EIP-5173: Non-fungible Future Rewards Token Standard

eip: 5173
title: NFT Future Rewards (nFR) Standard
description: A multigenerational reward mechanism that rewards‌ all ‌owners of non-fungible tokens (NFT).
author: Yale ReiSoleil yale@iob.fi, dRadiant (@dRadiant), D Wang, PhD david@iob.fi
discussions-to: EIP-5173: Non-fungible Future Rewards Token Standard
type: Standards Track
category: ERC
status: Draft
created: 2022-05-08
requires: 165, 721

Abstract

In this EIP, we propose the implementation of a Future Rewards (FR) extension which will enable owners of EIP-721 tokens (NFTs) to participate in future price increases after they sell their tokens.

Through the implementation of EIP-5173, the creators, buyers and sellers create a giving circle in trading practice. A giving circle is formed when all participants work in a framework to build greater wealth through each other’s success. One does not expect the same amount of return from the same person when they give someone a portion of their profits. There is no quid pro quo. Rather, they are confident that someone else in the same circle will give them the same benefits, with a smaller or greater monetary value, from other participants in the same circle later on.

Owners of the EIP-5173 compliant tokens can benefit in two ways from such a gift economic framework:

  1. An increase in price during their holding period;
  2. They continue to receive Future Rewards (FRs) after the token is sold.

The realized profits from the sale of the EIP-5173 compliant tokens will be shared across the chain of historical ownership if the seller is not the original Minter and therefore not the very first seller. Through the NFT Future Rewards (nFR) framework, the same seller, as well as every other seller, will receive the same FR distributions. Everybody pays it forward, forming a giving circle.

Giving circles are groups of people who work together to improve a situation that is typically much larger than it is at the moment. Some of the characteristics of a giving circle are community interdependence and delayed reciprocity.

In a well-designed circle of giving, givers may be able to receive more than they give over time, so giving is not the only thing involved. As a result, the traditional model of platform versus user and user vs. user relationships has been fundamentally altered into one, shared objective: if others succeed, I succeed more.

EIP-5173 establishes a standard interface for a profit sharing framework in all stages of the token’s ownership history desired by all market participants. In a giving circle, art buyers/owners are compensated for their participation in the instrument’s trading price discovery process.

We embrace and promote a new gift economic model, which is similar to the Copyleft and open-source spirit as opposed to traditional copyrights. The advancement of technology has enabled such implementation in trading for the first time. In the same way that open-source software has changed the software industry and society, we can also change the financial industry.

As in trading, most traders lose money, but the proposed Future Rewards framework is designed to help average traders do better.

Additionally, as we will explain later, it discourages any “under-the-table” deals that may circumvent the rules set forth by artists and marketplaces.

https://github.com/dRadiant/EIPs/blob/master/EIPS/eip-5173.md

Implementation

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Friends warned me that nobody was talking about compensating buyers/owners. So this is not a popular topic. The traditional practice is to reward the creators. And that’s exactly the point, isn’t it? To reward those who contributed to the price discovery process as well.

The word “Ponzi” is being discussed a lot on Twitter these days. Someone asked me, “doesn’t your future rewards sound like a pyramid scheme?”?

Not at all. A Ponzi scheme is a scheme that promises a constant, high-yield return that is unpredictable and cannot be guaranteed. Our reward system is based on the realization of profit sharing that rewards people for participating in the early stage of price discovery, and being rewarded by future price gains for performing the same function.

Before we make the PR on GitHub, I would appreciate more discussion, questions, and suggestions.

Thank you!

PR made. Please comment. Thanks!

There aren’t many people “interested” in this topic. Maybe it’s too alien to a lot of people.

If you’ve been doing some trading, you know that markets are designed to transfer wealth from the masses to the rich:

  • The exchange that charges transaction fees is acting in its own interest first, and at the expense of its users;

  • Exchange rules are designed to maximize profits;

  • Most traders lose money in the long run;

  • A 3% commission DeFi model shows the same old greed.

