Is the Treasury Polkadot's Biggest VC?

SPOILER: Clickbait title. This post argues that Polkadot’s Treasury should generally not act like a VC, and instead primarily focus on funding public goods.

In my opinion, OpenGov and the Polkadot Treasury have been some of the most exciting experiments coming out of the entire Web3 movement so far.

The rules of these systems are relatively simple and well-defined:

  • The Treasury perpetually grows through transaction fees and inflation.
  • Spending of the treasury is determined by existing token holders.

However, the final outcome of this game is not simple or well-defined at all.

One thing is clear though: because the treasury is controlled by DOT token holders, voters are naturally incentivized to spend funds that improve the Polkadot Ecosystem and the DOT token value.

But beyond that, what is the role of the Polkadot Treasury?

The Role of the Treasury

Compare the relationship between:

  • Modern Societies
  • Governments
  • Public Treasuries


  • The Blockchain Ecosystem
  • Polkadot
  • The Polkadot Treasury

Much of the advancement of modern society can be attributed to innovation created by free-market economics. The blockchain ecosystem operates under similar principles, where competition and the drive for profit lead to technological advancements and efficiencies. However, just as in modern societies, there are certain essential resources and services that are best provided as public goods.

My view is that the Polkadot Treasury should primarily be used to support public goods in the Polkadot Ecosystem and should avoid speculative investments.

Support Public Goods

In modern societies, governments use their treasuries to fund public goods and services that benefit everyone, such as roads, public parks, education, and healthcare. These are things that the free market either cannot provide effectively or would provide only to those who can afford them, leading to inequality and inefficiency.

Similarly, in the Polkadot ecosystem, the Polkadot Treasury should be used to fund initiatives that provide broad, non-excludable benefits to the entire community.

These can include (but are not limited to):

  • Development SDKs: Tools and libraries that make it easier for developers to build on Polkadot.
  • Block Explorers: Platforms that allow users to explore blockchain data freely and easily.
  • Client Libraries: Libraries in multiple programming languages that facilitate interaction with the Polkadot network.
  • Public Nodes: Nodes that allow light clients and their users access to the network.
  • Public Education: Initiatives that educate users and developers about the Polkadot ecosystem.

Just as public parks and roads benefit everyone in a community, public goods in the Polkadot ecosystem benefit all users and developers. Most importantly, these kinds of services have few sensible pathways to be funded except for a public treasury.

Avoid Speculative Investments

I would also argue that treasury spending controlled by the public usually leads to poor speculative decision-making. Generally, voters lack the technical expertise needed to evaluate complex proposals and cannot easily gain insight into the inner workings of a business, resulting in decisions based on superficial understanding or emotional appeal.

Public votes (especially in the blockchain space) can also be swayed by “popular trends” and short-sighted results. This results in projects that attempt to bribe the treasury or decisions that compromise on the principles of what we are trying to achieve in the long term.

In contrast, VC funding usually yields higher quality results due to accountability and expertise. Investors put their own money and reputation at risk when backing a speculative project, and as a result, are incentivized to conduct thorough research and make informed decisions. VCs are also more capable of supporting teams directly and gaining transparency into the actions of a team. This is why free markets have generated great results.

If we could get VCs in the Polkadot Ecosystem interested in evaluating and supporting public goods efforts, that would be great! We have seen evidence of this happening, for example, Consensys in the Ethereum ecosystem. But generally speaking, we cannot expect that philanthropy and corporate sponsorships will be there when we need them, and thus the treasury must exist to provide access to resources to fund public goods.

Flexibility and Experimentation

There are no hard-coded rules for treasury spending, nor would we want to introduce any. It is important in a decentralized system to keep low-level APIs unopinionated and allow for community influence to dictate the behavior of the system.

I am not against the idea of the treasury being used in other creative ways, especially when the cost/risk is relatively low or the experimentation value is high.

For example, we have recently seen a surge of various marketing efforts through the treasury. While I may not agree with many of the specific pathways and choices, I could see how marketing Polkadot to the world is a kind of public good for our ecosystem. Thus, perhaps treasury funding is the right place to fund marketing efforts.

