Tokenomics & Royalties

6.1 Royalty Calculation Model

Royalties for derivative works (remixes/inspired creations) are programmatically enforced via onchain logic embedded in minting contracts.

Royalty Formula:

For any derivative content Cₙ inspired by parent Cₙ₋₁:

$$\text{Royalty}(Cₙ) = P \cdot S(Cₙ₋₁) \cdot R(Cₙ₋₁)$$

Where:

Symbol	Meaning
P	Sale price of derivative content
S(Cₙ₋₁)	Royalty share in Basis Points (BP), set by parent node
R(Cₙ₋₁)	Reputation Multiplier (1.0 → 2.0) for incentivized creators

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Example:

Parameter	Value
Sale Price (P)	1.0 ETH
Royalty Share (S)	300 BP → 3%
Reputation Mult.	1.2
→ Royalty Paid	0.036 ETH

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6.2 Multi-Hop Royalty Splitting (Recursive)

For deep remix chains, recursive royalty calculation applies proportionally:

$$\text{Royalty}_{\text{total}} = \sum_{i=1}^d (P \cdot S(C_i) \cdot R(C_i))$$

• Depth (d) → Number of ancestor nodes in DAG.

• Recursive Cap → Set via governance; e.g., max 3 hops to avoid infinite recursion or micro-distributions.

Onchain Example Flow:

Derivative NFT Sale → Contract → Traverses DAG → Splits payout to:
  - Immediate Parent(s)
  - Ancestor Nodes (if depth > 1)
  - Platform Fee Recipient

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6.3 Role Responsibilities

Role	Responsibility	Reward Structure
Original Creator	Right to set royaltyShareBP in minted metadata	Receives upstream royalties from remixes
Inspired Creator	Must declare declaredInspiration=true if remixing	Royalty from their own derivative sales
Fraud Detectors	Can submit fraud claims with proof	Receives bounty upon confirmation (DAO)

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6.4 Incentive Mechanisms

6.4.1 Platform Fees (Protocol Sustainability)

• Flat platform fee (e.g., 2.5% of sale) directed to protocol treasury DAO.

• Can be redirected to staking pools for creators → yield on creative work.

6.4.2 Referrer Bonuses

• Referrals tracked via ephemeral referral tokens signed with EIP-712 signatures.

• Referrer receives 1–3% of transaction volume depending on activity tier.

[User Clicks Referral Link] → Generates ephemeral EIP-712 Signature → Used at Checkout → Referrer Paid

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6.5 Implementation: Solidity Architecture

struct RoyaltySplit {
    address payable recipient;
    uint16 shareBP;
    uint8 depth;
    bytes32 inspirationId;
}

Payout Function Flow:

function distributeRoyalty(uint256 salePrice, RoyaltySplit[] calldata splits) external payable {
    for (uint i = 0; i < splits.length; i++) {
        uint256 amount = (salePrice * splits[i].shareBP) / 10000;
        (bool success, ) = splits[i].recipient.call{value: amount}("");
        require(success, "Royalty transfer failed");
    }
}

• EIP-2981 Compatible → Royalty standard compliant for cross-platform support.

• Upgradeable Architecture → Supports governance-controlled changes to recursion limits or BP ranges.

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