That needs to change:

  • Everyone’s on the same page with a success-based model;

  • Exchanges only get paid when users make money;

  • Both buyers and sellers benefit from rules;

  • Traders are encouraged to do the right thing instead of “buying, selling, and buying”;

  • It’s finally possible thanks to new technology.

We’re building a new trading/investing platform based on this EIP.

In its current format, trading started in Europe several hundred years ago and was designed to rip off its users. 90% of them lost money.

Our goal is to create a new platform where both the exchange and its users have the same interests.

Join us for the discussion.

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Through the implementation of EIP-5173, the creators, buyers and sellers create a giving circle in trading practice. A giving circle is formed when all participants work in a framework to build greater wealth through each other’s success. One does not expect the same amount of return from the same person when they give someone a portion of their profits. There is no quid pro quo. Rather, they are confident that someone else in the same circle will give them the same benefits, with a smaller or greater monetary value, from other participants in the same circle later on.

Giving circles are groups of people who work together to improve a situation that is typically much larger than it is at the moment. Some of the characteristics of a giving circle are community interdependence and delayed reciprocity.

We embrace and promote a new gift economic model, which is similar to the Copyleft and open-source spirit as opposed to traditional copyrights. The advancement of technology has enabled such implementation in trading for the first time.

As In trading, most traders lose money, but the proposed Future Rewards framework is designed to help average traders do better.

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Trading is designed in such a way that only the platforms and a few insiders benefit.

Our goal is to inspire more developers to work together to develop on-chain royalty payment methods, and with the implementation of future rewards, build a win-win trading practice based on Ethereum.

This EIP is aimed at building a gift economic model where members pay it forward to end centuries of zero-sum trading.

Amazing proposal, I would like to ask a couple of questions.

Does EIP5173 open the door for building a better price discovery mechanism (when compared with bonding curves) in token launches?

Also, by creating a “gift” economy that accounts for both profits and FRs (for any asset that can be tokenized and wrapped), it creates a “hyperstructure relation” between users.
My second question then is, if you have any comments about new design surfaces for governance/tokenomics when 5173 NFTs represent Treasuries.

Thanks

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Several key features of this EIP were touched upon. The FR distribution giving circle makes the community more cohesive, akin to what you call a “hyperstructural relationship.”

However, this EIP is not directly related to the price or supply. But it is having a similar effect on the community’s bonding. It allows all members to create value together, which we call ‘a giving circle.’ The early buyers may have a slight upside advantage, but all subsequent buyers can benefit from a cascading profit dynamic.

The EIP-5179 tool is one of a series of tools needed to enhance the functionality of ERC721-based trading. You’re not the only one noticing a certain similarity between it and the bonding curve design (@anett beat you to it! ;-)). I like the general idea of the bonding curve, but at the interface level, EIP-5173 is designed around the idea of a chain of ownership among the users, which has some fundamental incompatibility with the bonding curve every time there is a new “buy” order that results in a new token insurance.

If you have any suggestions or new ideas to incorporate the bonding curve into this, I would appreciate hearing from you.

As for your second question, obviously it can be used for NFTs, but there are many other applications as well. Once the platform building is complete, we plan to release several other EIPs. One of its advantages is that it fosters a strong community. As of now, many people abandon a project/community once they sell their tokens. With EIP-5173, however, their interest will remain personal. Future Rewards will continue to be paid to them forever. This rotating benefit is enjoyed by everyone.

Moreover, team token offerings can use this mechanism to create an equitable token structure, in which investors own the entire tradable tokens, whereas team members own only the non-tradable o-token (o for originators). Team members receive their income after investors make profits.

As long as the terms of the treasure holding are clear and fair to all investors (such as restricted trading or a time lock), teams can designate some EIP-5173 tokens as treasure holdings. By removing the rug-pulling in cryptos, inequality would be greatly reduced, insider trading would be reduced, and common interests would be aligned.

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