There were also recent posts on having the treasury invest in Parachain projects. As I have already said, I don’t think OpenGov can make great decisions on speculative investment opportunities, but that doesn’t mean I would be against trying it out to see what happens. Especially if the pool of teams that qualify for funding would be limited.

However, I think that these kinds of speculative efforts should be the exception, not the norm. We can only establish a norm by discussing our collective belief on where the treasury should be spending and making clear pathways for projects that don’t align with that vision.

My Take on Other Funding Avenues

While at PBA Singapore 2024, we had the opportunity to hear from Web3 Foundation’s Seraya from the Grants team talk about funding avenues in the Polkadot Ecosystem.

His presentation can be found here:

Web3 Foundation Grants Presentation

Hopefully, a video link will be made available in the near future, and I will happily update this post to include that when it is.

His presentation covered many different avenues such as:

  • Decentralized Futures Program
  • W3F Grants Program
  • Treasury Funding
  • VC Funding (like through Polimec)

He spoke on the mechanics and practicalities of these funding avenues, but not much on which one to pick for your project or idea.

Here is my mental model on where I would expect certain projects to best fit in terms of getting their funding request approved:

Mermaid Diagram Text
graph TD
   FP(Is your product for profit?)

   PUBVAL(Does your product provide clear/immediate public value?)
   PUBVAL-->|Yes|T[Treasury Funding]
   LONGTERM(Does your product align with the vision of Web3?)
   LONGTERM-->|Yes|W3F[W3F Grants Program]
   LONGTERM-->|No|WHY[Why should we fund you?]

   ALIGN(Does your product align with the vision of Web3?)
   ALIGN-->|Yes|DFP[Decentralized Futures Program]
   ALIGN-->|No|WHY[Why should we fund you?]
   INVESTOR(Does the product have clear/existing investor value?)
   INVESTOR-->|Yes|VC[VC Funding]
   style T fill:#f9f,stroke:#333,stroke-width:4px;
   style W3F fill:#f96,stroke:#333,stroke-width:4px;
   style DFP fill:#6f9,stroke:#333,stroke-width:4px;
   style VC fill:#69f,stroke:#333,stroke-width:4px;
   style WHY fill:#f99,stroke:#333,stroke-width:4px;

Again, this is just my opinion, so I would be really happy to hear about other important funding avenues not included, and other people’s take on the decision path to select that avenue.

What do you think?

I would be interested to hear other people present their opinions.

  • What is the role of the Polkadot Treasury?
  • How should the treasury approach speculative investments?
  • In what ways should we experiment with Treasury spending?
  • What are other key funding avenues which were not mentioned and how should they be used?

Great write-up Shawn! Thank you for sharing this.

I agree the main purpose of the treasury is to fund public goods: we have done this since the beginning on Kusama and Polkadot - initially the narrative was: “the treasury belongs to the entire collective and its purpose is to fund projects that are essential to the network functioning, increase decentralisation and unstoppability, need to be open source, “free” for the community and hard to monetise”. Following this purpose, the infrastructure bounty was created (with the goal of covering costs for different RPC endpoints providers, explorers, indexers, libraries), and we also started seeing proposals covering essential tools for the community to function: voting/governance tools, open source wallets. I think the community should think about the treasury first days, and reflect on what these “essentials” are for the network to exist.

Given the current evolution of the network, creating a collective (or two) focusing on public goods development, similar to what this bounty used to be but established as a governance body, makes a lot of sense to me - I just dont know if this might be overengineering things, as collectives are not easily created right now.

In your mental model, you mentioned products that do/do not align with the web3 vision: i am wondering which hypothetical products would you define as not aligning with the web3 vision?

On one of your last questions:

  • How should the treasury approach speculative investments?

Your assessment on “spending controlled by the public usually leads to poor speculative decision-making” is right: when thinking about the transition from Gov1 to OpenGov, trade-offs happened and the problem of asymmetrical information became a difficult one to tackle: if the community has appetite for it, this could be solved by an investment committee (bounty, collective, ad-hoc group chosen by the community) that can decide and act fast, with complete info, expertise and accountability.

