Token Economics

[elmariachi111]

supply and demand

• styles are created as NFTs by artists.
• the code is mangled, packed, lzed and put into the NFT in binary representation
• (you can preview any style nft on any collection)
• the collection decides which styles can be applied
• (the artist can agree on which collections should be supported)
• the artist can set a max cap of mints on his style NFT
• the max cap can defined be per collection / per style
• the artist (collection?) may decide to extend the cap
• collections can request new styles by artists (offchain) and artists may create dedicated styles and "offer" them to be officially associated with a collection

demand

• artists can choose a minimum minting fee per style
• the minting fee may be defined by an onchain bonding curve
• the fee could take the rarity of the origin into account, including (advanced) the rarity of that certain NFT. Rare items cost higher minting fees
• or simpler: the later you mint, the more costly it gets.
• or totally different: you start with a high minimum minting fee and Dutch auction it down until everyone mints (as in EthBlockArt)
• only origin owners may mint new artworks
• versus: anyone may mint new artworks on origins to sell / drop them to the owners - still, splicing a rare NFT will cost more.

rarity

• you take the origin NFT's traits and their rarity into account when creating a style NFT: the more rare an origin is, the more rare your artwork will be.
• versus rarity of a header artwork gets its own onchain randomness, so the owner of a common cool cat could mint a very rare background image

Sample

you own a Cool Cat that has a current rarity score of 120, like mine: https://rarity.tools/cool-cats-nft/view/3973. Currently there are items on that rarity level sold for 16.35 ETH (another cat with a bow as "hat" trait). That's one realistic floor definition. The whole cool cat collection atm has a floor price of ~9 ETH (the cheapest sale within a certain time period). We could choose to use the rarest trait floor or the collection's floor as a base indicator for the derivative. Lets choose the collection floor for simplicity now.

Lets assume an artist minted a fresh artwork style and stated that only 200 of it may ever be spliced (Nmax = 200). The cool cats collection certifies on the Splice contract that they allow deriving Splices from cool cats. Then you could set the mint fee shares like:

80% = artist share
10% = vault for charity fund
7.5% = collection share (-> cool cats)
2.5% = splice protocol share

Also assume, we're using a linear bonding curve to determine the minting fee. Maybe an artist may choose the baseline (B) of a mint between 0.05 | 0.1 | 0.25 | 0.5 | 1 Eth and our artist decides for the 0.1E tier.

The first user wants to mint the first (n) Splice on cat 3973. The cat floor (F) is 9E.

Then a simple linear bonding curve for the minting fee (f) could be:

f = B + (n/N) * F/10
fee = 0.1 + (1/200) * 9/10 == E0.1045

Lets say, some users were quite happy with their result and already 100 Splices have been minted. Now a whale kicks in. He owns Cat 6472 (https://rarity.tools/cool-cats-nft/view/6427) that currently bears his pricetag of E60 on OpenSea. When looking at its rarity trait evaluation we find that this cat's tier trait seems to be the highest valued one (effectively floored at E50). But lets stick with our above formula that disregards the item's floor prices and just keeps using the (unchanged) collection floor (E9).

Floor price agnostic it'd be:
fee = 0.1 + (100/200) * 9/10 == E0.55

And when we're continuing doing so the final piece would mint for
fee = 0.1 + 1 * 9/10 == 1E

I think, it'd be super awesome to take a trait-dependent F into account. It's really hard to get that on chain, given the centralized nature of market places and a non available API from rarity tools. But assume, you do it in the most naive way: you "just" write an Oracle that reads the origin's highest trait floor and come up with above mentioned 50E tier price. Then our whale at position 100 must pay:

fee = 0.1 + (100/200) * 50/10 == E2.6

Simple. Now, lets do the math for all mints on one style:
https://docs.google.com/spreadsheets/d/18nPgjenQ4XuGz4EQuIpM7zNHQNb0jlfGlAAymlVv7BM/edit?usp=sharing

according to the above distribution (combining "charity" & platform share), the numbers are (for constant 9E floor collection, baseline E0.1, as quite realistic for Cool Cats), given all 200 Splices are minted:

Artist: E88.36
Collection: E8.28
Splice: E13.80

Floor price manipulation

Just taking a current floor into account for the minting fee is not the best idea, since it can be tampered with very easily:

• I want to mint the 100th Splice of above collection at the current floor of 9E. The fee would be E0.55.
• I create a new account and sell my own NFT to myself for 0.1E. The collection floor drops instantly.
• I mint for E0.105
• I sell it back for the old floor.

Thoughts on that:

Using a windowed average (as OSea likely does 🤔 ) would prevent this attack (depending on the amount of holders, one account that holds several assets might decide to decrease the floor for all of them.

We could just take all the listed assets into account. If someone would like to tamper with it he would have to to list them for a price far under floor and that effectively would lead to others stealing them immediately. If we have that rule in place & use a daily collection floor average / median it should be very hard to push down the floor just you want to lower your Splice fees (given that each of those actions would cost gas fees ;) )