Fees & protocol revenue

A pack payment is ev × (1 + s). The protocol takes 1% off the top; the surcharge component of the remainder is recovered exactly:

net           = paid × 99%
surplus       = net × s ÷ (1 + s)
compensation  = net − surplus          (less the 5% crown tithe)

Compensation goes to depositors. It is not income — it offsets the expected cost of being drawn, since every draw takes a card out of someone's hands and that value is distributed back. Surplus is the part that gets split:

Deriving the split from what was actually paid — rather than comparing against some expected-value figure — is what makes the protocol's take invariant to price movement. Sizing it against a stale average taxes drift as revenue in whichever direction the average is wrong, which we measured at over 4× the intended rent in both directions before choosing this shape.

One listing at a time holds the crown: the highest-backed deposit. It earns a 5% tithe off every pack's compensation while it reigns, paid out when it leaves — withdrawn, displaced, or drawn. A challenger must clear the holder's backing by 10% to take it.

The tithe comes out of the equally-split tranche, so it is the pool paying one of its own for anchoring the deepest bid — a bounded prize for over-backing, on top of the rarity it already buys. The share is capped at 20% in the contract.

The expected cost of being drawn on the sell-back leg is P(draw) × bid. The 1/b draw probability cancels the ×b bid exactly, so it works out identical for every listing — a lightly backed card is drawn often and owes little; a heavily backed one rarely, and owes a lot.

So compensation is distributed equally per listing, and only the surplus above it is distributed pro rata to total capital — the stock's value plus the ETH behind it. That affine split is the unique one that makes net return per unit of capital independent of position size. Either pure basis pushes the whole pool to one end of the price range and the chase cards disappear.

When a purchaser keeps the stock, the protocol takes 1% of the backing returned to the drawn depositor. When the purchaser takes the bid, there is no cut — they already conceded 10% of the backing to the depositor on that leg, and cutting again would charge twice for one settlement. Both cuts are capped at 5% in the contract.

harvestFees credits accrued fees as ETH without closing the listing. harvestFeesAsToken takes the same fees as $SP instead. Withdrawing settles any unharvested fees automatically.