Polkascan Foundation Funding Request 2022 – 2024
Publication: https://polkascan.org/funding-request-2022-2024/
The Netherlands, 18 February 2022
Subject: Polkascan Foundation Funding Request 2022 – 2024
Polkadot Governance,
Polkascan Foundation frames Polkadot Network as an enabler of the Polkadot Economy that spawns diversified economic activity through its permissionless and heterogeneous nature. Polkascan Foundation positions itself as the Bureau of Economic Analysis of the Polkadot Economy and seeks Treasury Funding for its 2022 – 2024 activities. Through sustainable funding methods Polkascan Foundation aims to become the first ever Common Good Organization in the Polkadot Ecosystem.
Polkascan Foundation intends to make two requests to Polkadot Governance:
- The allocation of a 12-month budget of 100.000,00 DOT (~€ 1.600.000,00) for the foundation’s 2022 activities by means of the (Child)Bounty Treasury Spending Instrument. The budget allows for periodic reimbursement of the foundation’s research, engineering, community support activities of its open-source repositories and the budget allows for periodic reimbursement of the foundation’s service management activities of its hosted platform. Future Governance requests are limited to bi-annual budget extensions for subsequent budgeting terms.
- The approval of a loan of € 800.000,00 (~50.000,00 DOT) through the Treasury Proposal Spending Instrument. This loan will be used by Polkascan Foundation to serve as operating liquidity by maintaining a stable Euro-reserve on its traditional bank account.
With the enactment of these two requests Polkascan Foundation is confident to be able to sustainably fund its entire operation for the foreseeable future. Additionally the foundation is confident that this level of treasury funding allows it to proactively push for a ‘regulatory’- and ‘fiscal’-ruling of ‘Treasury Funded’-organizations within the Netherlands.
Polkascan Foundation has considered a number of avenues as candidate funding sources over the past 6 years. Commercial models (subscription fees or advertisements), venture capital funding, token issuance and these have all been abandoned for various reasons to do with value alignment, incentive alignment and risk appetite of the foundation and its founders. The only remaining path forward is blockchain treasury funding and Polkascan Foundation has proven that this can be a viable model through the foundation’s 2020 and 2021 funding. The foundation has mitigated most of the identified operational risks to move forward with a reasonable and balanced funding proposal. Some risk remains, such as foreign exchange risks to be carried by the Polkadot Ecosystem.
Polkascan Foundation has managed to institutionalize its founders’ ambitions and ideas to add value to the Polkadot Ecosystem and it is ready for a bright future, willing and capable to continuously contribute to the broader vision of Web3.
Polkascan Foundation humbly asks Polkadot Governance to constructively evaluate and to consider the enactment of the foundation’s two requests as one single decision. The foundation’s representatives are ready and available to clarify the overall request and any particular points of interest.
Full details of the request to Polkadot Governance can be found in the following two documents:
- Funding Request 2022 – 2024 | This document provides full details regarding Polkascan Foundation’s funding request to Polkadot Governance.
- Business Plan | This document provides Polkascan Foundation’s business plan and should be seen as the context and justification for the funding request
Comments (33)
Wei Tang has expressed a number of concerns on Element in the Polkadot Direction channel.
I will address these one by one:
Concern: Our proposal is 'unfair' to other explorers:
Rebute: As far as we can tell all other teams that build explorers have always been able to secure the treasury funding they were seeking. So I really do not understand how our proposal has a negative effect on other teams that build explorers.
Concern: There needs to be a set of guidelines for payout.
Rebute: We fully agree and I hope everyone can find these guidelines throughout our proposal. All our work is open-source, our foundation is a non-profit and thus there is no external interest with the software or the platform we service (no advertisers, no shareholders and no tokenholders). I'd even go further that we have actually raised the bar for other organizations to match the conditions we have created with the legal setup of our foundation, our open-source software and our services for the ecosystem.
Concern: An 'Explorer Developer Fund' Bounty is a fairer/better strategy.
Rebute: Such a fund does not help us very much and this approach will not work for Polkascan Foundation. First: our foundation offers many products of which the explorer is just one. For instance we single-handedly bootstrapped the entire python/substrate ecosystem and this is a much higher maintenance burden than the explorer product alone. Second: we have come to experience that moving Treasury funds beyond EUR 50k through the regular banking system gets attention from regulators (in the Netherlands). Our proposal is really a method that allows us to seek regulatory and fiscal ruling on a fully treasury funded organization such as Polkascan Foundation. This is the only way for us to sustainable scale up our activities.
Concern: The issue of borrowing will have the same concerns as people have raised in Acala's proposal.
Rebute: Some of our previous treasury funded work for the maintenance and support contract of our foundation's Python libraries was funded through an advance payment for 6 months (repeatedly for 15 months). This advance payment was needed back then to allow us to set up a contract with the subcontractor to do the actual work for our foundation. The operating liquidity (loan) in our proposal serves this exact same purpose, with the key difference that the EUR amount is technically never touched and remains on our foundation's balance sheet as both operating liquidity (assets) and as a debt to the Polkadot Treasury (liability). Our expenses for our development work and IT services which run through our Profit & Loss will be fully reimbursed through the Bounty component of our proposal.
In my opinion Wei Tang's concerns are technicalities that miss the bigger picture of our proposal. We look forward to continue this dialogue.
Raul has stated a number of questions on Element in the Polkadot Direction channel. I will address these one by one:
Question: Since the Polkascan Foundation is a non-profit organization and aims to fund its operations through the treasury, can you explain a bit more on how the org will repay the loan at the end of the term?
Answer: Yes indeed Polkascan Foundation is a non-profit and has no shareholders. The entire capital of the foundation is required by law to be contributed to its mission.
The loan will get us an EUR reserve on our regular bank account of approximately 800k€. This amount will be on our balance sheet as both operating liquidity and a debt to the Polkadot Treasury. This amount equals half of the annual budget and thus allows us to contract with our subcontractors and it suppliers for spans of 6 months. Any outflow of this EUR reserve will be corrected through the budget/bounty reimbursement process. Effectively leaving the 800k€ untouched at any given time. Whenever we quit our activities or after 3 years the 800k€ is repaid (in DOT) to the Treasury.
Interest will be paid on the loan from our staking rewards of our foundation’s strategic DOT/KSM reserves. These reserves have been accrued through previous treasury funded activities surplus (expenses turned out lower) and staking rewards in these reserves. DEtails regading these reserves can be found in section 6.2. of our Business Plan.
Concern: And how are you planning on dividing the bounty? month-end, right? one child bounty will cover the entire monthly budget?
Answer: Full details on the reimbursement process can be found in section 4 of our Funding Request 2022 – 2024. Appendices in the funding request show a detailed scenario for our reimbursements. Summarized: at the end of each month Polkascan Foundation will initiate a reimbursement process by initiating a payout process through a ChildBounty (partial payout of the bounty). This payout will cover our expenses on Subcontractors (development activities on open-source software) and IT Services (expenses for our hosted platform). The reimbursement process takes VAT (taxes) into account and takes an organizational overhead into account.