---
title: "The Founder's Cut"
url: "https://caper.network/blog/the-founders-cut"
updated: 2026-09-09
license: CC-BY-4.0
license_url: "https://creativecommons.org/licenses/by/4.0/"
---

# The Founder's Cut

For most of history, whoever struck the coins took a cut. The word for it is [seigniorage](https://en.wikipedia.org/wiki/Seigniorage), from _seigneur_, the lord: the gap between what a coin is worth and what it costs to make, kept by the authority that makes it. A lord who ran a mint earned on every coin struck – a fee for turning raw silver into money the realm could actually use. Honest enough, in principle. Minting is a service, and the minter is paid for performing it.

The abuse that shadows seigniorage is debasement. A ruler short of money could mix cheap metal into the coin, strike the same face value out of less silver, and pocket the shortfall. Henry VIII [debased the English coinage](https://en.wikipedia.org/wiki/Great_Debasement) so thoroughly that he earned the name "Old Coppernose," the silver wearing off the high point of his portrait to show the base metal beneath. Debasement is seigniorage's evil twin. Instead of charging a visible fee to the person buying new money, the minter takes a little from everyone already holding it. The first is a price. The second is a theft wearing the costume of a price.

Every enterprise that issues a claim on itself faces a version of this choice, because someone has to be paid for building the thing. A startup pays its founders in shares; a token project pays them in tokens. And the standard method has always been the one closest to debasement: [mint the founder a large allocation up front](/wiki/economics/airdrops-and-token-distribution), out of the very supply everyone else will later buy. Whatever the vesting schedule wrapped around it, the structure is a pile of the enterprise's own money, created for the person at its centre, hanging over the market and waiting to be sold. When it is sold – and it is almost always sold – everyone who bought in earlier is diluted by it. The crypto era gave the pattern its own vocabulary: the premine, the founder dump, the ["team unlock"](/wiki/economics/token-unlocks-and-vesting) that markets learn to dread on a calendar.

The failure here is not that founders get paid. Founders should get paid; the person who takes the risk of starting a thing is precisely who a healthy system rewards, and rewards well. The failure is the _form_ of the payment – a stock of tokens, minted for an insider at a price no outsider ever paid, that can be turned into money only by selling it back into the same people the founder is supposed to be building for. It welds the founder's reward to an act that harms his own backers. That is debasement with extra steps.

A [caper](/wiki/foundations/what-is-a-caper) pays its founder the other way: as seigniorage, in the open, and never as a stock minted before anyone showed up. When someone buys into a caper, they pay a little above the curve's bare price, and that premium is the founder's cut. It is paid in the same proportions the caper itself is made of. Two thirds of what a young caper is worth is XRD sitting in its vault – a ratio read straight off [the curve](/wiki/markets/bonding-curve), not chosen; the remaining third is a claim on buyers who have not arrived yet. So two thirds of the cut is skimmed in the base money the buyer brought and dropped into a vault only the founder can open, and one third is a slice of the very tokens that buy just minted. Nobody picked that ratio. It is read off [the curve that stands as every caper’s counterparty](/blog/the-standing-counterparty), which has a fixed answer for how much of itself is real reserve and how much is claim.

The token slice is the part that deserves scrutiny, because at a glance it is the thing this essay just condemned. It is not, and the difference is stock against flow. A premine exists on day one: backed by nothing, priced at nothing, held by someone who paid nothing. The founder's slice does not exist until a buyer arrives. It is brought into being by that purchase, collateralised by the XRD just paid for it, at the price just paid for it – a price an outsider set, in the same transaction, seconds earlier. On a caper that never attracts a buyer the founder's slice is not locked or vesting or waiting on a cliff. It was never made. There is no overhang because there is no stock, only a fraction of what backers themselves chose to mint.

There is one thing on day one, though, and an honest account of the cut has to name it. The right to _collect_ the cut is itself a token: a single indivisible founder badge, minted when the caper is created and handed to whoever created it. The withdrawal method asks nothing of the caller except that they are holding it, and it checks that badge against the caper's own stored address rather than against any identity (`founder_take_pair` in `contracts/core/src/caper_dao.rs`). It is a bearer claim, and it is freely transferable – the one resource a caper issues that can trade outside Caper's own interface. A founder who does not want to wait out the taper can therefore sell the whole future stream to somebody who does, and be paid today for demand that has not arrived yet. That is not the flaw it first looks like, and it is worth being exact about why. Nobody holding the coin is diluted by such a sale: the badge moves who receives the skim, not how much is taken or from whom, and the arithmetic above is untouched. What it does mean is that "the founder" in the rest of this essay names a role rather than a person – a claim on a fee stream that can change hands with no proposal, no announcement and nothing on the platform for holders to see. The contract takes that sale seriously enough to design for it: the badge's identity fields are locked at mint and its presentation fields answer to the registry rather than the bearer, so nobody can dress a worthless badge up as a valuable one on the way to selling it. What a founder can and cannot take is set out in full at [what a founder can take](/wiki/foundations/what-a-founder-can-take).

