How does orb.land make “Creator Commitment NFTs” more practical and valuable through Harberger Tax and economic models?
Written by Karen, Foresight News
This week, Vitalik Buterin praised “orb.land is really cool” on Warpcast, undoubtedly bringing high exposure to orb.land. This article will introduce the core concept and economic model of orb.land, as well as the application of Harberger Tax in it.
What is orb.land?
orb.land uses the Harberger Tax system to constrain the holding and resale of Commitment NFTs, encouraging high-quality interactions between creators and holders, and promoting efficient allocation of resources.
In orb.land, in addition to the platform, there are main roles such as Orbter (creator, issuer), Orb (NFT, representing creator’s commitment), and Keeper (NFT holder). Among them, Orb is an NFT with repetitive use cases, and a person can only issue one Orb NFT. Different Orbs have different use cases, most of which are currently question-and-answer Orbs. Orb represents the commitment of Orbter (issuer) to a set of terms, and ensures transparency and immutability through on-chain records. From the commitment terms to the requirements for responding to the NFT holder’s questions, everything will be recorded on-chain for everyone to witness.
Owning an NFT of a certain creator allows you to ask questions to the creator and receive answers at regular intervals, and it may also be used to access other services.
According to orb.land, creators need to cherish their feathers and not violate their commitments or lie. If they cannot fulfill their commitments, these actions will be recorded on-chain, and the creators may lose the ability to collect Harberger Tax from Orbs and future royalties from sales, as the value proposition of Orbs has been compromised. Here, Orb is not only an NFT but also a carrier of the creator’s commitment, and each transaction carries the respect and maintenance of the commitment.
Technically, Orb is an improvement on the ERC-721 standard on Ethereum, managing NFT ownership functionality through auctions and the Harberger Tax system. The application of Harberger Tax is one of the key features of orb.land.
How does orb.land utilize the Harberger Tax system?
Harberger Tax originated from economist Alan Harberger and was later promoted and deepened by Glen Weyl and Eric A. Posner in the book “Radical Markets.” The essence is a unified asset tax that requires asset owners to pay a small portion of the asset’s value as a user fee every year. If the owner refuses to pay this fee, the asset will be auctioned to the highest bidder willing to pay. The goal of this innovative strategy is to effectively curb excessive concentration of wealth through continuous asset redistribution, promote more efficient and fair utilization of resources, and ultimately achieve overall social welfare.
Imagine that when the tax rate is zero, owners can set any price without bearing any costs and use it to set monopoly prices. In the case of a higher tax rate, the higher the price the asset owner demands, the more tax they have to pay. Therefore, they would not set an excessively high price, which may prompt them to sell the asset at a more reasonable price to others. Harberger Tax can promote efficient allocation of resources, reduce resource vacancy or inefficient utilization, and contribute to a more just and efficient market.
In orb.land, a creator can only issue one Orb NFT, and currently, an application is required to issue an NFT. When buying an NFT, the NFT buyer must set an intended selling price and planned holding duration, and anyone can buy the NFT at the intended selling price at any time. In addition, if the NFT buyer wants to maintain ownership of the NFT, they must pay a Harberger Tax proportionate to the intended selling price. In most cases, creators set a very high Harberger Tax (possibly several hundred percent), which results in high holding costs for the NFT but low acquisition/purchase costs.
For example, at the time of writing, the current selling price of Justin Drake, the core researcher of the Ethereum Foundation, for his Orb NFT is 0.3 ETH, with a Harberger Tax of 400% and a royalty of 10%. If you want to purchase this NFT and set an intended selling price of 1 ETH, the acquisition cost of the Orb NFT is 0.3 ETH, and the holding cost is 4 ETH for one year (1 ETH x 400% = 4 ETH) or 0.3333 ETH for one month (4/12 = 0.3333 ETH). Of course, anyone can buy this NFT for 1 ETH at any time, in which case you will receive 0.9 ETH (1 ETH minus the royalty), earning a total of 0.6 ETH. If an unreasonable intended selling price is set, such as 10,000 ETH, the NFT holder will have to pay a very expensive holding cost, i.e., 40,000 ETH for one year or 1,666.67 ETH for two weeks.
orb.land economic model
After understanding the Harberger Tax mentioned above, let’s take a look at the overall economic model of orb.land. In addition to the 5% platform fee charged by orb.land, creators receive all the initial sales fees and Harberger Tax revenue, and can also earn royalties from secondary market sales and auctions.
For Orb Keepers, they have the freedom to resell or re-auction the NFTs they hold, and they also have the opportunity to collect potential tips through questions.
The economic model of orb.land is cleverly designed, greatly inspiring creators’ enthusiasm for creation, encouraging them to continuously and steadily produce more high-quality content and services. It also ensures that creators can directly obtain long-term and stable income from their works, further enhancing their motivation and quality of creation.
The introduction of Harberger Tax not only ensures the efficient utilization of Orbs and avoids resource waste but also prompts buyers to more rationally evaluate the value and cost of purchasing and holding NFTs, reducing meaningless hoarding and speculation. This measure not only helps maintain market stability and fairness but also gives NFTs more practical and enduring value. Its subsequent development is worth continued attention.
Tags: NFT, Vitalik Buterin, orb.land, royalty
Source link:
https://foresightnews.pro/article/detail/60727
Note: The views expressed in this article represent the author’s opinions and do not constitute investment advice.
Original article link:
https://www.bitpush.news/articles/6784161
Related news
Interview with the founder of ether.fi: The repledging market has become “crazy,” beware of potential systemic risks
Can RWA become one of the dominant factors in the 2024 bull market?
Dialogue with TON Foundation: Can it bring 900 million Telegram users into cryptocurrency?
Sotheby’s became a clown? CyptoPunks sellers mock New York’s nouveau riche
UTXO: Different expectations for the Bitcoin ecosystem