Why On-Chain Curation Deserves a Royalty Cut

Curation is a core protocol function. Users who stake tokens in governance or provide liquidity to Curve gauge votes directly determine capital allocation and protocol security. This activity creates value for the underlying asset but the curator receives only baseline staking rewards.

The value capture is misaligned. The curator's work accrues to tokenholders and LPs, not the curator. A user boosting Convex Finance CRV emissions increases Curve's TVL and fee revenue, but Convex captures the arbitrage, not the voter.

Protocols monetize curation for free. Uniswap's governance directs fee switches and treasury deployment, increasing UNI's fundamental value. Delegates and active voters perform this service without a direct share of the generated fees or appreciation.

Evidence: The Aave Grants DAO experiment. Aave allocated treasury funds to a community-curated grants program. The curators identified high-impact projects, directly boosting Aave's ecosystem value, yet operated as uncompensated volunteers.

Curation creates protocol revenue. Users who discover and promote assets drive transaction volume, which directly converts to fees for the underlying platform like OpenSea or Uniswap. This activity is a core growth engine, not a passive byproduct.

Discovery is a public good. Platforms like Farcaster and Lens Protocol monetize engagement, but the users who surface quality content—the curators—see no direct cut. Their labor subsidizes the network's value.

Curation demands a royalty model. Analogous to Spotify paying per stream, on-chain systems need a native micro-payment rail for attention. This shifts the economic model from advertising to aligned value capture.

Evidence: Friend.tech's key sales demonstrated users will pay for curation access, creating a $50M+ fee market. This proves social capital is monetizable when the infrastructure exists.

Royalties are a curation subsidy. They fund the discovery and community-building that makes an NFT collection valuable. Marketplaces like Blur and OpenSea compete by slashing this fee, externalizing the cost of curation onto creators.

The zero-fee equilibrium is inevitable. In a pure liquidity game, the dominant marketplace will undercut fees to zero. This creates a tragedy of the commons where no one pays for the public good of curation.

On-chain curation solves the incentive problem. Protocols like Manifold's Royalty Registry and EIP-2981 enable enforceable, programmable splits. This shifts power from extractive marketplaces back to the value-creating curators and artists.

Evidence: After Blur's fee war, creator royalties on major collections plummeted from 5-10% to near 0%, destroying a primary revenue model and proving the existing marketplace structure is broken.

Curation is a protocol service. It is not passive discovery; it is the active, on-chain work of ranking, filtering, and surfacing quality assets. This work directly drives protocol usage and revenue, creating a clear case for a royalty fee.

Royalties are superior to token rewards. Airdropped governance tokens are a one-time subsidy that misaligns long-term incentives. A direct fee-for-service model like a 5-10bps cut from pool fees creates a perpetual, performance-based incentive for curators.

The technical mechanism is trivial. Smart contracts like Uniswap V3 or Curve pools can implement a simple split function, routing a defined percentage of swap fees to a curator's address. This is more transparent and efficient than off-chain deal-making.

Evidence: Look at Jito on Solana. Its MEV searcher network captures value from block production and shares it back with validators and stakers via a native fee, proving the viability of programmatic value distribution for core network services.

Fees are a tax on every transaction. On-chain curation models like EIP-2981 royalties impose a mandatory fee on secondary sales. This creates a permanent liquidity leak that accumulates with each trade, making the asset less attractive for high-frequency market makers and arbitrage bots.

Zero-fee venues win. The market's relentless efficiency routes volume to the cheapest execution layer. This is why Blur's marketplace dominated OpenSea by bypassing creator fees, and why UniswapX abstracts fees into the solver's problem. Any persistent on-chain fee becomes an arbitrage target.

Evidence: Look at NFT liquidity. Collections enforcing royalties on OpenSea via the Operator Filter saw a 90%+ drop in secondary volume, which migrated to platforms like Blur and Tensor. The data proves fees destroy the liquidity they aim to monetize.