I am wondering what your thoughts on diversifying the treasury beyond DOT and stable-coins are? do you consider this to be speculative spending as well?


In your mental model, you mentioned products that do/do not align with the web3 vision: i am wondering which hypothetical products would you define as not aligning with the web3 vision?

My decision tree here is mostly a sanity check that teams are actually coming to Polkadot with relevant projects. Maybe one slightly random and crazy example:

  • Polkadot should not spend treasury funds to donate to Wikipedia.

Now I want to be clear that I am a big fan of Wikipedia. Anyone who uses the internet has probably used it (a lot). It could certainly be seen as a public good for all Polkadot users, as Polkadot users are a subset of internet users. Also Wikipedia is mostly funded by donations and grants, so the Polkadot treasury could be seen as a natural support system for this kind of project.

But as far as I know, Wikipedia is a centrally managed system, and really not part of the “web3 future”. Supporting Wikipedia would not result in the kinds of outcomes that we are trying to build and fund within the Polkadot ecosystem.

I am wondering what your thoughts on diversifying the treasury beyond DOT and stable-coins are? do you consider this to be speculative spending as well?

Generally no, I don’t consider that speculative. If anything, I think from my experience, having the treasury hold and use stable coins seem to be quite important to be able to predictably fund public goods.

The question becomes much harder to answer if the proposal is for Polkadot to purchase other tokens. I might argue purchasing tokens like Ethereum and Bitcoin is probably low risk and low speculation (relative to the whole crypto market). I would probably argue purchasing most parachain tokens would be quite speculative, but something I might be interested to see us experiment with at a small scale.

I think a key thing to me is to see that these investments are providing value to all DOT holders. This is a clear sign that something is a public good.

I stated on twitter:

If “teams, parachain winners, core time winners” want funds from the Polkadot Treasury, they must provide public goods to all $DOT holders.

It is as simple as that. Not enough teams do this.

Instead, they want treasury funds, and only funnel value accrual to their own token.

I think it would be important that if we choose to invest into parachain teams / tokens, that they must provide some base level of access to their chain and services using only the DOT token.

Dear Shawn, I truly believe that you, like many other token holders, are genuinely interested in the success of Polkadot as an ecosystem capable of adding value and making a strong impact on society today.

However, there is an additional perspective you might consider.

You claimed that the treasury should only be used for public goods, as voters are naturally incentivised to spend funds on improving the Polkadot ecosystem and the value of the DOT token.

You might consider that in many cases, speculative projects are also the ones that improve the Polkadot Ecosystem and have the strongest impact on DOT token value.

Your correlation between the government and the public treasury is true. Still, take into consideration that state-owned public treasuries invest a lot of public money in speculative projects (often non-repayable money) like startups and even directly in banks. They even have financial products (plenty of government bonds for retail investors) because they know these actions bring value back to society!

In my opinion, the treasury is a source of plenty of value for the Polkadot ecosystem, including public goods necessary for a healthy society AND “speculative” projects to bring value to the ecosystem.

But the most important question is: what public goods must a parachain provide to the community to be considered fundable by the Polkadot Treasury?

In the case of Kylix, a DeFi platform that recently published a proposal, the public goods financed are:

  1. The DeFi pallets and the platform are provided as open-source.
  2. A token exchange is sent back to the Treasury to be used as a public good managed by the Polkadot community.
  3. Once built, the internal Kylix treasury, where the protocol fees are collected, will recurrently reserve a percentage as a public good to be managed by a DAO governance.

Do you think these are working public goods for parachain funding?

I was very specific to say “primarily”, and I am trying to establish that public goods spending should be the “norm”.

I also wrote in “Flexibility and Experimentation” that while we should establish norms, we should not necessarily be establishing rules. I am open to experimentation with the treasury as long as we can be conscious of minimizing cost / risk.

An easy example of this is NOT approving requests for $1M budgets on 1 year projects, and instead asking people to come with smaller requests, smaller scope of work, and an reasonably sized milestones.

