Driving protocol revenue to $CLOUD

CLOUD - Ideas
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Let me preface this piece by stating that this isn’t a criticism of Sanctum’s current position, merely a proposition I’d like to present to the community. I’ve been a Sanctum user and a $CLOUD holder for some time, and will continue to support the hardworking team regardless of this discussion’s outcome.

Without further ado.

Jupiter’s recent decision to implement a small swap fee, and direct 50% of protocol revenue to token buybacks got me thinking: Why isn’t this standard?

Legal Challenges: While I do understand that sharing revenue with token holders treads carefully close to securities violations, token buybacks offer a similar impact without the aforementioned risk. Therefore I can’t see a viable legal reason to not do buybacks.

Sufficient Revenue: A separate challenge is does the protocol generate enough revenue to warrant token buybacks, and is this revenue sustainable? In Sanctum’s case, I’m not sure where it currently generates revenue, (please inform me!) but I believe there are places where a fee could be implemented such as the router.

Public Good Ideology: Finally I’d like to put forward an issue that extends far across our industry. It seems that doing things for ‘free’ is commonplace in crypto, for e.g. content creation, project support, and creating new tech. It’s my view that hard work needs to be adequately rewarded in order to provide the correct incentives for continued efforts. Spending ages on a project or article for a ‘well done’ on X just isn’t sustainable in the long run.

What am I trying to get at?

Like $JUP, $CLOUD is utility token. Currently that utility is governance and perhaps ASR too. I think it is vital for $CLOUD, and all other utility tokens, that they’re backed by protocol success through revenue sharing. Companies share dividends to shareholders, protocols need to match this in the web3 version.

Traditional economics suggests that companies should maximise profits for its shareholders. Therefore as a $CLOUD holder, you stand to benefit.

Not only does this give holders a strong financial incentive to educate and spread Sanctums product and use case, but it helps institutions and outsiders understand that this crypto is actually backed by something.

So in essence I’m calling for Sanctum to incorporate some sort of revenue sharing through $CLOUD. What form that may take is whole other kettle of fish!

Keen to hear to hear discussion on this, how sanctum currently generates revenue, where else it could do so, and of course the reasons against the proposal.

Stay earnest,
ChefG

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I think it should be standard! There generally are two ways to raise funds: SAFE with token warrant, and SAFT. When we raised back in 2021, I chose SAFT because I strongly believe there should not be an equity company to take profits from.

Why I’m not thinking about buybacks yet: we simply don’t make enough revenue for buybacks to matter. Right now, Sanctum is like Jupiter pre-perps: we have a great product everyone uses (Jupiter Spot == Sanctum LSTs), but we don’t yet have that product that makes 100M ARR. My top priority this year is to build that product out. Jupiter built out Spot for three years (jup.ag was launched late 2021) before building Perps, and Spot for four years before taking fees on Spot (0.05% on Ultra mode).

So let’s build out that 100x product first, and then we can talk about buybacks.

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That sounds so logical.

We must be early

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This makes a lot of sense, and clears up my question regarding revenue. Out of curiosity, what is the current ARR? Looking forward to hitting those metrics :zap:

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It should be standard, but agree that this roadmap is the way to approach it.

The only pushback is that Jupiter didn’t launch the token till comparatively much later in the product cycle and in essence you’re asking aligned holders to wait a long time for the prospect of the possibility of shared revenue.

I’m happy to support long term and want to see this succeed, but do wonder if implementing the mechanic earlier, even if the revenue is quite small sets clearer expectations that would give net new entrants more confidence

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Cracked team that keeps on building and building and building with speed

I believe the future is bright for cloud

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update: Eno said on forecast #7 today (54:00 time stamp) that Sanctum will be trying to aggressively grow revenue in 2025 - more announcements to come this week!

https://x.com/sanctumso/status/1897512466667696615?s=61

link to the forecast!