Introducing Our Royalty LP Incentive & Fee Distribution Program

It was inevitable. Creator royalties are more or less a thing of the past. Some may opt to continue paying them, but it will be few and far between. There will undoubtedly be both positive and negative consequences resulting from this business model shift. Those that rely on royalties to pay bills will struggle to stay afloat. Those that are generating revenue and do not rely on them will capture more market share.

We are innovators. We are constantly seeking ways to utilize our knowledge of product development and financial engineering to benefit our business and our valued holders. We are fortunate to have some brilliant finance minds around the table at Cynova Enterprise and have decided to launch a program we expect many will copy.

Introducing our Royalty LP Incentive & Fee Distribution Program.

We saw the writing on the wall. With the launch of ABC and Hadeswap, it was clear there were significant changes coming to the Solana NFT ecosystem. Like any good business, we started brainstorming on how to capture economic value in what would become a new status quo. We think we have formulated a solid plan….

• Going forward, we will be establishing liquidity pools (LPs) and contributing significant liquidity to various high-profile projects (including Cynova Legacy) on Hadeswap and other AMMs we find worthy of doing so.
• Here is where things get interesting. We will fund those pools with 100% of any royalties earned on the secondary market. “But I thought you said royalties were dead?”. They are if you don’t have an incentive to opt in…stay with us.
• From those LPs, we will generate fees that will increase in size as more liquidity is provided. We will then distribute 50% of all fees earned on a weekly basis to our holders. A large portion of the other 50% will be reinvested back into the LPs. Here is the catch. ONLY Cynova Legacy holders that paid FULL royalties when they purchased will participate in the weekly distributions. Don’t worry, if you purchased in the past and are still holding, you will qualify.
• This creates a great circular economy. As our liquidity provisions increase, so will our earned fees. This will result in greater distributions for holders which will drive up the floor price. As the floor price increases, the royalties will increase (for those that opt-in) which means our liquidity provided will accelerate. This generates more fees, and the cycle repeats itself.

You may be saying “well if no one opts into paying royalties, this will never work”. We thought about that. So, approximately 1 week ago, we went ahead and established some sizable liquidity pools on Hadeswap and have been generating fees since. So, at a bare minimum, we already have a solid foundation for fee generation.

What should we do with those fees? Hm. Well, how about we go ahead and kick off the program? We have generated 50 SOL in fees to date (in just one week). We are going to reinvest 25 SOL (50%) back into our liquidity pools and distribute 25 SOL (50%) to our holders. We will take a snapshot of all wallets that currently hold UNLISTED Cynova Genesis or Cynova Legacy and which paid full royalties (automatic for anyone holding prior to last night) on Sunday at 8 pm UTC (today).

Depending on the number of qualified NFTs at the point of the snapshot, the first distribution will likely be in the range of 0.005 to 0.0065 per NFT held. Look, we know this is not a lot. But it is extremely important to recognize that this is an exponential compounding model. These could, and should, increase week over week. As a reference, many liquidity providers are generating well north of 500 SOL per week.

There are risks. And we don’t shy away from acknowledging risks, being open about them, and explaining our mitigation strategies. The primary risks associated with this program are as follows:

• Hadeswap, and other AMMs, may experience low trading volume. When this happens the fees generated may be low. We feel confident AMM marketplaces are going to accelerate in growth but will monitor accordingly.
• There is always the risk of impermanent loss. However, as we are not collecting or trading NFTs, we are less concerned about this risk. We are focused on maximizing fees.
• As more and more people use the AMMs, the fewer royalties we will earn on secondary sales. We expect at that point that the 50% of reinvested AMM fees we are generating will be enough to continue substantial growth. Additionally, the only way to qualify for the distribution program is to buy our NFTs with royalties. This promotes a nice balance.

We are excited to be an innovator and put Cynova in a leading position. We expect many will follow suit in some form or fashion. However, we have three major advantages:

1. We have amazing financial advisors that have formulated the best liquidity pool structures and will be managing the pools with us.
2. We are early.
3. We are developing a tool within Builderz that will automate the majority of this program infrastructure and intend to license it to other NFT projects. We expect there to be a large demand for this tool as royalties are such an important driver for many creators and they will be looking for alternatives. Stay tuned.

We hope you are excited about this program and look forward to creating continued value for our holders. We will continue to push forward with Cynova Studios and Builderz development whose revenue generation (B-Pay first) will offer opportunities to accelerate our liquidity provisions.