Revenue Distribution

How ad revenue flows to song token holders and NFT owners on Music-Fi.

Revenue Streams

Music-Fi has two distinct revenue models depending on whether a song has trading enabled.

Non-Tokenized Songs (Creator Holds NFT)

When the creator keeps their NFT without enabling trading:

Source	Creator	Platform
Ad Revenue	80%	20%

• Creator receives 80% of ad revenue directly
• Payment in ETH or USDC (off-chain)
• Full ownership retained
• No token price appreciation mechanism

Tokenized Songs (Trading Enabled)

When the creator enables trading and locks their NFT:

Source	Distribution	Platform
Ad Revenue	80% to Pool	20%
Swap Fees	LP Holders	1% per swap

• Ad revenue flows into the Uniswap V4 pool via donate()
• All token holders benefit from price appreciation
• Platform earns from both ad revenue and swap fees

Creator Advantage

Creators receive 80,000 tokens (80% of supply) when enabling trading. As ad revenue increases the pool value, creators benefit from the largest share of appreciation.

Revenue Flow Visualization

                    ┌────────────────────┐
                    │   Ad Revenue       │
                    │   from Streaming   │
                    └─────────┬──────────┘
                              │
              ┌───────────────┼───────────────┐
              │               │               │
              ▼               ▼               ▼
         80% Share       20% Share       1% Swap Fee
              │               │               │
              ▼               ▼               ▼
    ┌─────────────────┐ ┌─────────────┐ ┌─────────────┐
    │ Uniswap Pool    │ │  Platform   │ │   Platform  │
    │ (Token Holders) │ │  Treasury   │ │   Revenue   │
    └─────────────────┘ └─────────────┘ └─────────────┘
              │
              ▼
    Token Price Increases
    (All holders benefit)

Distribution Mechanics

Tokenized Songs

1. Platform collects ad revenue from streaming
2. 80% sent to song's Uniswap pool
3. donate() adds ETH to reserves
4. Token price increases automatically
5. All token holders benefit proportionally

Non-Tokenized Songs

1. Platform collects ad revenue from streaming
2. 80% paid directly to NFT owner
3. Payment in ETH or USDC
4. Weekly or monthly settlement

How donate() Works

Uniswap V4 introduces a revolutionary feature called donate() that allows adding value directly to a liquidity pool without executing a swap.

The donate() Function

function donate(
    PoolKey calldata key,
    uint256 amount0,
    uint256 amount1,
    bytes calldata hookData
) external returns (BalanceDelta);

Technical Explanation

The donate() function works by:

1. Direct Reserve Addition - ETH is added directly to the pool's reserves without changing the token supply in the pool
2. No Slippage Impact - Unlike swaps, donations don't move the price curve during execution
3. Immediate Value Increase - The added ETH increases the value backing each token instantly
4. Hook Integration - Our SongRevenueHook contract calls donate() to distribute ad revenue

Why donate() is Revolutionary

Traditional DEXs require swapping to add value, which creates slippage and benefits arbitrageurs. With donate(), 100% of the ad revenue goes directly to increasing token value for holders.

Hook Implementation

The SongRevenueHook contract handles revenue distribution:

function distributeRevenue(
    PoolKey calldata key,
    uint256 ethAmount
) external onlyPlatform {
    // Add ETH to pool reserves via donate()
    poolManager.donate(key, ethAmount, 0, "");

    emit RevenueDistributed(key.toId(), ethAmount);
}

Value Appreciation Example

Here's a concrete example showing how token holders benefit from ad revenue:

Before Revenue Distribution

Song: "Midnight Vibes"
Pool State:
  - ETH in pool: 2.0 ETH
  - Tokens in pool: 20,000 tokens
  - Token price: 0.0001 ETH per token

Your Holdings:
  - 1,000 tokens
  - Value: 0.1 ETH

Monthly Revenue Generated

Monthly listens: 100,000
Ad revenue earned: 0.5 ETH

Distribution:
  - Pool donation: 0.4 ETH (80%)
  - Platform fee: 0.1 ETH (20%)

After Revenue Distribution

Pool State:
  - ETH in pool: 2.4 ETH (+0.4 ETH)
  - Tokens in pool: 20,000 tokens (unchanged)
  - Token price: 0.00012 ETH per token

Your Holdings:
  - 1,000 tokens (unchanged)
  - Value: 0.12 ETH (+20%)

Compounding Growth

As songs accumulate more listens over time, revenue compounds. A consistently popular song can see significant token appreciation month over month.

Long-Term Projection

Month	Pool ETH	Token Price	Your 1,000 Tokens Value
0	2.0 ETH	0.0001 ETH	0.10 ETH
1	2.4 ETH	0.00012 ETH	0.12 ETH
3	3.2 ETH	0.00016 ETH	0.16 ETH
6	4.4 ETH	0.00022 ETH	0.22 ETH
12	6.8 ETH	0.00034 ETH	0.34 ETH

Assumes consistent 0.4 ETH monthly revenue

Distribution Frequency

Revenue is distributed based on song popularity:

Category	Threshold	Distribution
High-Volume	>500k monthly listens	Weekly
Standard	10k-500k monthly listens	Monthly
Low-Volume	Under 10k monthly listens	Quarterly

On-Demand Distribution

Platform administrators can trigger distribution at any time for special circumstances or accumulated smaller amounts.

Related

• Claiming Earnings
• Revenue Hook
• Swap Fees