Nice write up, thanks for sharing your thoughts. I agree that dividend functionality is useful and even required for creator coins.
CC dividends and "M&A" has been a topic of interest for sometime. Happy to have a call on Vibehut.io or find a way to discuss this further and please see my past writing about subscriptions here: https://github.com/deso-protocol/dips/discussions/204
I'm a fan of Yes, and How.. so I'll further my thoughts here for anyone interested.
CCs do a lot and still there is a feeling and evidence that the proverbial Tetris pieces don't fit perfectly.
At the moment the main attributes of a CC are Founder Reward, Bonding Curve (supply -> price), coin holders, the ability to buy, sell and trade and a robust API to programmatically make it all flow.
They are recognized a reputation token which in practice seems to be hard to measure. It's been tried to use CCs as access to events and use Diamonds to payout holders.
It's been exciting.
Here is another take that is not too far of a stretch form where we are.
Since CCs are so flexible, a huge question is who and what are CCs for?
CCs are for anyone that wants to provide value on the internet and let others gain along side them as they exchange their value for currency or tokens.
For adoption of CCs, they need to fit into how we operate. Here are some reasons why the CCs do not fit.
- CCs are used for many different things
- Valuation is impossible to determine
- "Investment" in CCs and creator transactions are conflated
** CCs Represent Different Things.
A CC could be for companies, could be for a social account, could be for a charity. Each fundamentally has a different way it operates.
Equities are special because they have a Single Responsibility. They provide ownership of a business. If each CC represents something different people have to learn what each CC represents. Instead, CCs need to boil down to one idea.
** Valuation Is Impossible to Determine
There is no steady stream of income from CCs, the lack of "dividends" makes it borderline impossible to value the CCs. This is a fundamental flaw and opportunity.
An expected payout, whether it's from a steady cash flow or a one-off event is fundamental to the valuation of something.
The bonding curve and order book offers a way to buy/sell coins which set the CC price, they does not set the value. Value is set from the discounting of future cash flows.
"Rugpulls" are a valuation problem, not a CC problem. If the value was known a Rugpull would be a celebrated opportunity.
** Investment and Transactions are Conflated
Getting access to content because you own a CC is non-standard and does not work because the price of the coin is volatile.
The standard model is an individual transaction or subscription to purchase or get access to content. Investment to own a piece of the business.
!! Proposal
Taking these into consideration:
I propose that CCs should instead be a considered a "Claim on Revenue" coin. This would provide a standard way to claim a % of the revenue generated by the originator of the CC.
This will keep up with their flexible nature and provide a standard way to value (discounted cash flow model) and acquire them.
How:
- Each account would be able to set a payout percentage. This would be applied on each transaction, subscription or diamond received and would goes to the CCs
- The historical and expected revenue and dividends amounts should be clearly stated (All time, 1 month, 7 days)
- A new [Buy now] button and subscription options will need to be implemented. These will generate the revenue to be paid out. For example a buy now button to pay for access to an event, subscribe to creator for content content.
Then
1. All CCs are the same, a claim on revenue, only own them if you want a piece of the revenue
2. CCs value then can easily be valued through standard discounted cash flow valuation methods. This also solves the RugPull issue
3. Separating transactions and investments gives a clear understanding. As we subscribe to Netflix for content. Separately, we invest in Netflix to get the benefits of ownership.
4. M&A activity can happen if the revenue streams or content are not dependant on the person.
CC others that have discussed this @diamondthumb and @darian_parrish.
CC dividends and "M&A" has been a topic of interest for sometime. Happy to have a call on Vibehut.io or find a way to discuss this further and please see my past writing about subscriptions here: https://github.com/deso-protocol/dips/discussions/204
I'm a fan of Yes, and How.. so I'll further my thoughts here for anyone interested.
CCs do a lot and still there is a feeling and evidence that the proverbial Tetris pieces don't fit perfectly.
At the moment the main attributes of a CC are Founder Reward, Bonding Curve (supply -> price), coin holders, the ability to buy, sell and trade and a robust API to programmatically make it all flow.
They are recognized a reputation token which in practice seems to be hard to measure. It's been tried to use CCs as access to events and use Diamonds to payout holders.
It's been exciting.
Here is another take that is not too far of a stretch form where we are.
Since CCs are so flexible, a huge question is who and what are CCs for?
CCs are for anyone that wants to provide value on the internet and let others gain along side them as they exchange their value for currency or tokens.
For adoption of CCs, they need to fit into how we operate. Here are some reasons why the CCs do not fit.
- CCs are used for many different things
- Valuation is impossible to determine
- "Investment" in CCs and creator transactions are conflated
** CCs Represent Different Things.
A CC could be for companies, could be for a social account, could be for a charity. Each fundamentally has a different way it operates.
