Fees on gross income

[indexomega]

Newbie question here.

Does the concept of investing and collecting fee on gross sales exists in finance?
I mean, you invest in a company and collect fees on their gross income. It's not the same as being a normal stakeholder where you get distributed profits when the board decides to distribute.
Is this something common?

I'm asking because I see many projects where you get passive income from fees by staking a coin and I wanted to know if this is something common in realworld finance, not just in defi. Is it sustainable? Is it difficult for tax purposes?

 

[Martin Everson]

Does the concept of investing and collecting fee on gross sales exists in finance?
I mean, you invest in a company and collect fees on their gross income.

Yes

I'm asking because I see many projects where you get passive income from fees by staking a coin

You mean like Tezos or something?

Is it sustainable?

Doubt it

Is it difficult for tax purposes?

You need to speak to your local accountant for your specific situation.

 

[Brandon3]

How to get some more details about it? I would like to know more. Thank you!

 

[indexomega]

Yes

Does this profit distribution has a name? I couldn't find it anywhere

You mean like Tezos or something?

I'm not very familiar with Tezos, but I understand it does proof of stake and you get fees based on how much you hold.
However these coins only pay you for transaction verification fees. I'm thinking of something more similar to uniswap pooling, where you collect fees on pool activity by investing in the pool.

You need to speak to your local accountant for your specific situation.

Yes, because I don't know if someone receiving fees from gross sales would be considerer a stockholder or not.

How to get some more details about it? I would like to know more. Thank you!

Basically, let's say your company sells a product or service.
Now, you create and distribute a fixed amount tokens.
Whenever you sell something, a percentage of that sale is deducted and then is distributed amongst the token holders.
Example:
1. You distribute 100 tokens
2. You sell it to three holders, they have 30 tokens, 50 tokens and 20 tokens respectively.
3. Let's say your company generates an income of 1000$ in sales.
4. Now, 5% of that goes as fee for token holders
5. Token holders receive $15, $25 and $10 respectively.

Why would you do this? Because of the same reason you'd sell stocks. You can get capital by selling those tokens as people expects returns on that based on the company sales they project.
It's something similar to an ICO but with gross sales instead of the usual stock divided distribution.

Anyway I'm not planning to do this, it's just an idea I have.

 

[Martin Everson]

Does this profit distribution has a name? I couldn't find it anywhere

On gross sales you can call it "Royalty Payment"