In general I think the assumption you're making is wrong. Treasury funding should be considered a subsidy, so for example the idea of cost plus is completely wrong. The point is to subsidize something that will normally not be profitable. For example let's say polka dot issues some new features and some wallet has to decide if to implement them immediately or to wait for the features to be commonly used. From a business perspective for the wallet only it makes sense to delay the implementation as maybe few people will use the new feature. But for polka dot ecosystem it makes sense to implement the change as soon as possible. But this will produce a loss to the wallet. So because polka will benefit then polka should pay with the treasury. I think this is the only role of the treasury. Not to give some commissions or incentives or whatever to anyone especially because that will be completely unfair to other wallets and other staking providers that should compete on a same level playing field. Does that mean that no marketing can be done? Of course not, someone could post a proposal proposing to do marketing for polkadot in general. But not some incentive model where some specific project can do whatever they want and based on some performance indicator receive money from the treasury. Strong no to any project that thinks the treasury is for paying out incentives and reduce competition instead of subsidizing projects when they do something that will not be immediately profitable to them but is good for the ecosystem

Hi Agyle,

Thank you for proposing this innovative method of allocating treasury funds in incentive pools.

Ivy’s goal is to help increase DOT long-term demand.

One of the ways to do this is to increase the harmony between DOT holders and DOT builders with a strong alignment of interests to create a thriving population of ecosystem agents.

What is wonderful about the incentive pool idea is it can help achieve this goal, and creates a culture of rewarding ecosystem agents for value-add activities.

This concept is already in play within OpenGov with the tips functionality associated with codebase contributions.

Some of the most successful networks in the world have employed these incentive models to boost growth and adoption.

In an ideal world, proposals would be submitted at cost.

The issue is that it is challenging for DOT holders and the Treasury to determine what is really cost.

For example, we’ve noticed that certain proposals show a uniform price per hour rates that strike us as above market(with no breakdown by function), and do not include invoices.

Certain teams seeking treasury funding, as a result, are incentivized to increase the cost of deliverables as high as possible.

One way to mitigate this is, in connection with incentive pools, would be to introduce a DOT Treasury Minimum Wage - one that is meaningfully lower than what is proposed in most proposals.

Then provided the deliverables meet certain KPIs, the incentive portion of the grant is distributed.

If not, it is returned to the treasury.

While this would introduce a subsequent operational assessment of whether criteria has been met, there is also a precedent of this occurring in the network via the bounty pallet.

What is beautiful about the incentive pool as well is that it doesn’t need to be unique to one team. ALL ecosystem agents in the future could have the opportunity to participate in the incentive pool - which makes achieving the specific KPI significantly more scalable.

In the future, the KPI in question can be measured by on-chain activity.

We acknowledge that that incentive pools introduce additional operational overhead, but due to their potential in creating more between alignment with DOT holders and DOT project teams accessing treasury funds, as well as boosting the amount of ecosystem agents actively contributing to the success of Polkadot, we believe they warrant further experimentation.

In terms of the Genesis proposal itself, we are still reviewing the specifics of the implementation.