The Respect Fund: How the 5% Collective Levy Works

What Is the Respect Fund?

Every time a royalty event occurs on the platform — when a contract cites an IP asset and burns LTU — 5% of the royalty is redirected to the Respect Fund before the inventor and company receive their shares.

This is not a platform fee. It does not go to the company that built this software. It goes to a transparent, append-only ledger governed entirely by the community. The platform cannot touch it. No admin can redirect it.

You Choose Where Your 5% Goes

This is the key difference from conventional taxation.

A VAT payment goes into a government pool. You have no say in how it is spent. You cannot see the real-time balance. You cannot verify the allocation decisions. The social contract breaks because transparency is absent.

Here, you direct your levy. In your settings, you can choose one or more eligible companies or projects to receive your transaction levy. Every time your activity generates a royalty, your 5% flows to the cause you have chosen.

Eligible recipients are companies with a mission-driven governance model:

• Not-for-profit organisations
• Cooperatives
• DAOs (decentralised autonomous organisations)
• Social enterprises
• Collectives

For-profit companies are not eligible to receive directed levy — they have conventional investment channels. The levy is for public goods, commons infrastructure, and community projects.

What If You Don't Choose?

If you have not set a levy preference, your 5% flows into the general Respect Fund pool.

The general pool is distributed through the Impact Proposal system:

1. Any user with IA ≥ 5.0 can submit a proposal requesting LTU from the fund
2. The proposal goes to a community vote — weighted by IA score
3. 60% weighted approval from at least 3 voters passes the proposal
4. Approved proposals are funded from the pool balance

This is democratic allocation at the protocol level. No committee. No veto. Weighted by intellectual authority, not by token holdings or political influence.

The Fund Is Transparent

The Respect Fund is an append-only ledger. Every levy event is recorded. Every disbursement is recorded. The current balance is public. Any user can audit the complete history.

This is what transparent public finance looks like: every unit of value that enters and exits is visible, timestamped, and immutable. No off-book transfers. No discretionary allocations.

Supporting a Project From the Marketplace

In the Pulse feed and Marketplace, eligible companies that are seeking funding appear as Funding Seeker cards. You can direct your levy to a project directly from the card — one click, and every future royalty you generate will route 5% to that project.

You can change your preference at any time. The change takes effect immediately for future royalty events. Past events are already settled and cannot be redirected.

The Cycle

When the system is working well, the Respect Fund creates a virtuous cycle:

1. Good IP is cited → royalties flow → 5% to Respect Fund
2. Respect Fund supports a community project → that project creates value
3. The community project cites IP assets in its own contracts → more royalties → more levy
4. New ideas are funded → new IP is created → new citations → new royalties

No central actor needed. The protocol does the work.