Lets put it out there.....What would you like to see done with the licencing fees

As of October 2021 what would you like to see done with the licencing fees.
(anonymous votes)

  • 100% Burn
  • 75% Burn 25% Redistribute
  • 50% Burn 50% Redistribute
  • 25% Burn 75% Redistribute
  • 100% Redistribute

0 voters

2 Likes

I prefer more burn than redistribute but think any redistribution should have a lock up period to prevent essentially yield farming.

3 Likes

Howard just wrote in Discord:
“We just passed a vote internally to begin making open market purchases of eRSDL using the reserve fee today. Ops is putting the procedures together (i.e. you need ops, finance, marketing, etc) to begin, and then we’ll move on it quickly. What is considered the license term and what to do with the tokens when the license expires is tbd. Taking suggestions in the Forum.”

Let’s use this space to chat about the length of license term too. Feel free to chime in below.

1 Like

Initially I thought some redistribution might be good allowing people to not sell their core asset and gain passive income but after the SSS exploits I think the safest play, which would also benefit holders without any doubts is 100% burn. It would also be the quickest and easiest mechanism for the team to implement. Sadly there will always be people who try and find a way to game/break the system, and are good at it, so burning seems like the only sensible option to me.

7 Likes

Totally agree with this, burn it all!

5 Likes

This was the twitter sentiment

1 Like

I have historically been against token burns in the past but something Howard mentioned in last nights town hall resonated with me. (Paraphrasing here) If you purchase a license you don’t reissue the same license again to someone else, its gone.

Redistribution is not terrible but creates an avenue for attack in terms of large holders taking the opportunity to release back into the market creating volatility.

I agree with one of the other commentators, a burn initially is very straight forward and easily setup. Less complexity means less can go wrong. As a community and for the wider crypto world it is a well understood mechanism so comms would be straight forward.

Next up is the possibility of doing another vote on say a 18 month interval. We can reassess how the process has worked and offer the community another opportunity to stay the course or do a redistribution etc. There are other more complex scenarios as well that could be looked into over time like returning the fees back to the treasury to allow for additional funding of aspects of the project, exchange listings etc…

7 Likes

Burn them all without a doubt

2 Likes

Any redistribution will apply downward pressure on price. The whales won’t mind it but its bad for the community as a whole. 100% burn will benefit everyone.

2 Likes

Okay, so I see lots of burn support… which makes sense for a token holder looking at scarcity as benefitting the unit cost. Because we are charging fees in the native currency in which the non-bank lender transacts, likely USD at first (but remember the platform can work in ANY jurisdiction [shameless plug, lol]), the amount of open market purchases is not tied to the token count. So, let’s take the example as follows:

  • $100,000,000 in average balance
  • Average SaaS fee 1% of average balance
  • Revenue $1,000,000
  • Earned monthly so $83,000 …
    So at $0.10 we would be buying 830,000 tokens out of the market/mos, and at $1.00 we take out 83,000. If we burn the tokens, and the price goes up to $1,000 per token, then we’d just buy 83… etc. I think we can do this down to the factional token, should the unit price become extremely high.

The question came up as to whether the Company should hold the tokens in a locked wallet… say 2 year vetting subject to certain conditions, etc. The company would then have those tokens back in its Treasury to use 2 years down the line for whatever R&D or Acquisition might be available. When you think about it, the Company will have to pay taxes on those licensing fees. So to collect the fee, buy tokens and then burn them would be done at a 20% to 30% premium to the price in the market. That doesn’t sound like great business sense to me. Any thoughts there?

1 Like

Burn 100% it is a no brainer.

3 Likes

So are you suggesting in a nutshell (an option only)

Buy $eRSDL → keep for 2 years → sell $eRSDL for research & development and/or exchange listing?

Just checking I understand what your offering as an option.

Was the $5m you was talking about not long ago meant to cover that or go towards R&D? Or did I miss understand that?

