Patronage-based Earnings

How it works

The platform records what each member does in a period: fees paid, volume traded, goods bought, or services supplied. At the end of the period, the DAO sets aside a share of its surplus or a fixed token budget. It divides that budget among members in proportion to their recorded activity. A member who did twice the business receives twice the reward. Members who hold tokens but do not use the platform receive nothing from this pool. The reward returns part of what members paid, which lowers their real cost.

Use it when

• You want the people who use the platform most to own the most of it.
• Reward real usage rather than token holding or speculation.
• Return surplus to members without a fixed dividend that favors large holders.

Watch out for

• Users can fake activity, for example by trading with themselves, to farm the reward.
• If the reward is worth more than the fee, the platform pays people to use it at a loss.

Example

dYdX. dYdX paid DYDX tokens to traders every 28-day epoch from August 2021, scored by the fees each trader paid and their open interest, like a cooperative's patronage rebate.

Related

• 8 ♥ Liquidity Mining
• 2 ♣ Mutual Credit
• Entry Governance Token