It also means not investing into tokens where large amounts of those tokens are distributed and made liquid to founders, and the treasury is left holding the bag. These kinds of situations are really only suitable for individual investors and VCs to navigate, for the reasons I listed above.

Still, take into consideration that state-owned public treasuries invest a lot of public money in speculative projects (often non-repayable money) like startups and even directly in banks.

My “not super well informed” opinion on is that most corruption happens at this layer of government spending. Government leaders are bribed to choose lesser products. Banks pay huge bonuses to their executives, then allow taxpayers to bail them out.

Can you present data which backs your viewpoint here, and which negates the presence of corruption? (I think it is important to remember why we are building systems for “less trust, more truth”)

Regarding Kylix:

The DeFi pallets and the platform are provided as open-source.

Generally I think this qualifies as something which could be compensated for by the treasury. To minimize risk, I would like if this pallet was completed first, and request for reimbursement of the time spent to built it and make it open source come after. At that time, quality and usability of the final product can be evaluated to see if it aligns with the funds being requested.

A token exchange is sent back to the Treasury to be used as a public good managed by the Polkadot community.

If the exchange is managed by the DOT token, then generally yes this is also a public good.

Once built, the internal Kylix treasury, where the protocol fees are collected, will recurrently reserve a percentage as a public good to be managed by a DAO governance.

This statement is too broad to understand if it would fit the public good model. You seem to be better equipped to understand if this is truly a public good provided to all DOT holders.

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Governance Philosophy
Like the philosophy of Zhuangzi in ancient China, the governance of inaction under the mechanism of anti mouse feces. History has always taught us that innovation is not designed, but rather gives communities greater freedom, and it will grow on its own

Supplement and iterate the anti mouse feces mechanism,
The funds aimed at ordinary users should be directed towards the final ecological application. For example, for wallets, it is not as good as for app chains and parachains, because wallets are mostly used in conjunction with ecological applications. Wallets are just a means of supporting multiple companies to compete in a healthy way.
The funding for developers and project builders should be from Hacksong, conferences, and early stages of the project, rather than just brand marketing, such as taxi or celebrity football, because the Poca brand itself does not require marketing. Why should a project with a long-term high ranking be marketed. Some people oppose that Coca Cola has been marketing its brand all along. It should be clarified that the Coca Cola brand is almost just a category, and when you see advertisements, you directly purchase the product, which will pay for the brand promotion expenses. Polkadot does not have this effect.
For example, reputation systems, such as starting with small amount applications, or disbursing amounts in batches,

Was discussing this elsewhere, and realized there may be a misunderstanding. Are you saying it will be a public good if the Kylix DEX is managed by the DOT token, or are you saying it will be a public good if the token swap (DOT for Kylix tokens) is managed by the DOT token (via OpenGov)? (I think you mean the former, but the person I was discussing with interpreted it the other way.)

Hello! I’m glad to see that you’ve opened a very enriching discussion on a topic that is currently significant within the Polkadot community.

I’d like to share my thoughts for the benefit of Polkadot:

What I think?

For me, the role of the Polkadot treasury is to fund whatever the community needs, prioritizing public goods such as education and Polkadot SDK development. However, like free-market governments, the treasury can also act as a private entity. There are numerous examples of private investors led by countries aiming to maximize their resources with profits. In other words, public-private investors have the consequence of creating additional sources of wealth and economic development for society.

Sometimes OpenGov decisions often rely more on sentiment than rationality. I would like to see a group of investors and tech experts appointed by the treasury to provide non-binding opinions on any venture capital-related treasury expenditures.

I think the only limit is the imagination, guided by rationality.

The only other funding avenue that I see is parachain grants.

Extra thoughts:
Is better to compare Polkadot to the government rather than a company?

Another point I’d like to bring to the table is comparing Polkadot with other companies like Amazon, Tesla, or Nike. This comparison is meaningful because it contrasts with governments, which have distinct implications such as the use of force (like police and prisons).

In terms of companies, what constitutes public goods? It often includes aspects like ensuring the health and housing of their workers, among other benefits. Who governs a company? Typically, the shareholders have the authority to make key decisions. And what is the treasury of a company? It’s essentially the pool of financial resources the company manages for various purposes.

