Revenue Participation Tokens

Revenue participation tokens are tokens that entitle their holders to receive part of the revenue earned by a business, protocol or project, usually paid out periodically in crypto or stablecoins. They work much like a revenue-sharing agreement or a dividend right, but are recorded and often paid through a smart contract. Examples range from tokens that pass on a share of exchange trading fees to tokens issued by small businesses or music artists as a way to raise funds. Because holders expect profit from the work of others, such tokens usually look like investment contracts under the Howey test in the United States and like financial instruments in many other countries. They are therefore generally treated as a security token, requiring registration or an exemption, and many projects have avoided direct revenue sharing for that reason.