Profit Share mechanism for LandWorks — what, why, and how

The latest improvement proposal of EnterDAO lays out a profit share mechanism for LandWorks which aims to enable referral fees. This article covers what is the profit share mechanism, the rationale behind it, and how it works.

The what

The profit share mechanism is an extension of the LandWorks protocol which allows other protocols / dapps / projects / games to capture a portion of LandWorks’ protocol fees. This is achieved by “referring” listing or rents to the LandWorks protocol thus ensuring a % of the protocol fee. The referral can be both for listing a property or for renting it, with the only difference being that the listing referral is paid out upon a rent event of the listed property whereas the renting referral is paid out immediately.

Example 1: OpenSea decides to work with LandWorks and to offer the possibility to list for rent your Decentraland or Voxels properties. Whenever someone rents a property that has been listed through OpenSea, OpenSea will get a portion of the 3% protocol fee that LandWork gets for each rent.

Example 2: LooksRare decides to work with LandWorks and to offer renting of Decentraland and Voxels properties in their platform. Whenever someone rents a property through LooksRare, LooksRare will get a portion of the 3% protocol fee that LandWork gets for each rent.

Both examples can work simultaneously as well. Meaning that a single platform can be both a listing and renting referral.

On top of that, the mechanism also allows for collection-level profit sharing. Meaning that LandWorks’ protocol fee can be shared with a particular collection upon a renting event.

Example 3: The Sandbox decides to work with LandWorks and enable renting through our protocol. For every rent of a Sandbox property, a portion of LandWorks’ protocol fee will be shared with The Sandbox.

The why

As stated in EnterDAO’s whitepaper, the DAO is “founded with the mission to build products enabling new markets within the metaverse economy” and this mechanism is the next step in that mission. Through this proposal, we want to extend our proven protocol to any dapp / project / DAO / game that operates in the metaverse economy. We truly believe that rent-seeking is closely tied to value creation therefore this effort is aimed to further democratize land and allow more people to experience the metaverse. By sharing our protocol fee we aim to incentivize more platforms and games to enable renting thus enabling new markets within the metaverse.

The how

The mechanism works based on whitelisting addresses as referrers. There are two whitelists — one for listing referrers and one for renting referrers. A single address can be in whitelists.

Each address in each list has a payout % associated with it. This % indicates what portion of LandWorks’ 3% protocol fee will be for the referrer. Each payout % is limited to 50% in order to avoid having to pay more than 100% of the protocol fee to a single referrer.

Each address in each list has a user payout % associated with it. This % indicates if the referrer wants to share any portion of their earnings with the actual user who has rented/listed the property. This mechanic basically acts as a discount to users of the referrer and it is optional.

The referral payouts happens after the collection-level revenue split (if there is any).

Alongside the profit share mechanism, we have also developed an npm package, allowing anyone who wishes to integrate our listing and renting workflows as widgets.

Please make sure you check the documentation.

If you think your dapp is well suited to become a referrer and start earning fees, please join our Discord and let us know.