SIP | Gotta Collect All the Rare

  • 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.

6 Likes

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

2 Likes

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

3 Likes

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?

2 Likes

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.

3 Likes

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

1 Like

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

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.