Nor can it accumulate into one. The slice is a fixed fraction of every mint, so the founder's share of the coin is simply the average of that fraction over the stretch of curve the caper has travelled – and an average of something capped at five percent is capped at five percent. No vesting schedule enforces that, no cliff, no lockup, no clause anyone could waive. It is arithmetic, and it holds on every path. In practice the share sits just under five percent at the first buy and falls from there: near four percent once a tenth of the supply is out, under one percent by the time the curve is nearly full. The founder is diluted by their own success, which is the right direction for that number to travel. One thing worth stating plainly, since the arithmetic does not cover it: this bounds what the skim can hand a founder, not what a founder may own. They can [buy on the curve](/wiki/foundations/buying-into-a-caper) like anyone else, at the same price as anyone else.

Two design choices make this honest rather than merely rebranded. First, the cut comes out of the buyer's own premium, not out of what existing holders own – a fee on new money, in the exact seigniorage sense, rather than a debasement of old money. A thirty-first of the cut’s token leg – the tithe written into `TITHE_NUM`/`TITHE_DEN` in `contracts/logic/src/lib.rs` – is routed to a shared pool, the Commons, that every caper on the platform feeds, so each new venture launched thickens the common treasury standing behind all of them. Second, and less obvious, the cut is front-loaded in rate but self-terminating: the founder's share of each buy is heaviest at the very first purchase and thins steadily as the token distributes, until it reaches zero at thirty percent of the supply sold and stays there. That end point is a constant, `COLLATERALIZATION_TAPER_END` in `contracts/logic/src/lib.rs`, and not a per-caper setting anyone chooses. Past that point the founder's cut is over, and the Commons' with it: both are slices of the same tapering fraction and both reach zero together. One charge outlives them, and it belongs in an honest account of the cut rather than in a footnote – a [trade fee](/wiki/markets/trading), 0.5% today and a stored setting rather than a constant, that rides on every buy and every sell for as long as the caper exists. Where each leg lands is most of its character. The buy leg is deposited into the caper's own treasury, so it stays behind the token, inside [the claim every holder can redeem](/blog/the-exit-right). The sell leg leaves, into the treasury of the base $XRD caper that every caper is priced against. The founder's take ends. A small symmetrical toll on trading does not. The reward is concentrated where the risk is – the cold open, when a founder is asking strangers to back something with no history – and it switches off once the thing is established, instead of curdling into a permanent tax on a mature token.

There is a subtlety in this that cuts against the usual launch-day greed. The _rate_ is heaviest at the start, but the founder's actual _take_ is not, because at the start the price is near nothing, and a large share of nearly nothing is nearly nothing. The real money arrives only as real backers do: the cut swells with genuine demand and then fades as the rate winds down. A founder cannot get rich by sniping his own launch, because at launch there is nothing there to snipe. He is paid in proportion to the interest he actually attracts – which is the only thing you would ever want a founder paid for. His incentive is fused to the single activity that also serves his backers: bringing real demand to the thing they hold.

This is an old problem in a new mint. Any enterprise built around a person has to answer how that person eats without letting them loot the enterprise to do it. Salaried from the treasury, they drain the common pool. Paid in a founder's stack, they carry an overhang that punishes the faithful. The caper keeps the mint's honest half and discards its dishonest one – a visible fee on the making of new money, charged to the party who chose to make it and taken out of what they just brought – and then does something no historical mint ever did: it turns the fee off once the coin is in wide circulation and the risky work is behind it.

Seigniorage built palaces, and when it curdled into debasement it toppled the currencies that paid for them; the line between the two was always whether the one minting the money was charging a fair price or picking a pocket. For most of financial history that line was a matter of the minter's character, policed weakly if at all. A caper draws it in the contract instead. The founder is paid, well and early, out of what newcomers freely offer and never out of what holders already own – and when the enterprise no longer needs bootstrapping, the cut simply ends. The person at the centre is compensated for the risk they took by the very mechanism that once let sovereigns rob their subjects, running honestly for the first time.