Comparing Polkadot in this context can bring to light on how decentralized networks operate similarly yet differently (decentralized) from traditional corporate structures.

Thanks for bringing this kind of conversation that we truly need.


The truth is: it is a spectrum.

The most obvious public good scenario is creating a system chain. A system chain’s native currency is DOT, and there is no question about the fact that the system chain is a service provided for all DOT holders. A system chain has no autonomy or self-sovereignty.

A middle point might be to have your own native token in addition to supporting DOT as a first class citizen. Let’s say you are building a DEX, if you are able to perform all basic actions using DOT (create a pool, contribute, swap, withdraw), I’d say you’ve reached the bar of a public good. I probably would be okay with the non-DOT native token having some benefits over DOT. For example, if the DEX captured some value, then that could be distributed to just the users of the token.

I think it is hard to define concrete rules for this kind of thing. The idea of a “public good” should be a goal / mission of a product, and I think if you are actually aligned with that vision you will probably end up with a something which fits the model. If instead, you are trying to create a product which captures value and limits access to private token owners, you will probably won’t be considered a public good.

I am NOT saying that such products are bad. In fact I believe the opposite: free markets can be used to innovate products quickly. But the IMO the treasury should not be involved in such systems because it is not capable of behaving in the ways traditional VCs can, and that the money in the treasury is not really the money of the voters. By enabling speculative investments, you basically allow people to gamble with someone else’s money, and that will not result in high quality decision making.

I think it is not better to think of Polkadot like a company.

Companies, almost by definition, have a central party in control of the system, for example, Executive Officers (CEO, CTO, COO, etc…) or the Board of Directors.

These individuals are held accountable for their actions and performance. If there is incompetence, they are replaced. If there is corruption, they go to jail.

These individuals also have the ability to act strategically and behind closed doors. These can be advantageous for all parties, but such advantages cannot exist in a large DAO like Polkadot.

I do think things like the Bounties are more like companies than governments. They seem to have many of the same accountabilities and abilities as companies. But I want to clarify that I do not consider Bounties a part of Polkadot governance. They are their own entities which are funded by Polkadot governance.

Anyway, it will be hard to directly compare these new decentralized organizations to anything we know about today. These are brand new systems, with different properties than what we are used to. I believe in general, the vibe is that blockchains can lead to an evolution from the Nation State to a “Network State”.


Agree to disagree! Big companies are ruled by stakeholders, not just the CEO, CTO, etc. While there are cases where a stakeholder is also the CEO, it’s generally not recommended. This is why comparing Polkadot to a company makes sense: if you have more skin in the game, you have more voting power, and you can influence or remove CEOs or other professionals working for the company (like removing curators etc.).

As you mentioned, the CEO is legally accountable for their actions and can face jail time if they fail to act with due diligence in managing the corporate patrimony. However, stakeholders have a corporate shield, as their risk is primarily economic.

If Polkadot’s voting power were based on identity, like in democracies, it could be considered a state. However, since it operates with voting power tied to the skin in the game, it functions more like a company.

Totally agree.

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Thanks Shawn, really appreciate it.

To be clear, I wasn’t looking for some hard and fast rule or a definition of public good or anything generalized like that.

I was just trying to figure out if there was a misunderstanding about what was meant in this case about “exchange is managed by DOT token,” since “exchange” in this case can mean the Kylix DEX or the proposed token swap of DOT for Kylix tokens.

I’m thinking through these things along with this thread & conversations elsewhere, and your thoughts here have a great deal of clarifying power as I muddle through the implications of the different ways of thinking about them. It’s a continuum (or spectrum), no doubt, and I’m not a believer that a clear “algorithmic policy” will suffice, but assessing speculative Treasury investment referenda will be easier when I’ve arrived at a loose heuristic (ethos?) around the principles involved.

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My “not super well informed” opinion on is that most corruption happens at this layer of government spending. Government leaders are bribed to choose lesser products. Banks pay huge bonuses to their executives, then allow taxpayers to bail them out.

