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Builders Payouts

Ways to get working capital

Hold vs Sell vs Cash-out vs Loan - for long-term contributors

This page covers what's rational for builders to do with their split share once the cobuild is live, assuming:

  • High conviction over a 5-10 year horizon
  • A meaningful split (often 10-40% of supply early on)
TL;DR
  • If you believe the cobuild will grow over years, your default is:
    hold most of your split, use loans for working capital, and sell only when you consciously want to reduce exposure.
  • Cash-outs are a clean way to exit but remove treasury; loans give you liquidity and support the floor.
  • Occasional AMM sells are fine for liquidity needs; just don't turn your founder stack into a constant sell wall.

Your Split

Your split is not "free tokens." Each token is:

  • Tied to treasury assets via a redemption mechanism[4]
  • A source of borrowing power, because loans are priced off that same curve and are designed to be over-collateralized

What you do with those tokens feeds back into everyone else's position:

  • Cash-outs (redemptions)
    • Burn your tokens
    • Pay you from the treasury
    • Designed to increase the floor price for remaining holders, because supply falls faster than the treasury
  • Loans
    • Burn your collateral at origination
    • Lend you less than you'd get from redeeming
    • Also increase the floor at origination (same mechanics as a discounted cash-out, plus loan fees)
  • AMM sells
    • Do not touch the treasury at all
    • Just move tokens from you to someone else inside the corridor between floor and ceiling
    • Floor and treasury stay unchanged

So you're always trading off:

Personal liquidity now vs future upside + network health.

Basic Moves

With split tokens you can:

Hold

Do nothing. You stay fully exposed to:

  • Rising issuance price (ceiling)
  • Activity-driven floor growth from other people's issuances, cash-outs, and loans

Good if:

  • You don't need cash right now
  • You're maximally bullish and happy being "all-in" on upside

Cash-out

Burn tokens and withdraw base asset at the bonding-curve price minus cash-out tax and protocol fees.

  • You receive slightly less than the backing value per token
  • The tax stays in the treasury → designed to increase the floor for those who stay
  • When the tax is > 0, the mechanics are structured so that each cash-out can raise the per-token redemption value for remaining holders

Use this when:

  • You intentionally want to reduce exposure (e.g. stepping back or leaving the project)
  • You're okay with "selling" some upside to reward remaining holders

AMM Sell

Swap tokens at the current market price (between floor and ceiling).

  • No cash-out tax
  • Treasury & floor don't change
  • You just move tokens from "you" to "someone else"

Best for:

  • Small, periodic liquidity needs (taxes, personal runway)
  • Situations where there's good AMM liquidity and you don't want to touch the treasury

Loan

Use tokens as collateral to borrow from the treasury instead of exiting. See Loans for full details on fee structure and costs.

  • Collateral is burned at origination
  • You can borrow up to ~63-95% of your cash-out value (depending on loan duration)
  • When you repay, collateral is reminted to you

Intuition:

A loan is like selling your tokens at a discount now with the option to buy them back later at today's floor price, plus a fixed fee.

Default Strategy

If you have 5-10 year conviction, the baseline play is:

Hold most of your split; use loans to fund work and salary; sell rarely and deliberately.

From the math, a loan beats holding when you can deploy borrowed capital at a return that exceeds the loan fees — roughly 5-6%/yr for long-term loans, 11-13%/yr for short-term. See Loans for the exact thresholds.

Founder Salary

Suppose you're a founder with a big split and you just want to pay yourself a normal salary.

Option 1: Sell

Pros:

  • You get full AMM/floor value today
  • No future obligation
  • Simple to reason about

Cons:

  • You permanently reduce your future upside
  • If you sell heavily, you become your own sell pressure

This is "classic equity sell-down": safe but de-levered.

Option 2: Loan

Here you:

  • Borrow against a portion of your stack (say 10-30% of your split)
  • Use that to pay yourself over some years
  • Plan to repay from future revenue or occasional, smaller token sales

Mentally, you're doing:

"I'm selling a chunk of my tokens at a discount to my future self, not to the market."

Rational when:

  1. You expect the floor to grow steadily (a few % per year or more), and
  2. You're confident your future income (from the project or otherwise) can handle eventual repayment.

If things go well:

  • Floor grows, your salary was funded, and you still own most of your original position at a much higher value.
  • The ~37-40% fee on a 10-year loan looks cheap in hindsight.

If things go poorly:

  • Floor stagnates or falls
  • Repaying hurts, and defaulting effectively means "I sold those tokens years ago at ~60-65% of what I could have redeemed then"
  • System stays solvent; you just own less of it

That's the real trade:

Debt + more upside vs no debt + less upside.

Option 3: Hybrid

A very sane founder pattern:

  • Use small, rolling loans on a minority of your stack (10-30%)
  • Keep the rest unlevered
  • Re-assess annually: only roll or increase if floor growth and cashflow actually support it

This keeps you:

  • Aligned for the long term
  • Liquid enough to live
  • Away from "all-in leveraged founder" risk

System Effects

From the formal analysis, different actions affect the floor and treasury in predictable ways:

  • Issuance (users buying from the cobuild)
    • Increases treasury and supply
    • Increases the floor whenever issuance price > current backing per token
  • Cash-outs (including yours)
    • Reduce both treasury and supply
    • Designed to increase the floor when there's a cash-out tax
  • Loan originations
    • Reduce treasury and supply (collateral burned, funds lent out)
    • Designed to increase the floor due to over-collateralization and fees
  • Loan repayments
    • Increase treasury and supply (collateral reminted)
    • Slightly reduce the floor vs the origination point, though the prepaid/time fees keep the full loan cycle net-positive for the system
  • Auto-issuances
    • Increase supply with no treasury inflow
    • Mechanically decrease the floor and should be used sparingly

Implication for builders:

  • Best for network & you: use loans for working capital, repay when the project is healthy.
  • Neutral: occasional AMM sells.
  • Heavy early redemptions and big auto-issuances: mechanically drag on the system and should be reserved for exceptional cases.

References

[1] Cryptoeconomics of Revnets - formal analysis of issuance, redemption, loans, and rational holder behavior.

[2] Revnet Value Flows as a Continuous-Time Dynamical System - derivation of the floor dynamics and neutral line in terms of issuance/redemption rates.

[3] Revnet Analysis - simulation results and archetype guidance (Launchpad, Stable-Commerce, Periodic Fundraising), including tax-regime and auto-issuance effects.

[4]: The redemption mechanism allows holders to redeem tokens for a share of treasury assets, subject to contract terms, available liquidity, and protocol risk. Redemption is not guaranteed.