Creator Fees are a ‘tax’ applied on all sales of Coin. Fee-applicable sales are when a user sells (or Converts) Coins to sidechain $RLY or when a user is swapping out of a Coin to another Coin. This Fee is given to the respective creator as sidechain $RLY.
The Creator Fee is meant to both slightly discourage users from exiting a token economy and to give Creators a benefit even as users sell their Coin.
Creators Fees are default applied to all Coins that launch with Rally. Creators have the ability to request that their fee is turned off, but once turned off it cannot be turned back on.
How are Creator Fees calculated?
The Creator Fee is a slippage - or price-influenced - Fee meaning it is a sliding scale with smaller fees on smaller sales, and larger fees on larger sales. The Fee is determined by looking at the percent total amount of $RLY removed from the Coin's backing (liquidity pool) vs. total backing by the sale. You can find a Coin’s total $RLY backing in the “Activity” tab on every Coin page.
Note: Given the token bonding curve of Coins, it is possible for a sale to incur a percent fee that slightly differs from the visible market price change to the coin.
How to Calculate Examples
User A converts (or sells) X amount of Z Coins worth 1,000 $RLY (Z Coin has 100,000 $RLY backing)
1,000 $RLY of 100,000 $RLY backing equates to a 1% 'removal' of $RLY backing
This 1% is then applied to the 1000 $RLY sale
The creator receives 10 $RLY from the sale
User A receives 990 $RLY from the sale
User B converts (or sells) Y amount of W Coins worth 2,000 $RLY (W Coin with 100,000 $RLY backing)
2,000 $RLY of 100,000 $RLY backing equates to a 2% 'removal' of $RLY backing