sponsor(s): TBD
  • Link to Temperature Check Poll: Discord
  • Created Date: 04/25/22

Summary: Update collector royalties to be paid in $RARE

Abstract: The collector royalty program currently makes payouts in ETH. This proposal would update the program rules to begin paying all collector royalties in $RARE.

Motivation: One of the best ways to reward active participants in SuperRare Network on an ongoing basis and ensure continued distribution of $RARE into an ever greater number of hands, while growing the potential size of the collector pool, is to begin making collector royalty payments in $RARE.

This change would both i.) create further utility for collector participation + growth on SuperRare, and ii.) facilitate the further distribution of governance tokens into the hands of active, and increasingly diversified stakeholders compared to recipients of the genesis airdrop.

Specification: At the direction of the Governance Council, SuperRare Labs will update the Collector Royalties program such that royalty payouts are made exclusively in $RARE

Such payments will be made at the beginning of the month using $RARE from either i.) the community treasury, OR ii.) using on-balance sheet reserves to purchase $RARE in the open-market - based on which method is deemed to be optimal given prevailing market conditions at the time of the monthly disbursement by SuperRare Labs (e.g. a low market price for $RARE implies a positive arbitrage opportunity and prudent treasury management with open market purchases relative to a high $RARE price)

Benefits: By making collector royalty payments in $RARE, we further improve distribution of our governance token into the hands of active participants & core stakeholders. This proposal introduces additional flexibility in how collector royalties will be paid, allowing the network to more efficiently optimize its treasury resources based on highly dynamic and rapidly evolving market conditions.

Drawbacks: The primary drawback of this program is that it deliberately seeks to increase the distribution of $RARE at the expense of ETH, which is (in theory) a treasury-neutral payment method. While payment of collector royalties in $RARE could provide better cost efficiency to the network on a fiat-denominated perspective, judgements around the relative value of the $RARE, ETH and their USD pegs are ultimately subjective and require trust in the analytical faculties of SuperRare Labs and the Governance Council.

Outcomes: Once adopted SuperRare Labs will, at the direction of the Governance Council, begin making all collector royalty payments in $RARE as described subject to independent assessment of prevailing market conditions.

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Yep, more utility and use cases for $RARE is cool, got my vote!

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Got my vote! Bullish on $RARE long term. Why not be paid in it for royalties?

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its a good idea and great for experimentation as collector royalties are an isolated system. any thoughts on how the amount will be calculated? is it the ETH <> RARE pricing at the time of each sale or at the end of the month?

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I actually think this is a great idea. The only thing I’d maybe suggest is to do a matching program at the beginning to double the RARE received by the collector for their royalties.

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I think pooling the royalty fees and then swapping them for RARE once a month could be an interesting mechanic.

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Agreed with @chikai that this may be better piloted out with $RARE bonuses on top of regular ETH royalties.

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I agree that this is an interesting mechanic. But I am always hesitant to apply anything to the $RARE that makes it more than a governance token. I don’t know how and if this applies a monetary value to $RARE, and since I don’t understand it fully, my gut is against it. But not strongly, so will probably abstain from a decision for now.

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Working on modernizing the backend of the CR program right now. So I wanted to raise a few thoughts.

With Buy-Now-With-Rare enabled on the marketplace. I am including a new column in CR for the calculation of any sales that occur in $RARE. For now just keeping them as a separate credit line. We will then have some choices about if we should pay those out in $RARE (since the fee was collected in $RARE) or convert to $ETH. One tradeoff, I do think we will need a separate claim contract for each currency we want to allow claims in :grimacing:

And so do we want this decision to map onto other currencies as they get added to the marketplace? It may become a little silly to have to submit many claim TXs. CR Claims are often small, and not worth paying the gas to claim until they stack up. By splitting that up among multiple currencies, that becomes harder.

If operationally it just makes more sense to pay out royalties in a single denomination. Should it be $ETH or $RARE? Given maybe the DAOs interest in more circulating $RARE- I think this is just extra points in the direction of flipping the whole program to be $RARE based.

In any case, we would still need to resolve the question of how to perform a conversion, and set the rates.

My opinion there is that it should be the spot price at time of sale. This is maybe a little extra work, but not much- as we’ve begun aggregating block by block price conversions anyway. And we’re on-track to having a new exchange-rates system internally :crossed_fingers:

  • Downside here is that it’s fairly costly to do a matching program with the RARE on top. Roughly 100 $ETH over the past year was earned in CR, so maybe something on the order of 1 million $RARE distributed in 12 months of this amended program.
  • This is a good point. I think there’s a framing where this is distributing governance points to users who are active on the network. But also I think there are better ways than CR of doing it if that’s a priority.

Another thing that has come up in discussion is the ability for smart contracts to be awarded a CR. Contracts that would likely not have a built in method for even claiming that royalty. Which means we’d effectively be burning that royalty amount for no gain. My proposal here is setting a generous timeframe ( like 18 or 24 months? ) to claim your credit. Afterwards the DAO treasury would be eligible to reclaim it.