1 Like

Voted burn 100%. Avoids people accumulating eRSDL to just dump on the market and tank price like we saw with Reserve Lending launch. A deflationary token model would make eRSDL an even more attractive investment, popularity increase → number of holders increase → more recognition and stronger community

4 Likes

I believe in a previous communication, it was mentioned that only a portion of the service fee would be turned into market purchases of tokens, so the there are funds outside the token. And I don’t think us token holders are so concerned with the tax burden of these purchases. I can understand why the company needs to be paying attention to these costs, but the token purchases, which are one of the main incentives for token holders, should not be over complicated by concerns of tax burden. This is the responsibility and concern of the internal accounting which we aren’t privy to.

For the same reason, I worry about this 2 year hold period proposal. Who controls what happens with those funds in 2 years and who determines what is an appropriate use of those funds? I have a lot of confidence in you and Ryan and the unfed team, but adds an extra ‘point of failure’, and means token holders would now have to trust that the team isnt going to do something that could negatively impact the community. Keep it clean, simple and easy to communicate in marketing. Burn baby burn!

As an aside, I think that it could be beneficial to build an R&D pool, but I think it should come from somewhere outside of this specific mechanic of the license fee.

6 Likes

I voted burn, but I think the better idea would be to redistribute the usdc spent on the fees to holders. that creates buy side incentive, and redistributing usdc instead of market buying ersdl means that distributed ersdl won’t get market dumped.

1 Like

+1, very well explained

1 Like

I am not against the idea of locking the tokens in a smart contract for a set period of time that can then be used (market conditions permitting) to support the project further. To instantly burn the tokens without looking at other options would be irresponsible for us as a community.

How this is planned is key:

  • Clearly state the options available with clear outlines of how it will work in practice, pros & cons of this approach, timelines.

  • Consultation period with the community to ensure that feedback is incorporated prior to the options available to vote on are locked.

  • Communication plan to release to the wider community with AMA and town halls to ensure a broad understanding by the community on the vote.

  • Potential separate vote to revisit the plan at a future date. This project will change dramatically over the coming 2 years as will the makeup of the community. It would be a risk to log us into a path that becomes unsuitable for the project in the future.

As Fasjack mentioned, how this is governed is key and would need to be air tight. I am a big believer in projects having treasury’s to self fund themselves.

You can look at Project Catalyst on Cardano as an example of a very complicated system that does yield good results, however it takes time and effort to get something that evolved. Ours wont need to be as complex but we can’t under estimate the work involved in getting this put together.

5 Likes

I always assumed tax would be sorted on the side, exclusive of what would be spent on the buy back? Would that not be a better way to go? Maybe even place that tax in some yield farming to earn a return until tax day and then spend that return on extra buyback to maximise results?

1 Like

The idea of putting the tax payment aside to earn a return before making the payment makes sense.

In the U.S., and I’m not a tax expert, income tax to the Host (Licensee) is incurred on the EBT (Earnings Before Taxes). This number is post License Fee payment to RT.

Using a portion of the licensing fee to purchase eRSDL inventory should offset some tax liability, but I’m not sure how subsequent burn would be treated by the IRS…

I guess a similar example would be one sells a $20mn Picasso and then buys $10mn in gold bars … even if you melt the $10mn in gold down, you still pay taxes on the full $20mn …any unFed agents that are U.S. CPAs whod like to write a memo on this, rock on.

So, if my analogy holds, then probably for a $1 license fee, we’d want to split up:

  • 1/3 for taxes, 1/3 for open purchases, 1/3 to cover OpEx/CapEx/+.

I can’t see it on my mobile, but upwards in this chain someone laid out a real cogent way to document, decide and address this issue. I like that model for getting to execution.

2 Likes

I have put this as a separate proposal under “License Fees Burn/Distribution Suggestion” but here it is…

Licensing fees buy ERSDL out of the market to be burned until only a certain amount of ERSDL remain in existence (100million, 50million, 10million. Maybe a community vote can be held for this number). Once that limit is reached the burning stops and the rewarded portion of the fees are then distributed to ERSDL holders in stable coins.

A deflationary to yield bearing (D2Y) token model.

This eliminates the opportunity for dumping rewards, incentivizes holding a deflationary asset and eventually rewards long term holders with a yield bearing asset.

Interested to hear the communities thoughts on this?

1 Like