EXPLAINING DIVIDENDS: A 🧵
Dividends are shareholder treats, when a company makes money, it “can” share part of it with you as a reward for investing in them. It could be cash, extra stock… NFT projects can do the same or can they?
Let’s dive in 👇
🟣Concept
🔴Example
🟣 This is the most common type of dividend, where the company distributes cash directly to its shareholders on a per-share basis.
🔴 If a company declares a $0.50 cash dividend per share and you own 100 shares, you would receive $50 in cash.
🟣Instead of paying cash, a company may issue additional shares of stock to its shareholders as dividends.
🔴If a company declares a 5% stock dividend, you will receive 5 additional shares for every 100 shares you own.
🟣Similar to stock dividends, a scrip dividend pays shareholders in the form of promissory notes or certificates that can be converted into shares at a later date.
🔴 You have shares, you receive a document that grants you 10 shares for example in 1 year.
🟣 In some cases, a company may distribute assets other than cash or stock as dividends. These assets could be physical goods, equipment, investments
🔴 Investors collected a 15.4% net return through a sculpture shareholders received by a fractional art investment platform
🟣This type of dividend is paid when a company is closing down or liquidating its assets. It represents a distribution of the company’s remaining assets to shareholders.
🔴 Company is closing down, they sell PCs, desks or other. They distribute part of it to shareholders.
🟣Companies pay a one-time, non-recurring dividend, known as a special dividend. This is paid when the company has extra cash or wants to reward shareholders due to exceptional performance or events.
🔴 A one time pay, reminds you of something?
WHAT ABOUT WEB3 / NFTs?
These structures are extremely tricky so make sure to consult with your lawyer before implementing. There’s a thin line between being considered a security / Falling under regulated assets and not. These are theoretical examples for now, DYOR
👇
🟣NFT creators or artists receive royalties whenever their NFT is sold or resold on secondary market.
🔴 This is common in NFT projects ensuring creators can keep generating revenue from their art.e
🟣Projects, especially those in the realm of virtual worlds, may issue governance tokens to NFT holders. These tokens represent voting power and decision-making authority within the project’s ecosystem.
🔴 Several projects dropped tokens to holders. @yugalabs did
🟣Projects incorporate staking mechanisms, where NFT holders lock up or “stake” NFTs for a certain period. In return, they may receive rewards in the form of native tokens or other benefits offered.
🔴Projects like @valhalla introduced staking, @yugalabs did
🟣Some NFT projects may periodically airdrop free tokens or NFTs (airdrops) to their existing NFT holders as a way to reward them for participation and loyalty to the project.
🔴 You could set a special drop to reward those who have been very active in your community.
🟣Fractionalization allows a single NFT to be divided into smaller fractions / shares, enabling multiple investors to own a portion of it.
🔴Dividends can be paid to owners based on revenue-generating activities, such as royalties from resale, usage fees. @BobuBeanFarmer
🟣In gaming projects, players who own specific in-game assets represented as NFTs can earn dividends based on in-game activities or achievements.
🔴Players receive rewards as tokens or NFTs for completing quests, competitions, or contributing to the game’s ecosystem.
🟣NFT marketplaces or platforms can allocate a percentage of the transaction fees collected from NFT sales and trades to be distributed as dividends among active NFT holders.
🔴Blur is a close enough example of such.
A lot of structures can be possible with NFTs, crypto and smart contracts similar to ERC 1155, ERC 6551 and other EIPs.
Again make sure to consult with a lawyer other than me and make sure to bookmark this and retweet to spread more knowledge.
AKYLLES