My point was that there are calls for proposals dedicated to startups to spend public state-funded treasuries also to create new workplaces, and to give a benefit back to society. I don’t know how the “corruption” topic came to be, considering that corruption also happens for public goods in public procurements (as often happens in Italy).

Can you present data which backs your viewpoint here, and which negates the presence of corruption? (I think it is important to remember why we are building systems for “less trust, more truth”)

I never negate the presence of corruption. Nonetheless, financial entities like banks and fintech are heavily regulated and audited. For example, N26, a challenger German bank, just received a fine of 9.2 million euros from the German bank regulator for submitting late and incomplete AML reports. Scams still happen (like Wirecard), but TradFi is nowadays regulated to the point of suffocation that it is now excruciating to bring innovation there, at least in Europe.

Well, luckily we have Web3.

Feelings and reason cannot be disentangled, and it’s understood these days that our feelings precede our ratiocination. We are feeling creatures that think, and that’s not even a bad thing: the pervasive idea that emotions impede reasoning has been empirically undercut pretty soundly (briefly: some do more often than others, but without feelings, it turns out we are paralyzed and unable to arrive at decisions).

Maybe more importantly, there’s simply no way to remove feelings from politics, and there’s no way to do governance without politics, since individuals and groups have conflicting interests and will invariably contend with each other to acquire the power and influence to pursue those interests.

Such an advisory body can be proposed at any time, but there’s no way it will actually circumvent or preclude emotions or politics, and of course quis custodiet ipsos custodes? (Spoiler: it’s turtles all the way down.)

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Interesting–by this metric, Hydration Network qualifies as a public good, since DOT can be used as a fee token across its defi offerings.

They also have recourse and contractual rights, they can seek redress under legal frameworks, they rarely invest in unproven startups, and even with those guardrails, state investment in private enterprise still sometimes goes horribly wrong.

My expectation is that if Treasury becomes a VC, its success rate will be abysmal. It’s not a secret that Web 3 startups have a high failure rate, due diligence is very very hard to do, and securing Web 3 projects is an inexact science even for experienced, reputable project teams (we all remember the aUSD debacle, I’m sure).


The Polkadot network, treasury and DAO is not a VC. It’s an incubator.

What are some of the differences between an Incubator and a VC?

  1. VC provides later stage of investment (Series A/B/C) vs an Incubator’s seed funding
  2. VC typically fire and forget style of investment vs an Incubator who’s mission is to provide support in a variety of forms (Education, Mentorship, Resources (Employees, Networking, etc)). In fact, funding / seed is not necessarily given by incubators at all.
  3. In tradfi, a VC would be engaged for a much longer time than an Incubator looking for an IPO to exit on. An Incubator would provide a structured approach to helping to grow a business from early stages for a period typically less than 2 years.
  4. Incubators are involved at pre-revenue concept stages/phases vs VCs looking for businesses that have sound structures that just need time to grow.
  5. VCs are typically much more selective than Incubators.
  6. VCs typically would focus more on economics vs Incubators who are more interested in the idea.

So, what does this mean in practice and deployment for Polkadot?

If what Vitalik said about crypto being “the Internet of money”, is true; We should be focused on incentivizing and supporting a broad range of adoption and growth using the technology. The government may build the roads with taxes but they still need to (and do) subsidize development for non-core areas such as reduced carbon emissions, EVs, etc. Polkadot is still at a point where we’re trying to convince people that cars are more efficient than horse and buggy and they should adopt “car” technology. So…

The Polkadot DAO should be focused on creating structures (collectives) that handle the necessary minimum business functions (Development, Marketing, etc). But we should also be looking at creating the structures necessary to provide support to fledgling adopters in the form of an Incubator. The function these support structures should fill is one of 1) Education 2) Technical Support 3) Marketing Support 4) General helpdesk support 5) Services support 6) Legal support 7) (and lastly) Funding.

In Polkadot, the more pallets that are created, the lower the barrier to entry is. So even if a project fails, there is still benefit to the polkadot network if that project created any pallets that may be reused in the future. It allows future developers to have a larger collection of existing / reusable logic to deploy.

