I don’t think we should do this (especially since the keys are about to be burned) but am taking your point to an extreme and imagining a scenario where the OpenSea royalty is 90%. 
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Ha, yes 90% is a little extreme…but it does demonstrate the point. The higher the Open Sea fee is, the more likely it forces speculators to change their behavior and seek out community marketplaces as alternatives. It also collects some royalties in the meantime, but that’s just a bonus.
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Should the proposal specify a destination for the royalties (multi-sig or compound-style treasury), or leave it open for a separate vote?
OK, I’ve put together a draft which anyone can comment on here:
On further thought, multi-sig does not really make sense for this, given that it can’t be changed later. Needs to go straight to on-chain. @dom are you planning to setup a different nouns-style treasury using the multi-sig, or should we use the one setup for Loot Exchange? Btw, can easily change the URL to make it more neutral.
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If you’re asking about the owner bags (assuming that passes) I think it’d be better to use a different treasury. It’s a good way to kick off the idea of “a DAO”, not “the DAO”, and it also allows some flexibility around quorum, etc. requirements that might work well for the bags but not as well for a perpetual ETH treasury. Would love to fork what’s already there, though.
For this proposal, I think neutralizing the URL or just using what you prefer makes sense. It’s your proposal!
Agreed. Thanks for moving this forward.
Great! I think we should be explicit in the proposal that the destination for the royalties already exists (as the compound-style treasury referenced here and add any disclaimers necessary (e.g., launched by the Loot Exchange team but not controlled by the team, etc). This should help reduce any ambiguity/confusion when voting.
This would also be a non-binary snapshot vote. How are we proposing to tally the results?
Snapshot has an option of Ranked Choice Voting, which I think should handle the tallying quite nicely.
Sounds good. Ranked choice deviates from the framework in LIP-1, but there are benefits here to staying flexible and moving otherwise strong proposals through the process.
@Peter_Watts let’s move this forward to snapshot. Can you please drop the contents of your proposal draft into a comment here (which I will lock for posterity). Also, if you could include a copy of your proposal, or a direct link back to the comment, in the snapshot itself that would be best.
In the meantime, I will rename the post title to include “LIP-2” (cc: @dom, tagging you here because I think there was some uncertainty around which would be LIP-2/3 between the royalties/remaining bags proposals). I’ll also edit the initial post in this thread to include a direct link to the snapshot vote when that is ready.
Thanks all.
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Makes sense re: LIP-2. Will consider bags to be LIP-3.
Hi @Hierux can you confirm which LIP number I should use on Snapshot? The Snapshot for 200 bags still says LIP-2, so I just want to makee sure before creating it.
I will post the final proposal below, which you can lock. I made it generalized to all marketplaces, rather than Open Sea specific, after some feedback.
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LIP-3: Set marketplace royalty before burning the keys
Summary
In accordance with LIP-0, the keys which control the Loot contract will soon be burned. These keys control the ability to set royalties. This is a proposal to set a royalty before the keys are burned, and direct the funds to an on-chain treasury controlled by Loot owners.
If approved, the same royalty will be set across all marketplaces:
- Open Sea
- Rarible
- Loot Exchange
Future marketplaces can leverage Rarible’s on-chain registry to detect and apply royalties.
Arguments For
-
Setting a royalty on popular marketplaces like Open Sea would create an immediate inflow of funds to a treasury, enabling experimentation in community funding, without needing to wait for community marketplaces to grow market share.
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Setting a royalty on Open Sea evens the playing field with community marketplaces. With no royalty, these marketplaces may struggle to attract sellers, and will be forced to undercut Open Sea’s fee, limiting the total amount of royalties that can be raised.
Arguments Against
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Any form of fundraising and distribution could lead to centralization of decision making, and debates over what is “official” and what should be funded.
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Community may become reliant on Open Sea, rather than being forced to create alternative fundraising mechanisms.
Related Discussions
For more in-depth discussion of the pros and cons, see the threads below:
- LIP-0: Burn the keys to the Loot contract
- Proposal: Set royalties on Open Sea to help Community Marketplaces
- Proposal to Fund Development and Confer Benefits by Charging Royalty Fee
Comparisons
Here are some examples of royalties collected by other popular collections:
- Meebits = 0%
- Bored Ape Yacht Club = 2.5%
- 0N1 Force = 5%
- Art Blocks = 7.5%
- XCOPY = 10%
Specification
The proposal is to send royalties to the same community-governed treasury that was created for the Loot Exchange. It is a Compound-style on-chain voting system (forked from NounsDAO) that uses Loot balances for governance (one vote per bag).
- Background post on the Treasury
- Voting Dashboard
- Wallet Address (0x8cFDF9E9f7EA8c0871025318407A6f1Fbc5d5a18)
- Github
The idea is for it to be a “Royalty DAO”, with the narrow focus of collecting and allocating royalties from multiple marketplaces. Although it was deployed by the Loot Exchange team, they do not control it. It is controlled by Loot owners.
If the community chooses an amount above 0, the following steps will be taken:
- Dom logs into Open Sea and configures the royalties amount and destination
- Dom follows the instructions here to set the same royalties on the Rarible registry
Disclaimers
-
Once the keys are burned, the royalties cannot be changed (it’s likely Open Sea could change them if petitioned by the community, but the mechanism is unknown). So it’s important to pick a number that makes sense long term.
-
Although forked from audited and battle-tested contracts with a minimal diff, the treasury contracts are still new and untested.
-
Open Sea charges a platform fee of 2.5%. Any royalties would be on top of this fee (so a 5% royalty will result in a 7.5% total fee).
Poll
What should royalties be?
- 0%
- 2.5%
- 5%
- 7.5%
- 10%
My bad! In my head it’s been LIP-2 for so long that I must have messed up when I was adding it to Snapshot. The issue is that Snapshot is immutable so I can’t edit it. 
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Yeah, no worries. Dom’s proposal ended up getting across the finish line first anyway. I’ve renamed the posts appropriately. Let’s move this forward as LIP-3 @Peter_Watts.
Thanks for confirming!
I hear what you’re saying. I’m just not sure I agree that innovation and the drive to move away from Opensea is elevated when the “800-pound gorilla” starts paying you 10%.
Snapshot is live:
https://snapshot.org/#/loot-dao.eth/proposal/Qme6rEn4FupXKLBM89cJeL4U8WkEGChNuVyziXfbdHFq3t
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Why not use Agld to vote? loot is owned by more than 1,000 people, and the number of participants is estimated to be several hundred! And there are 150,000 people owned by Agld. If you want loot to develop, you need more people to participate, not just more than 1,000 people.
This particular proposal is very specific to Loot tokens. But it’s a good idea to enable broader participation in general Loot governance. Perhaps you could have a weighted system, that allows voting from many different derivative projects, including $AGLD and More Loot. But someone needs to do the work of suggesting sensible weights and creating a proposal for it to get community support.
Why doesn’t the new Loot Exchange use Agld to buy loot?The new exchange (Loot Exchange).For example, the payment rate with Agld can be lowered by 20%-40%, which is also for the development of loot.
I believe that the expandation of Loot programe can not just round the loot bags only, It is a good method to incorprate the AGLD or More loot players to join in the construction of this universe. Please do think about it.
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