# Rogue Protocol: A Framework For NFT Royalties Tokenisation

**Authors:** Šarūnas Barauskas, Roberto Ripamonti, Emanuele Ragnoli  
**arXiv:** [2211.00063](https://arxiv.org/abs/2211.00063)  
**Date:** 2022-10-21  
**Summary page:** https://www.summarizepaper.com/en/paper/2211.00063v1/

## Key points

- The crypto ecosystem is popular for raising venture capital through different investment vehicles such as ICOs, DAOs, and NFTs.
- Investor protection is a crucial aspect of efficient capital markets that has been overlooked by many projects focused solely on marketing to attract new investors without generating any economic revenue.
- Regulators have taken a strict approach to the ecosystem and deemed certain tokens as securities when they were not intended to be.
- Cryptocurrencies that exhibit truly decentralized activity like Ethereum have been granted exceptions by regulators such as the SEC in their interpretation of the Howey test for digital assets.
- A system that automatically directs project revenue to a treasury pool and computes token prices using predetermined bonding curves would efficiently raise capital while providing automatic guarantees of fair participation for investors in project success.
- NFT royalties are an excellent example of decentralized economic activity generating cash flows used to back associated tokens.
- The authors propose a cryptographic system called Rogue Protocol for NFT royalties tokenization that ties token prices to the success of decentralized activities while ensuring fair distribution and rewarding founders and participants according to their risk-taking levels.
- The proposed framework addresses investor protection issues in cryptocurrency ecosystems while promoting value creation over hype-based marketing strategies.

## Summary

The crypto ecosystem has become a popular avenue for raising venture capital, with each new influx of capital being characterized by a different investment vehicle such as ICOs, DAOs, and NFTs. However, these paradigms have failed to address the issue of investor protection which is a crucial aspect of efficient capital markets. Many projects have focused solely on marketing to attract new investors without generating any economic revenue making price discovery impossible and leaving investors vulnerable to rug pulls. As a result, regulators have taken a strict approach to the ecosystem and deemed certain tokens as securities when they were not intended to be. Despite this regulatory environment cryptocurrencies that exhibit truly decentralized activity like Ethereum have been granted exceptions by regulators such as the SEC in their interpretation of the Howey test for digital assets. This exception could benefit numerous decentralized projects if implemented correctly. A system that automatically directs project revenue to a treasury pool and computes token prices using predetermined bonding curves would efficiently raise capital while providing automatic guarantees of fair participation for investors in project success. This framework would incentivize founders to design decentralized projects that create value instead of hype while reducing the need for stringent securities laws. NFT royalties are an excellent example of decentralized economic activity generating cash flows used to back associated tokens. The authors propose a cryptographic system called Rogue Protocol for NFT royalties tokenization that ties token prices to the success of decentralized activities while ensuring fair distribution and rewarding founders and participants according to their risk-taking levels. In conclusion, this paper presents an innovative framework that addresses investor protection issues in cryptocurrency ecosystems while promoting value creation over hype-based marketing strategies. The proposed cryptographic system offers an effective solution for efficiently raising capital while minimizing risks for investors and encouraging founders to develop sustainable decentralized projects that generate economic revenue.