By subsidizing development through the treasury in these collectives it allows us to provide critical funding for fledgling projects in the form of services and man hours. So for example, if a project were to deploy their rpcs for production networks on google cloud that could cost them upwards of $30,000-$40,000 a year. By funding the “IBP” (Infrastructure Builders Program), that collective can provide those functions and lower the overall cost of deployment for a project. That’s $30-$40K/yr of funding they don’t need to worry about. By operating the IBP, the collective costs are reduced with economy of scale. The IBP rates are currently slightly lower than the averaged 3 year commitment costs of google cloud & aws. The same is true for almost every aspect of the support structures that we should provide. We’re able to pay groups of people and share those resources among all projects in the same way that an incubator does.

The big question for me is, what collectives do we need and what support should we provide to fledgling projects? I have some ideas (non-exhaustive).

  1. Education - Expansion of the PBA (creation of education collective?). We need to allow individuals and teams to come be part of the PBA and similar programs. We should have education tracks for each critical role of a business (CEO, COO, CMO, CTO, CLO, etc) along with the existing substrate development support. Starting a parachain is more than just coding rust, there are numerous other functions that go hand in hand, and it is a business.

** Edit: We 10000% need frontend development education and support. Building front ends is a nightmare. **

** There should be grants and awards for completing the PBA or similar education initiatives on any track as an individual or as a team. We are competing with other networks for developers and we need to provide compelling reasons for people and teams to come build on polkadot. **

  1. Technical Support - For example, We have Rogue network that is providing contractual substrate services for doing things like polkadot-sdk upgrades. I’m currently working with them on a semi-abandoned project to get it back into shape. A big part of this has been, where is funding going to come from to pay Rogue for the services needed? We need a collective of substrate developers that teams can come to for help. It would be ideal if this collective would provide mentorship to parachain team developers, possibly go on-site to provide 1:1 education and help. By funding them through treasury as a technical support collective, this again helps to subsidize costs for fledgling projects.

  2. Marketing Support - This collective already exists in proto form to an extent led by Evan. We should assist the new projects in marketing, making people aware that they exist, and coordinating release messages with them.

  3. General Help Desk - The general help desk collective should mirror in form the ambassador collective. It should be a collective of individuals with a wide range of experience and expertise (Birdo comes to mind as an example) that can act as networking agents fielding a wide variety of questions from projects and answering the questions or putting them in contact with the necessary individuals, collectives, or teams that can answer those questions. This collective would be the first line of support for new projects on any topic.

  4. Services Support - As the example I gave above with the IBP we can create collectives that provide a variety of services to fledgling projects helping to lower costs for the projects deploying on polkadot. Other examples include Audits (bounty #22), Defi related payments to 3rd parties (bounty #36), Moderation team (bounty #24), and more.

  5. Legal Support - This one is very costly as blockchain familiar legal advice is sparse at best. Most lawyers have no idea about block chain or legal specifics surrounding it. We should have an on-chain legal support collective that will assist in creating entities / foundations and answer legal questions that are necessary for fledgling projects. This could majorly reduce costs for new projects as the cost for basic structures is in the $25K-$50K range.

  6. Funding - This is the contentious part of it. When and where do we fund these projects? I know for sure we should fund them after completing the PBA, but after that things become grey. Personally, I am in favor of funding projects and having them give up some percentage of supply in exchange for that funding. We could have that be a flat rate amount, for example, say $100,000 in exchange for 5% of token supply going to the treasury, or that can be variable. We do need to fund these projects to incentivize startups to build here. But It’s not clear how much, when, or under what conditions. The funding sources we have currently were highlighted in Shawn’s OP 1) DF Program 2) W3F Grants 3) Treasury Funding 4) VC Funding. But, By having these other incubator style support structures in place we can reduce the requested amounts to the point where they should ONLY need money to pay for team salaries.

