Transaction fees

A percentage of fees from transactions could be used as treasury income

Fees can be collected whenever transaction are made on a network. Transaction fees pay for node operation costs but they could also be used to help fund ecosystem initiatives that help to maintain and improve the network or that benefit the wider ecosystem. Network fees could create a sustainable circular economy where ongoing income is generated to support a number of different treasury responsibilities.

Low short term income potential (Score - 2)

A new and growing Web3 ecosystem will often have a limited amount of transaction volume. Low transaction volume would translate to a limited amount of generated income through transaction fees. Some income could still be generated in the short term for the treasury, however for this to be a meaningful amount of income the network would likely need to achieve a larger scale to increase the amount of transaction volume.

Very high long term income potential (Score - 5)

As an ecosystem grows the number of transactions could also increase over time. Large transaction volume could result in a more meaningful amount of income for the ecosystems treasury. A growing amount of use cases could be one reason why an ecosystem is able to generate more demand and transactions in the network. Growing both the number of use cases and the number of users that participate in the network can both be important factors for increasing the total amount of transaction volume and fees that the ecosystem generates on a daily basis that can then be used to fund future ecosystem initiatives.

Low incentive complexities (Score - 4)

All community members that use the network would pay transaction fees that help to pay for the operation of the network. If transactions fees are used to maintain and improve the network this simple taxation model could help to create a circular economy that funds the operation and maintenance of the network. Providing the community has control over the treasury the incentives are highly aligned. Community members will benefit from disbursing assets towards initiatives that could help to maintain and improve the ecosystem. Initiatives could help with creating more transaction volume through new use cases due the introduction of new protocols, applications and network improvements. This approach for generating income is also fair for the ecosystems users as the users who pay the most in fees will be the ones who use the network the most. These users would be getting the most value from the different features and use cases available in the network. The main complexities around the incentives for this approach will be around the situations where the founding entities still have control and a larger influence over how the ecosystems treasury is managed and disbursed. This should hopefully be a short term problem as the stewardship over the ecosystem treasury assets should eventually be pushed towards the community once the right systems and processes are in place.

Very low game theory risks (Score - 5)

This income approach does not give any single community member more control than others over how the treasury assets are collected. Due to this there aren’t an any immediately obvious game theory risks around how people could manipulate this approach to benefit themselves. The more that people use the network the more transactions fees they would pay.

Total score = 16 / 20

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