Who Earns with RARA?
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July 15th, 2022

With the Genesis Reaction Registry now closed and the genesis curations only days away (July 23rd), it’s a great time to talk about who earns with RARA’s social curation protocol.

In short, NFT creators, collectors, and fans can all make money with RARA.

  • Reactions. Creators and Collectors of NFTs registered as reactions earn $USDC.
  • Curated NFTs. Creators and Collectors of NFTs curated with reactions earn Curation Tokens (redeemable in $USDC).
  • Fans and Curators. Fans and Curators earn Curation Tokens (priced in $USDC)

Creators and collectors earn royalties when their NFTs are used as a reaction or receive reactions. It’s kind of like if you earned a little bit of money for making emojis or received emojis on your Instagram posts.

Fans earn curation tokens in exchange for curating and reacting to NFTs. As more reactions are added to an NFT, the value of early fan curator tokens increases. It’s kind of like earning money for liking a tweet before it goes viral. It costs a little money to do it but you make money by curating cool NFTs early. More importantly, you can finally prove you’ve got good taste in NFTs.

The Curation Pie

Before we dive into how each person can earn with RARA, let’s start with how the money is split between creators, collectors, and fans.

RARA’s social curation protocol is powered by reactions, the Web3 equivalent of a like, emoji, or meme. For as little as 1 $USDC (cost of a reaction), anyone can add a reaction to an NFT they like and get curation tokens in return. Here’s how the 1 $USDC is split* up between royalties and curation incentives.

The first ~4.5% rewards the owner and creator of the NFT registered as a reaction while the remaining funds are reserved for curation incentives. When a reaction is burned on an NFT, the next ~5% rewards the owner and creator of the curated NFT. Then ~89.5% are used to purchase Curation Tokens - the incentive mechanism for curators and fans. Finally, the protocol has an optional referral fee of 1% (0.5% for reaction purchases and 0.5% for reactions spent on curations) for app builders.

The Curation Pie | How Creators, Curators, and Fans Earn with RARA
The Curation Pie | How Creators, Curators, and Fans Earn with RARA

RARA Social Inc. plans to charge these referral fees to support the continued development of its app. We expect other NFT app builders will integrate the protocol and do the same.

*The exact amounts of royalties and curation incentives vary slightly for technical reasons relating to fractions in solidity as are noted below in the "Flow of Funds" section.


Curation Tokens” are the token representation of the popularity of an NFT. Priced on a bonding curve, curation tokens are ERC-1155 tokens created to incentivize fans to react to and curate the best NFTs early.

“Reactions” are non-transferrable ERC-1155 tokens generated by registered NFT’s media that are consumed by reacting to and curating third-party NFTs. Similar to a Web3 like, emoji, or meme, reactions create a permanent reputation system for NFT.


Curation Incentives

As the largest portion of the pie, curation incentives are what drive RARA. Fans are rewarded curation tokens in exchange for spending $USDC to curate NFTs with reactions. As more reactions are added to the same NFT by others, the value of curation tokens increases.

Sigmoid bonding curve | Y-Axis = Token Price | X-Axis = Curation Tokens Sold
Sigmoid bonding curve | Y-Axis = Token Price | X-Axis = Curation Tokens Sold

For example, for every 10,000 $USDC spent on reactions, there is ~$8950 available for minting curation tokens. The amount of curation tokens minted will vary for each curated NFT according to that specific NFT’s bonding curve and whether or not it is an early or late stage curation.

We’ll dive more into the dynamics of the bonding curve in another post, but this tweet thread will provide you with the basics for how curating cool NFTs early can be very rewarding for NFT fans.

Royalties

RARA’s protocol rewards the most popular NFTs for engagement. As reactions and comments are added on NFTs, the creators and collectors of NFTs earn in two ways: (1) reaction royalties and (2) curation royalties.

Reaction Royalties

NFTs registered with the protocol as reactions earn royalties in $USDC every time a reaction is used** to curate NFTs. Reaction royalties are split between the owner of the NFT and creator according to on-chain royalty splits.

RARA’s protocol sets creator royalties according to any on-chain royalties supported by the RoyaltyRegistry. If the RoyaltyRegistry does not support the royalty implementation or the royalties are not set on-chain by the creator, the NFT owner may set the royalty split for reactions.

For example, for every 10,000 $USDC spent with “CryptoStella #112: Celebrity Ape” reactions to curate NFTs, there is 450 $USDC to split between the owner (currently Collin.eth) and creator (@stellabelle). With on-chain royalties set at 10%, the owner will earn 405 $USDC and the creator will earn 45 $USDC in reaction royalties with the remaining funds going towards Curation Royalties and Curation Incentives.

"CryptoStella #112: Celebrity Ape" registered by collin.eth (tags: fomo, cryptostellas, og)
"CryptoStella #112: Celebrity Ape" registered by collin.eth (tags: fomo, cryptostellas, og)

**Reaction royalties are technically earned when a reaction is purchased rather than when the reaction is used. However, the purchase and spend of a reaction is expected to generally be a single step as there is no incentive to hold a reaction as reactions cannot be resold or transferred.

Curation Royalties

NFTs receiving reactions earn royalties in curation tokens which may be redeemed for $USDC. Every time a reaction is added to their NFT, curation tokens are minted to both the fan using the reaction and the owner and creator NFT receiving the reaction. The NFT owner and creator share the royalties according to on-chain royalty splits or as set by the owner. To unlock the curation royalties for themselves and the creator, NFT owners must first register the NFT with the protocol.

For example, if 10,000 $USDC was spent on “CryptoStella #112: Celebrity Ape” reactions curating “Right-click and Save As guy” NFT, approximately 500 $USDC would be used to mint “Right-click and Save As guy Curation Tokens” to the NFT owner (CozomoMedici). As on-chain royalties are currently set at 0% on-chain by XCOPY, the owner would keep all of the curation tokens. The owner can hold the curation tokens in anticipation that the value will increase as more reactions are received or redeem the tokens at any time for $USDC.

Referral Fees

Curators with developer chops and buidlers of NFT platforms and metaverse can earn referral fees for helping sell (saleReferrerBasisPoints) or spend (spendReferrerBasisPoints) reactions to curate NFTs. Referral fees are paid in $USDC and are approximately 0.5% and 0.55% respectively.

For example, for every 10,000 $USDC in reaction sales an app creator would earn ~450 $USDC and another 500 $USDC when the reactions are spent curating NFTs. Flow of Funds For the developers here, check out how the $USDC funds flow down to makers, takers, and fans (curators) in our recently open-sourced protocol GitHub repo here. Do a technical dive into the protocol in our post for devs, too.


That’s it. That’s how creators, collectors, and fans can earn with RARA’s social curation protocol. Genesis Curation Party is next Saturday, July 23rd at noon Eastern Time. More details to follow.


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