DUIP-1: Set Data Union protocol fee to 1%

Within the Data Union ecosystem run by the Data Union DAO, a small protocol fee (or protocol tax) can be collected from the money that passes through the Data Unions framework. The fee collection happens automatically in the Data Union smart contracts when revenue from data sales is sent to it.

The protocol fee is an important component of the future UNION token economy, where revenues from protocol fees can be directed towards a buy & burn mechanism, or used for a development fund. The DAO can decide later about the exact use of collected protocol fees, this proposal is just about setting the initial rate.

I propose the rate is set to 1% initially. Why? We’ve collected feedback from Data Union builders, and this level has been generally accepted and comfortable to them.

Regulating the fee responsibly is an important task for the DAO, as setting it too high may alienate builders, while setting it too low may make it useless for helping the DAO’s mission. The DAO may choose to tweak the rate in the future as it sees fit.

Pros

• If Data Unions are successful in generating revenue from data sales, the protocol fee will bring in a continuous income stream to the DAO
• The income stream can be used as a component in the UNION token economy or for operations of the DAO.

Cons

• Although widely used in the blockchain / web3 space to power token economies and incentive structures, protocol and transaction fees can also be a source of complaints if they are too high.