Revenue Sharing

From customers to contibutors, without intermediaries.

Money Exchange

In the previous section, we discussed how time spent on a project is used as the baseline for determining how each contributor is compensated for their efforts. Now we're going to talk a bit about the exact mechanics of how payments work.

As we've stated before, in an aftok there is no central controlling entity — this means that there's not a central "accounts receivable", nor a bank account to which customers can make payments for later distribution to the project contributors. Instead, we turn to one of the great, though controversial, advancements of the modern world to find a solution: cryptocurrency.

Share Revenue, Not Profits

When it comes to handling money, the aftok model diverges not only from traditional corporations, but from every other established form of cooperative organization. In an aftok, it's not profits that are shared, but raw revenue — payments are made directly from the customer to the contributors, all of them, all at once.

The reasons for this should at this point be obvious; without a central bank account (or centralized control over a pool of funds in general) the notion of "profit" is somewhat meaningless. The profit on a given item is the amount that it sells for minus the cost of the item to produce, but determining the "cost to produce" an item presumes that the cost to produce that item is somehow different from the aggregate effort of all the people involved in producing it! Of course, in many circumstances payments to third parties for raw materials or supporting services are necessary components of the "cost" of an item, and we'll address how to handle that in another section but for now, it's sufficient to observe that without a central party responsible for handling funds, determining what counts as "profit" is remarkably difficult. So, the aftok system cuts the Gordian Knot — it channels revenue directly to the participants, and then provides those participants with mechanisms to collaboratively fund shared expenses.

Cryptocurrencies provide the ideal mechanism for this sort of payment, because as "programmable money" they give us a way to construct single payments that are automatically split and sent multiple recipients. When it comes time for a customer to pay for a purchase or fund a subscription, the software instantaneously computes each participant's share of the total billed amount, based upon the aggregate, fully depreciated time-share of their contributions to the project. It then constructs a "bill" that the purchaser's cryptocurrency wallet can use to construct the payment transaction, ensuring that each share of the total cost is paid out correctly.

The computation of the fractional share of revenue received by each contributor includes any depreciation that has occurred since the end of each recorded interval. Logged intervals are subject to an exclusion period (which may be configured on a per-project basis) such that intervals for which the exclusion period have not yet elapsed are not included in share computation. This is to allow for a "grace period" during which contributors may amend the start and end times of the logged interval, to account for situations when they forgot to clock in before starting work or clock out afterward, for example.

The exact depreciation algorithm is configurable on a project-by- project basis. Depreciation functions are specified using the dhall configuration language.

Zcash logo

Built with Zcash uses the Zcash cryptocurrency for its payment system. There are several reasons for this. Zcash provides strong privacy guarantees to its users when used as supported by the aftok system; only transactions sending to shielded addresses are permitted, and viewing keys held by the system are used to both produce new distinct recipient addresses for each payment (to reduce the potential for payers to be able to link recipient addresses) and to verify completion of payment in combination with the encrypted memo field which is used to transmit the unique invoice number.

Privacy is a core requirement when it comes handling a person's income, and Zcash provides exactly the features required to make the aftok system possible. At present, no other currency system, cryptocurrency or otherwise, provides all the necessary features to enable private, verifiable multi-recipient payments. Additional information about how to set up a Zcash wallet and provide the necessary viewing keys is covered in the docs.

Now that you understand how revenue sharing works, read on to learn about a bottom-up process for deciding upon differences in individual compensation.

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See how to put these principles into action