LIP-3: Set royalties on Open Sea to help Community Marketplaces

Community & Ecosystem Proposals
#21

Makes sense re: LIP-2. Will consider bags to be LIP-3.

#22

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.

1 Like
#23

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

  1. 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.

  2. 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

  1. Any form of fundraising and distribution could lead to centralization of decision making, and debates over what is “official” and what should be funded.

  2. 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:

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).

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:

  1. Dom logs into Open Sea and configures the royalties amount and destination
  2. Dom follows the instructions here to set the same royalties on the Rarible registry

Disclaimers

  1. 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.

  2. Although forked from audited and battle-tested contracts with a minimal diff, the treasury contracts are still new and untested.

  3. 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%
#24

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. :frowning:

1 Like
#25

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!

#26

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%.

#27

Snapshot is live:

https://snapshot.org/#/loot-dao.eth/proposal/Qme6rEn4FupXKLBM89cJeL4U8WkEGChNuVyziXfbdHFq3t

2 Likes
#28

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.

#29

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.

#30

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.

#31

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.

#32

Status

The proposal has PASSED, with 58.33% voting for a royalty fee of 5%.

Snapshot results here.

2 Likes
#33

Per the vote, royalties have been set to 5% on OpenSea and directed into the decentralized treasury controlled by Loot owners at 0x8cfdf9e9f7ea8c0871025318407a6f1fbc5d5a18 (Etherscan)

As noted by @Peter_Watts, a UI is available at https://www.royaltydao.com/

2 Likes
#34

The first set of royalties look like they have been transferred to Royalty DAO — there is about 46 ETH in there now.

1 Like