GP8 Measures DRAFT NFT Rewards Program

Governance Governance Measures
1

Measure 3 - Repeat of NFT Rewards program with terms and conditions modification approval

In GP 7, the governors voted to allocate 500K Algo to the NFT Rewards program to boost Algorand’s NFT community and create growth across the NFT ecosystem.

The goal of the measure was to:

  1. Increase the number of users trading digital assets in Algorand Ecosystem;
  2. Increase digital asset sales & volume;
  3. Drive new users to NFT Marketplaces; and
  4. Support creators within the ecosystem.

The NFT rewards program launched at the end of July, beginning of August, 2023, and has so far proven very successful in achieving the goals outlined in the measure.

Since launching the incentive program, RandGallery saw a 4X jump in transaction volume the first week compared to the week before the incentive program. Shuffl’s program, which directly rewarded creators with additional royalty, has seen significant uptick in the listings as well as new buyers & sellers engaging with the platform. Algogems’ tournament and prize incentives doubled its monthly volume to 33K by mid-month.

This measure proposes the continuation of the NFT rewards program with one modification to the ARC 49 NFT Rewards terms and conditions to allow Marketplaces to keep the revenue generated as fees through the rewards program.

This modification will effectively remove “4. Any marketplace fees generated by the rewards must be deducted and/or reinvested as rewards” from the Requirements for initiatives section.

The Foundation supports Option A.

Measure 3
Should we run the NFT Rewards program in Q4/2023?
Option A - Yes
Option B - No

Measure 4 - Increase the NFT Rewards Allocation

The current program, although only half-way through its term, has generated a significant boost in Algorand’s NFT Volume.

To further boost participation in our NFT Ecosystem, we propose doubling the current rewards allocation from 500K to 1M Algo with a cap of no more than 35% of the total volume allotted to one Marketplace. The 35% cap is to ensure we create a more equitable rewards allocation. The additional rewards on top of 35% are redistributed in a waterfall model to the subsequent marketplaces in proportion to their volume until the pool is exhausted. All unused rewards shall be returned to the governance pool.

This new cap will also require modification of ARC 49 NFT Rewards, Allocation of rewards section.

The approved 1M ALGO will be distributed to NFT marketplaces on Algorand that meet qualifying criteria to be used to implement initiatives that drive new users to the Algorand NFT ecosystem, bring creator exposure and increased trading volumes for a more robust ecosystem.

The Foundation supports Option A.

Measure 4
How much Algo should we allocate to the NFT rewards program in Q4/2023?

Option A - 1M Algo
Option B - 500 K Algo

2 Likes
2

The incentive reward that shufl used should be what is used by all the marketplaces. Rand saw a 4x jump in volume the first week because 3 projects launched on the same date. These projects were anticipated for months, so the credit should go to the project creators, not the incentive program, or Rand.

The way Shufl has used the rewards is by far the best for the sustainability of the people creating here. Without creators, collectors and marketplaces will cease to exist.

5 Likes
3

If we had truly decentralized governance, then ALGO being distributed to a US platform for rewards wouldn’t matter, because it’s not the foundation distributing it, it’s the community passing a vote to do so.

Since we are not at that stage with the Algorand Foundation, can we please add another question to this measure - for US platforms to be eligible to participate in the program the ALGO rewards that the marketplace would receive will be converted to USDC prior to being distributed to the marketplace. This way otherwise eligible marketplaces are not being unfairly left out due to their jurisdiction.

I am all for the incentives and I think it’s clear they help drive volume no matter which form they take. Some models may be better than others but I enjoy seeing a variety of different approaches.

The marketplaces that are not receiving the rewards are at a severe disadvantage to their competitors and at this point I don’t know why we wouldn’t want to include every marketplace that’s left building here.

I have been asking about this repeatedly for months and nothing has been done. I have only heard that it’s a ‘legal thing’. What’s seen as a little ‘thing’ to the foundation is a really big thing for the individual platforms. Mind you we’re talking about 1/30th of what defi is getting.

2 Likes
5

The important thing to me behind this incentive is to bring new wallets into the Algorand ecosystem and increase volume, of which the increased creators royalties do neither. They may help existing creators stay within the ecosystem, but that isn’t what this governance proposal should be focusing on. As a creator yourself, I can understand why you feel this way, and it would definitely be better for creators if there’s more overall volume in the NFT ecosystem rather than occasional stimulus which can’t be sustained for years to come

1 Like
6

Every creator joining the chain and building on it is a new project developing and building. Creators increase network effect because they need to sell their product.

The most frustrating part of building in web3 is the flash in the pan preference over long term sustainability. Having boosted royalties over a period of months makes it juicy for outside creators to get started here, especially when BAYC is fighting with open seas about royalties.

Projects generally use royalties to buy giveaway prizes as well, so these boosted rewards do as much for the eco as the creator.

As an aside, please do not use me being a creator to dismiss my argument. You don’t know anything about our project, our business model, or our multiple streams of revenue. I am fighting for the ecosystem, not myself.

1 Like
7

As we can see from Ethereum’s latest changes, royalty fees aren’t important for a thriving ecosystem. Whereas buyers and sellers absolutely are. With an ecosystem thriving with sale volume, the creators come (and stay) by themselves. The main downside with the Algorand ecosystem is the lack of users and volume and that, undeniably, puts creators off. 25% royalty fees on 0 is still 0, and without bringing in more users, it’s going to be hard to convince creators to build on Algorand

8

After stewing on things a bit, here is a solution that I think helps check all the boxes:

Multi targeted approach to attract new users and retain creators

  • 2x royalty boost
  • Daily engagement giveways for those who tweet the buys (500a/day?)
  • Monthly jackpots (amount spent = number of tickets)

This creates a positive feedback loop for the eco. With the tweeting, details of the event get advertised to the outside ecosystem. The monthly raffle allows those buys to count towards the monthly total and anyone can enter at any time. Meanwhile during everything, creators are getting boosted royalties

1 Like
9

I think the ability for the marketplace to have their own direction is important here. Forcing every marketplace down the same path means that there’s potential approaches that may end up not being discovered.

Every marketplace obviously wants to increase their users and sales. Shufl decided that the best way was to directly increase royalty fees, Rand and Algogems went down a different path. If these approaches don’t work out, they are free to try other approaches. As long as the goal in mind is to expand the Algorand ecosystem, I don’t see the need to force marketplaces down a specific path

2 Likes
10

Hey John, please know that this topic is not forgotten. I’m actively having conversations about ways to solve this problem that do not require conversion to USDC because our programs distribute ALGO only. I’ll post an update as soon as I can.

11

Simplest way is to modify the programs and not have them distribute algo only.

Why try to jam square pegs into round holes if we don’t have to.

12

I’ve argued for that. Algo is the way.

13

bartlett-west

14

Curious what the rationale for the 35% cap is. Has the waterfall method been modeled out yet?