Fees & protocol revenue

Every acquisition fee, minus the protocol cut and the crown tithe (a small slice set aside for the top deposit reward), is split equally across all active positions¹. Every position earns the same amount per acquisition, no matter its backing. Earnings build up continuously as a withdrawable balance.

Equal per acquisition, uneven over time. A position earns its share on every acquisition it's in the pool for, and richly-backed positions, with their lower selection weight, tend to stay in the pool far longer. So a richly-backed NFT and a cheap one earn the same on any single acquisition, but the richly-backed one collects fees across many more acquisitions before it's finally allocated. On average, the larger the backing, the more ETH the position earns over its lifetime, purely because it sticks around longer.

The risk is duration. The selection weight implies an average lifetime for each deposited NFT, but any individual position can be selected earlier than that average. When that happens, the depositor's earning life ends sooner than expected: no more future acquisition fees, FWA rewards, or crown tithe from that NFT. A depositor whose NFT is selected early and who doesn't replenish can realize a loss versus the cut they expected to earn over the average lifetime.

• It keeps acquisitions cheap and rewards small depositors: a modest position earns just as much per acquisition as a large one, which encourages the many small deposits that keep the pool liquid and the price low.
• On its own it would scare off large deposits, so the size incentive it removes is added back through a separate, visible mechanism: the top deposit reward.

Where protocol revenue comes from

The protocol is the third role: it doesn't list positions or make acquisitions, but it earns when activity exposes a gap between NFT value, ETH backing, and the choices purchasers make. Its revenue comes from a few clearly-bounded sources, held in the contract until anyone pushes them² to the payout address. None of them touch backing; they're taken only from fees and the surcharge:

• A cut of every acquisition fee (from the surcharge; your acquisition price is unchanged).
• A cut when a purchaser keeps the NFT (a small % of the position's value, from the depositor's refund).
• The settlement discount: by default to the protocol; a toggle can instead share it among depositors (your proceeds as a purchaser are the same either way).
• A 1% FWA trading fee (once its market is live), the one stream meant to stay with the protocol long-term.

Optionally, a configurable slice of the protocol cuts can be redirected into buying back FWA³instead of being paid out, turning the protocol's revenue into buy pressure for the token.