Polkadot's Future Investment Fund (PFIF)

Copied from the original Polkadot forum post.

Definition

This is a draft for an investment fund dedicated to increasing Polkadot adoption and generating capital returns through strategic investments, with a strong focus on JAM and forward-looking developments both within and beyond the Polkadot ecosystem.

Motivation

Below are several characteristics of the current treasury grants model, especially for higher-medium and big spenders.

• Spend-oriented.
• Low to no accountability except for community credit.
• No legal binding for responsibilities.
• Lacks a milestones model.
• Tracking efforts place an extreme burden on the community's shoulders.
• Passive, with low engagement, as there is no proactive request-for-proposals process.

Proposed PFIF model:

• Actively and consciously invests with a focus on adoption and growth.
• Employs both traditional and modern investment strategies, techniques and legal procedures.
• Operates with 100% accountability, aiming for investment transparency and efficiency.
• Clearly defines investment targets, identifies development teams, and invests for equity and broader adoption.
• Seeks capital returns for sustainable funding and profitability.

Objectives

• Increased Polkadot Adoption Across Sectors: Identify and invest in projects and companies that could leverage Polkadot technologies (with JAM in focus) in their operations and contribute significantly to the Polkadot ecosystem.
• Capital Efficiency: Address the limitations of the current treasury grants model by enforcing strict accountability measures.
• Capital Returns: Secure financially viable and profitable investments, thereby providing capital appreciation to the fund's investors.

Fields of Interest

PFIF's fields of interest include but are not limited to:

• Software
  • Protocol development
  • Gaming
  • Tooling
  • Industry-specific operations software
• Hardware
  • Mobile
  • Networking
  • Internet of Things (IoT) devices
• Infrastructure
  • Communications
    • Data centers
    • Physical network infrastructure
  • Energy systems

Investment Ticket Size

Initial investment ticket sizes range from $50K to $500K USD. Ticket sizes will be periodically reviewed and adjusted as the fund grows and evolves over time.

Fund Size

• Initial Target: $10 million to kick-start operations.
• Medium-to-Long-Term Target: $100 million.

Operations

1. Operations should be carried out under a legal foundation to ensure compliance.
2. Ten members on the investment committee, each locking 10,000 DOT in OpenGov at maximum conviction (6x) on a newly created identity-verified account dedicated to PFIF. This deposit remains locked in OpenGov throughout their membership.
3. An advisory board of reputable leaders in the ecosystem, and parachain team representatives.
4. Decisions operated under a 6/10 multisig.
5. 2% operation cost. Committee members are compensated at $150 per hour and receive performance-based fees.
6. Quarterly publication of transparency reports and profit distribution to all investors.

Fundraising Sources

1. Treasury
2. Web3 Foundation (W3F)
3. Polkadot Community: Polkadot community at large should be able to invest in the fund in a trustless manner. Real-world examples should be examined to model public investment.
4. Investment Committee & Board Members
5. Individual and Institutional Private Investors

Closing Thoughts

I believe that a well-managed PFIF can be very successful in creating widespread adoption and generating capital returns, and can set a great example of how to manage ecosystem resources. While there are many details yet to be discussed, I hope this post serves as a productive starting point for discussions.

Thank you for your attention, and please share your thoughts.