SOUND is not intended to be a vehicle for speculation by anyone, but especially not the general public or RCRDSHP players. Over the next few months, we will be working hard to get the SOUND token listed on exchanges, so that it can circulate amongst creators that want to mint NFT-backed digital collectibles on LTMP platforms.
SOUND token is designed to be deflationary, meaning that a fixed total of 2 billion tokens have been minted, and they will become more scarce over time as they are bound into NFT-backed collectibles. We reserve the right to employ splits of SOUND token for usability reasons, but we do not intend to expand its supply.
The biggest chunk of tokens (42.5%) is allocated towards direct support of LTMP's content partners and creators, meaning artists and other music-related brands, via subsidies and stakeholder rewards. During the next few years, subsidies and rewards are the main pathway for SOUND tokens to flow into LTMP platforms for use in minting new collectibles.
During RCRDSHP’s launch period, SOUND token was not required for minting, which allowed us to get to market quickly. As we now proceed to integrate SOUND token accounting into the RCRDSHP Creator Suite, the software used by our content partners to manage their accounts, they will begin to see SOUND token balances corresponding to tokens actually held for them intheir custodial wallets. Our subsidies help content partners get bootstrapped on RCRDSHP without initial cash outlays.
In summary, stakeholder rewards are daily SOUND token disbursements given to artists basedon RCRDSHP player behavior. The amount will fluctuate based on a rolling average of daily active users.
It’s worth noting that the original RCRDSHP Whitepaper (released privately in July 2021) called for passive allocation of staking percentages based on attention metrics. Based on what we have learned since then, we decided to implement active staking instead. This means that RCRDSHP players will be encouraged to choose which artists they want to support, and leaderboards will be used to rank an artist’s biggest patrons.
This use of stakeholder rewards is novel, and we expect its application at RCRDSHP to evolve as we learn from artist and player behavior.
The Ecosystem Fund is meant to help third parties get up and running as ecosystem partners, external entities that will help grow the size of LTMP platforms such as RCRDSHP by providing marketing, technical, and other similar kinds of help to our artists and players. It’s worth mentioning that RCRDSHP will be using a portion of the Ecosystem Fund to airdrop SOUND tokens to a few hundred of our most dedicated early adopters as a reward for their sustained support since our launch. The airdrop is not simply a gift either. We think that many of these early adopters are well positioned to start small businesses providing value-added services to RCRDSHP and future LTMP projects!
Tokens in the treasury will be used primarily for private sales and to fund liquidity pools for the token. Other than that, team and advisor allocations are self-explanatory.
LTMP platforms provide ways for successful artists to recycle SOUND token back into their accounts via stakeholder rewards. RCRDSHP hides the complexity of SOUND token from its players by using its coin-based in game currency as a proxy for SOUND.
RCRDSHP collectibles have a coin-denominated face value that acts as an indicator of how much SOUND token is staked inside at the time of its minting. We refer to those coins as our in-game currency and they have a SOUND exchange rate that we control, currently set at parity (1 to 1).
The amount of SOUND token that must be bound into our NFTs can be considered a kind of minting cost. As mentioned earlier, it’s designed to be equivalent to the cost of the vinyl that goes into making vinyl records, or the cost of the plastic that goes into making CDs. Small, but not insignificant.
Using our SOUND treasury and basic economic principles, we can exert a measure of control over the market price of SOUND. But the most important economic lever we have in our control is the exchange rate between SOUND and coins. Collectible types on RCRDSHP are subject to mandatory minimum coin values. That means that via an exchange rate, we can influence the supply of collectibles entering the economy. We can make minting of SOUND-backed NFTs more or less expensive, as needed in order to let supply not outpace demand.
RCRDSHP doesn’t sell coins directly, but coins cost a dollar if you want to buy them from us at retail price via our collectibles. The reason is that every time you buy something on RCRDSHP, the retail price is based on the face value of whatever you’re buying. If you buy a two-collectible pack that is guaranteed to contain a ten-coin artist card and a two-coin release card, then that pack will cost you $12. That price system has been in place since our launch in September 2021 and we’re not planning to change it anytime soon.
Our content partners will soon have the ability to sell collectibles directly to fans outside of drops using their storefronts. When they do so they will be allowed to price their goods at their discretion, as long as it’s greater than or equal to one USD per coin.
The idea behind stakeholder rewards is to give favored status to creators who prioritize quality of quantity and most successfully engage with their fans on LTMPs platforms. Rewards happen on a daily basis, flowing proportionally to the artist based on how much coin their fans have staked for them via showcasing.
Showcasing is the practice of publicly highlighting certain collectibles in a player’s collection. Normally showcasing is done just for showing off (or flexing) the most valuable items in your collection. Showcasing can also function as a mechanic related to challenges: collect certain designs and show them off in order to win. But on RCRDSHP, your showcased collectibles with the highest coin value also serve another very important function: they are automatically staked in favor of their creator.
Stakeholder rewards are paid in fractional amounts of SOUND that automatically and regularly flow into the creator's SOUND balance. All reward tokens are initially locked, meaning their only useful function (other than potential governance privileges) is for minting new collectibles that can be sold to generate new revenue in fiat at a zero material cost basis. The most efficient strategy for maximizing RCRDSHP profit thus becomes to keep fans engaged and the SOUND stakeholder rewards flowing in a virtuous cycle.
Some may ask why we lock up SOUND tokens awarded to artists. Shouldn’t we allow them to sell their SOUND on the open market for cash money? The answer is that while we want them to make as much money as possible, we want them to do it by selling quality music and collectibles to their fans, and not by speculating on the price of SOUND.
Locking SOUND acquired via stakeholder rewards achieves an alignment of incentives that benefits everyone, but completely ruins the equation for bad actors. Think about what would happen if there was an easy mechanism for quickly turning relatively “free” stakeholder rewards into fiat. I can assure you that we would almost immediately be overrun with hackers and bots trying to exploit the system for easy gains. Eternal and costly whack-a-mole would be required to keep up with bad actors, forcing us to implement features that risk ruining the user experience for everyone else trying to use the system legitimately.
Over the course of years, as the rewards system is up and running effectively, we may develop methods for artists that have a surplus of rewarded SOUND to sell it back to us or on the open market. We also have some ideas for how artists can gift, share, or lend their SOUND holdings to other players in the system, to create win-win scenarios. Stay tuned.
Can it be profitable to market collectibles on RCRDSHP as an artist that ignores stakeholder rewards? We don’t know, but since they would have to regularly acquire SOUND token somehow (eg. on the open market) then we suspect the answer is no, it would not work well, if at all. There is a slight possibility that if we succeed beyond our wildest expectations, relatively wealthy artists could just treat SOUND as a cost of doing business
Once the staking rewards system is operational, we will begin tracking how much every player has generated for every staked artist that has ever been featured in their showcase’s staking slots. Based on those metrics, we’ll publish leaderboard-style rankings on a per artist basis, tracking who has generated the most rewards for a given artist during given time periods and for all time.
The most significant outcome of these leaderboards, which we refer to as patron rankings, is that the focus of airdrops and special gifts from artist to fan will shift. Coming up with incentives for set completion and ideas for challenges is a task that has proven difficult at times. We will instead encourage artists to generously and lavishly shower top patrons with exclusive gifts, merchandise, show tickets, and other kinds of special access. And we know that they’ll do it too, because top patrons are the prime source of their stakeholder rewards.