Equities are special because they have a Single Responsibility. They provide ownership of a business. If each CC represents something different people have to learn what each CC represents. Instead, CCs need to boil down to one idea.
** Valuation Is Impossible to Determine
There is no steady stream of income from CCs, the lack of "dividends" makes it borderline impossible to value the CCs. This is a fundamental flaw and opportunity.
An expected payout, whether it's from a steady cash flow or a one-off event is fundamental to the valuation of something.
The bonding curve and order book offers a way to buy/sell coins which set the CC price, they does not set the value. Value is set from the discounting of future cash flows.
"Rugpulls" are a valuation problem, not a CC problem. If the value was known a Rugpull would be a celebrated opportunity.
** Investment and Transactions are Conflated
Getting access to content because you own a CC is non-standard and does not work because the price of the coin is volatile.
The standard model is an individual transaction or subscription to purchase or get access to content. Investment to own a piece of the business.
!! Proposal
Taking these into consideration:
I propose that CCs should instead be a considered a "Claim on Revenue" coin. This would provide a standard way to claim a % of the revenue generated by the originator of the CC.
This will keep up with their flexible nature and provide a standard way to value (discounted cash flow model) and acquire them.
How:
- Each account would be able to set a payout percentage. This would be applied on each transaction, subscription or diamond received and would goes to the CCs
- The historical and expected revenue and dividends amounts should be clearly stated (All time, 1 month, 7 days)
- A new [Buy now] button and subscription options will need to be implemented. These will generate the revenue to be paid out. For example a buy now button to pay for access to an event, subscribe to creator for content content.
Then
1. All CCs are the same, a claim on revenue, only own them if you want a piece of the revenue
2. CCs value then can easily be valued through standard discounted cash flow valuation methods. This also solves the RugPull issue
3. Separating transactions and investments gives a clear understanding. As we subscribe to Netflix for content. Separately, we invest in Netflix to get the benefits of ownership.
4. M&A activity can happen if the revenue streams or content are not dependant on the person.
CC others that have discussed this @diamondthumb and @darian_parrish.
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@1dolinski
8 months ago
Plugged into ChatGPT for a response
Your proposal is intriguing and touches upon some of the challenges and opportunities in the realm of Creator Coins (CCs). Let's break down the points you've raised:
**What Works:**
1. **Single Responsibility for CCs:** Simplifying the purpose of CCs to represent a single idea or responsibility can make them more understandable and accessible to a broader audience. By proposing that CCs be considered a "Claim on Revenue" coin, you're giving them a clear, tangible value proposition.
2. **Valuation through Revenue:** By tying the value of a CC to a creator's revenue, you're introducing a more concrete valuation method. This could make the CC market more stable and predictable, as investors can use traditional valuation methods (like discounted cash flow) to determine the value of a CC.
3. **Separation of Transactions and Investments:** This is a crucial distinction. By separating the act of purchasing content (or access to content) from the act of investing in a creator's future revenue, you're making the ecosystem clearer for both creators and investors.
4. **Historical and Expected Revenue Data:** Providing transparency about a creator's past and expected revenue can give potential investors more confidence in their investment decisions.
5. **M&A Activity:** The idea that CCs can be merged or acquired if the revenue streams or content are not dependent on the individual is innovative. It opens up possibilities for collaborations, partnerships, and even the creation of conglomerate-like structures within the CC ecosystem.
**Potential Challenges:**
1. **Implementation:** Changing the fundamental nature of CCs to represent a "Claim on Revenue" would require significant changes to the underlying platform and might face resistance from existing users who have grown accustomed to the current system.
2. **Regulatory Concerns:** Anytime you're dealing with financial instruments that promise returns based on revenue or profits, there's potential for regulatory scrutiny. This could lead to challenges in terms of compliance, especially if these coins are available globally.
3. **Dependence on Revenue:** If a creator's revenue drops or becomes inconsistent, it could lead to volatility in the value of their CC. This might deter potential investors who are looking for stability.
4. **Rugpulls:** While tying CC value to revenue might reduce the likelihood of rugpulls, it won't eliminate them entirely. Unscrupulous creators could still exaggerate their revenue potential or engage in other deceptive practices.
5. **Diverse Revenue Streams:** Not all creators have consistent or easily quantifiable revenue streams. For some, revenue might come from various sources, making it challenging to determine a clear payout percentage.
In conclusion, your proposal offers a fresh perspective on how to enhance the value and utility of Creator Coins. While there are challenges to consider, the potential benefits in terms of clarity, valuation, and investment potential are significant. It would be interesting to see how such a system would evolve and be adopted by the broader community.
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