Title: We Like the $RARE
- Author: Kyle Olney, Director of Product @ SuperRare Labs
- Status: Passed
- Type: Governance
- Implementer: SuperRare Labs
- Sponsor(s): TBD
- Link to Temperature Check Poll: Discord
- Created Date: 02/04/22
Summary: Waive network fees for platform transactions paid in $RARE
Abstract: With the passage of the Shut Up and Take My $RARE SIP, users would be able to purchase artworks on SuperRare using $RARE as a payment mechanism. This SIP proposes to waive network fees for any transaction paid in $RARE, creating further utility for its continued circulation and use in our ecosystem.
Motivation: As we expect an increasing number of $RARE tokens to be distributed through a variety of token distribution programs in 2022, SuperRare Labs would like to create as much utility for $RARE token holders as possible.
One of the most obvious benefits that can be provided to $RARE holders who transact on SuperRare is to waive the 3% network transaction fee for any purchase executed using $RARE. By waiving these fees, we create an incentive for $RARE to become the primary payment instrument in our marketplace, as well as increase the velocity of tokens in circulation - both in aggregate, and more specifically into the hands of those artists/collectors who are most active on the platform.
Specification: If passed SuperRare Labs will deploy two minor changes necessary to update the marketplace and auction-house smart contracts such that network transaction fees will be voided for payments made in $RARE.
Benefits: Similar to the Shut Up and Take My $RARE SIP, this change benefits the network in multiple ways by i.) increasing utility of the $RARE token, and ii.) promoting further distribution of governance tokens to artists/collectors who are active participants in the network, while boosting token velocity and providing additional reasons to accumulate $RARE.
A further benefit of this program is that it creates an organic “demand” signal in the market to help offset the “supply” signal of increasing token distribution from the DAO treasury - which should help stabilize price discovery.
Drawbacks: The sole drawback to implementing this proposal would be lost revenue that would otherwise accrue to the DAO treasury by continuing to maintain the 3% network transaction fee.
This loss of network fee revenue will require require that collector royalties on qualifying transactions executed in $RARE be paid out utilizing existing assets held by the DAO treasury (either ETH, or potentially $RARE).
Outcomes: Once implemented, $RARE-based transactions on SuperRare will no longer be assessed the 3% network transaction fee.
Further impacts to marketplace health are hard to ascertain at this stage and may justify the inclusion of a sunset provision so the DAO can check-point whether the cost of this program outweighs it’s expected benefits before making this change permanent.