Hi Everyone,

Sharing Afloat's proposal draft. We'd really appreciate your feedback.

**Summary:** [Afloat](https://stayafloat.io/#/) enables the fractional buying and selling of tax credits that historically have been inefficient, opaque and centralized. It has already processed tax credits ranging in orders from $2K -$70k USD.
It was built on a private Ethereum clone but due to Polkadot technology and identity management, it’s applying for a grant to migrate.

**Afloat founder:** [Louise Reed](https://www.linkedin.com/in/louisewreed/)

"Tax credits promote individual rather than governmental choice of how money will be spent to accomplish public policy objectives (Weidenbaum 1974). As opposed to most governmental subsidies, a tax credit is given directly to the citizen after the desired behavior is accomplished. Tax credits may serve as incentives in areas where direct expenditure by the government would be difficult (Hyatt 1977). Tax credits are perceived as a "costless form of subsidy" because the government merely refrains from collecting taxes from eligible individuals rather than redistributing funds."[1]


Tax credits, as a socioeconomic tool, are very similar to concepts found in the Substrate, Polkadot, Kusama (dotsama) ecosystem, where the tokenomics are decided by participants through a governance process designed to maximize the benefit for the network. For example, the network will

1) "mint or burn DOTs in order to reward the nodes that run the consensus protocol, to fund the treasury, to control the inflation rate, etc."[2],
2) "[ensure] DOTs also play a role in slashing protocols designed to disincentivize attacks or adversarial behaviors,"
3) "let DOT holders express their opinion in governance decisions",  and
4) "decide which projects are allocated a parachain slot".

Afloat stakeholders and the Dotsama ecosystem embrace similar socioeconomic tools and align well in spirit and in practice.

A common tax credit is for land preservation. The inhabitants of a geographic area recognize that their shared quality of life may be positively impacted if more land was preserved rather than developed. If the owner of land property in that area agrees to preserve land, they may be eligible to receive a tax credit in an amount associated to the value of the land property.

A tax credit only reduces the tax liability for the holder of the tax credit, and they expire at various durations. A common scenario is for a taxpayer to earn tax credits well beyond their tax liability over the effective lifespan of a credit. To maintain the original intended benefit of the tax credit, they are allowed to be sold to other tax payers in that have a corresponding compatible tax liability.

Afloat is an application for connectivity and liquidity. Tax payers may originate credits using the platform, and a special type of NFT is minted with any files encrypted and attached . They may request appraisal and verification of their paperwork, forms, or other evidentiary paperwork. Afloat has a number of known tax credit experts (e.g. accountants, CPAs, attorneys), and upon accepting the appraisal request, are given access to the encrypted materials. The appraiser may provide a judgement and/or a value attached to the credit.

**Here is the [detailed proposal](https://docs.google.com/document/d/1ENV5db5ojrbOSMRF9OwHtJGbY_pVeYosUXU2jCl1Hg8/edit?usp=sharing).** 

**Open Sourced components**
- Substrate pallet(s) for a "gated marketplace for graded assets" 
- Substrate pallet(s) for "NFT Candle auctions" to support expiration-configured pricing
- Support for encrypted files attached to NFTs


[1] https://www.jstor.org/stable/2488893
[2] https://research.web3.foundation/en/latest/polkadot/overview/2-token-economics.html


- Afloat is a platform that allows people to buy and sell tax credits.
- They want to migrate to Polkadot technology and are applying for a grant.
- Tax credits are like tokens in the Polkadot ecosystem, where participants make decisions to benefit the network.
- A common tax credit is for land preservation, where people can get a tax credit for preserving land.
- Afloat helps people with tax credits by providing connectivity and liquidity.

#938 Tax credit infrastructure - proposal feedback