** With these support structures in place it may make VC more willing to invest in projects since they know teams will have a large support network in place to assist in a variety of ways. **

To conclude:

By operating as an incubator we can create structures that allow us to provide support to new projects and reduce overall costs for that support with economy of scale. It has the benefit that we don’t necessarily need to provide direct funding to teams limiting potential losses in a failed project / team. Thinking of ourselves as an incubator will allow us to fund every project, reduce opengov friction, reduce direct payments to teams, and maximize the support provided to teams.

Polkadot is and should strive to be an Incubator.


One thing I think the treasury could do that would be more “VC like” would be to co-invest on Polimec up to a certain amount. With the current limitations of DID and Polimec, it would be good to have treasury support there initially. It could be something like, Treasury will match and co-invest into any successful Polimec raise up to $50,000. So, Team A goes to Polimec, does a round and raises $25,000 - They would receive an additional $25,000 ($50,000 total) from treasury and any allocation (on the co-investment) would go to treasury. Team B goes to Polimec, does a round and raises $100,000 - They would receive an additional $50,000 from treasury ($150,000 total) and any allocation (on the co-investment) would go to treasury.


Really thoughtful post and I hope the eco moves in this direction. Especially w.r.t. pointing out the lack expertise that the collective community has on any given subject, leading to poor speculation.

Something kind of in the ‘VC’ space I was curious about, kind of inspired by the kinds of deals Microsoft strikes up w/ companies like OAI, leveraging Azure: I wonder if instead of giving teams DOT, there could be an option where we instead give compute credits/discounts (i.e. a form of DOT that can only be spent on Agile Core Time block space, and cannot actually leave the ecosystem)

Would this be possible to build, and do you think the economics of that might improve ROI?

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Quick TL;DR of the above conversation, courtesy of ChatGPT:

The forum thread discusses the role of the Polkadot Treasury, arguing it should focus on funding public goods like development tools, education, and infrastructure rather than acting as a venture capital firm. Key points include:

  • Public goods funding benefits the entire ecosystem and avoids speculative investments.
  • Speculative projects often lead to poor decision-making do to lack of expertise and susceptibility to trends.
  • Flexibility and experimentation with Treasury spending are acceptable but should be exceptions.
  • Proposals suggest forming an investment committee for better handling of speculative projects oai_citation:1,Is the Treasury Polkadot’s Biggest VC? - Governance - Polkadot Forum.

Given the conversation above, I think we generally agree that treasury shouldn’t act like a VC and definitely needs to fund public goods.

I think we also broadly agree that we want to promote innovation — which inherently includes some form of speculation. “How?” is the main question.

Traditionally, governments and central banks influence this through their policies, for example interest rates, subsidies to certain sectors and grants for high risk ventures where VC funding is lacking.

I tend to align with Shawn’s thoughts that the norm should be to fund public goods, with maybe a small budget allocation dedicated to early stage, high-risk ventures where VCs do not invest OR aren’t investing due to a specific economic climate.

I don’t fully agree with Tom that the treasury can or should attempt to act as an incubator, because an incubator (e.g. YC) does a lot more than just give out some funds to a project as outlined in his own post.

The problem is that each new collective increases the amount of bureaucracy involved and slows down an early stage project, where speed is critical.

Not to mention that there are seasoned investors in incubators as well who do in fact conduct a lot more due diligence than a public treasury is capable of.

I do however agree with the need for a specific collective dedicated to evaluating and quickly awarding small grants.

What immediately comes to mind is a grants committee on-chain which should look largely similar to the W3F grants.

I think just having certain bounties and committees in place allows for a mental shortcut for voters, reserving the treasury as a place for public appeals (ideally offering more friction than a committee but overruling committee decisions where necessary).


Co-investment opportunities are interesting to me. Especially more direct ones along side VCs who are putting their own capital at stake.

Perhaps many of the issues I see with VC level investments could be solved with some real-world representation like: Proposal: Establish the Polkadot Community Foundation to represent DOT holders IRL | Polkassembly

In any case, for speculative investment I think we need some kind of collective, organization, or smaller group (than the DAO) managing those risks. It is not easy to form those groups, especially at high confidence / trust, which again is why I think this would be the exception, not the norm.