LIP:16 (#43)

LIPs/lip-16.md

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+---
+title: <LIP-16 Standardizing Fees for Collecting NFTs and Other Paid Actions>
+description: <This proposal aims to establish a foundational infrastructure for the sustainability of applications and protocols through nominal fees from value-imbued microtransactions, such as paid collect NFTs and other paid actions.>
+author: <@lens/kipto and @lens/nilesh>
+status: Draft
+type: <Protocol>
+created: <date created on, 2024-03-06>
+---
+
+## Abstract
+
+<!--
+The introduction of $bonsai, a potential first native Lens token, signals a pivotal moment for the Lens Protocol. It emphasizes the necessity to build a sustainable circular economy that benefits all ecosystem participants. By introducing and standardizing fees for microtransactions, including paid NFT collects and other paid actions such as paid follows, we propose creating an equitable framework that ensures value created within the ecosystem is fairly distributed. This approach aims to foster a balanced and sustainable growth, benefiting applications developed on the protocol and ensuring the longevity and resilience of the ecosystem.
+-->
+
+## Motivation
+
+<!--
+The current model, primarily sponsored by the protocol, offers tremendous value to users and applications but lacks a viable path towards sustainability. It's imperative to address the long-term sustainability of both the protocol and its applications. By implementing a small fee on microtransactions, we can create a revenue model that supports the ecosystem's growth while maintaining its user-friendly experience. This model will allow for a fair and sustainable distribution of value between the protocol, applications, and content creators, ensuring the continued provision of a gasless experience and the onset dynamics for a circular economy.
+-->
+
+## Specification & Rationale
+
+<!--
+We propose a standardized fee mechanism for paid collects and follows, benefiting applications, content creators, and the protocol. A fixed percentage fee on these actions will secure a steady revenue stream, distributing value across the ecosystem. The protocol will take a nominal portion of this fee and to the application where the content was created and consumed, with the majority allocated to content creators and referrer, promoting a fair and sustainable economy.
+
+To ensure uniformity and equitable practices across the ecosystem, we suggest a fixed nominal fee in percentage points for revenue sharing for the protocol and platform. A predetermined portion of this fee will directly be directed to the Lens treasury, supporting the protocol's development and gasless experience, while the main part will reward the application that enabled the content creation and collect experience.
+
+One purely hypothetical example could be a 4-4-2 model, where 2% of the fee goes to the protocol, 4% to the application where content was created, and 4% to the application where the content was collected.
+
+Drawing from successful experiments like Orb's community wallet feature, which redirected a fixed fee percentage to clubs, we advocate for standardizing this practice. This not only supports creators but also incentivizes applications that drive user engagement and revenue generation in novel ways, without significantly detracting from creators' earnings.
+
+This proposal aims to balance growth, sustainability, and equitable value distribution, ensuring a thriving ecosystem for all stakeholders.
+-->
+
+## Copyright
+
+Copyright and related rights waived via CC0.