Polkadot Growth Initiative (PGI)

[Flavio_PLMC]

Hey @shawntabrizi

Happy to answer - please note that the first comment refers to fees in project tokens paid by the issuer:

@LucaPolimec

→ Polimec takes a 10% fee on the first $1M, 8% on amounts $1M-$5M, and 6% after that in the tokens of the projects.

Which is also reflected in the second comment:

@LucaPolimec

The Polimec protocol does not take any cut from contributions from investors into projects. Hence, there is no cut for the PGI contribution and every contribution yields a direct investment at 0% fee.

Polimec does not take any fees on any funds raised (DOT, USDC/USDT or other participation currencies), as stated in the Knowledge Hub.

Hope this clarifies it

[shawntabrizi]

@Flavio_PLMC Okay, I think I understand.

So if a team raises $1M, Polimec gets a $100K allocation of the team’s token at the raise price or whatever.

My suggestion would then be that Polimec should not get a token reward for the proportion of treasury funds used in the raise.

Imagine a team has raised 90% of their goal.

• One option would be to use the treasury funds to complete the last 10%.
• The other option would be to work a little harder to find more capital to invest that last 10%.

Without this rule, Polimec gets the same reward either way. With this rule, Polimec is incentivized to find non-PGI investors to fill that last 10%, and get a bit more token rewards as a result. This is probably better for the team, since they will get more tangible investors helping them, and better for this treasury investment, as the treasury capital will reach more teams that need it.

Furthermore, it makes this proposal for 400,000 DOT not lead to some specific advantage or “funneling or rewards” to the Polimec team. This I think is the right “vibe” for these kinds of requests.

---

@Max

I think this is a good initiative overall. My main feedback is that 23.3% of non-PGI capital is a pretty low threshold. Would you consider raising it?

I generally agree with this.

Having looked at your model, it seems like there is an implicit idea that if a team can’t raise 33%, then probably they shouldn’t qualify to “make it”. This proposal basically reduces that rule by an additional 33%.

It would make sense to me that the 33% cutoff of non-PGI investment stays, but that if they can raise 33%, then they can access the additional 10% as a success booster. So in this case, you do not have the treasury helping teams artificially pass through the Polimec protocol design.

Or is that the goal here? That the protocol thought that teams were going to be able to make it past 33%, and that in fact they can’t even reach that bar without the help of the treasury?

I think it would be good to qualify if this 10% bonus from the treasury is a success booster, or a “help from failure” booster. I think it can’t (or shouldn’t) be both.

[guido]

This is huge for the future of Polkadot and Web3.

I’m full support the whole direction of the Polkadot Growth Initiative (PGI). It benefits the Polkadot’s ecosystem, in this way a lot of upcoming projects will join to the ecosystem bringing the creation of innovative new use cases and more adoption.

Polimec provides the best infrastructure to run a curated on-chain bounty like the Polkadot Growth Initiative (PGI) in a decentralized, transparent, and regulatory-compliant manner as the first use case of the partnership between KILT Protocol and Deloitte Switzerland with the on-chain KYC/KYB Credentials - announced in the “Corporate Adoption of Blockchain” panel at Decentralized Lugano 2.0 (May 2023), and with Polimec Protocol in the “KILT’s Enterprise Adoption: Polimec as First Use Case for KYC/KYB Credentials Issued by Deloitte” presentation at Polkadot Decoded (2023).

Polimec and Deloitte Switzerland Introduce New KYC Credentials to Enhance...

On the other hand, the automated framework for projects to raise funds on Polimec is awesome/innovative on the web3 ecosystem aligning the interests of all stakeholders (everyone can learn more about it on the Knowledge Hub: hub.polimec.org).

Looking forward to the proposal on Polkadot for the implementation and success of the Polkadot Growth Initiative (PGI) by Polimec.

- Aye! nothing more to say from my side.

[mister_cole]

@mister_cole

Question for the OP: If enacted, will PGI have a transparency/OSS requirement?

I am still curious about the answer to this question

[whaleonmoon]

Sounds like a Great Idea to me.

[LucaPolimec]

Hey @shawntabrizi thanks for your feedback, and happy to go more into detail. It is important to me that it is clear what the PGI entails – and what Polimec’s role is and isn’t.

@shawntabrizi

So if a team raises $1M, Polimec gets a $100K allocation of the team’s token at the raise price or whatever.

My suggestion would then be that Polimec should not get a token reward for the proportion of treasury funds used in the raise.

→ The token reward is funneled back into the ecosystem and has the goal to make success as likely as possible for the team. The exact distribution depends on the % of the funding target raised, but is allocated either to liquidity pools and a long-term holder bonus or, for very successful raises (>90% funded), to those two categories plus evaluators for their correct evaluation. Hence, treating the on-chain treasury in the same way as an external VC makes sense to me here.

@shawntabrizi

Imagine a team has raised 90% of their goal.

• One option would be to use the treasury funds to complete the last 10%.
• The other option would be to work a little harder to find more capital to invest that last 10%.

Without this rule, Polimec gets the same reward either way. With this rule, Polimec is incentivized to find non-PGI investors to fill that last 10%, and get a bit more token rewards as a result. This is probably better for the team, since they will get more tangible investors helping them, and better for this treasury investment, as the treasury capital will reach more teams that need it.

Furthermore, it makes this proposal for 400,000 DOT not lead to some specific advantage or “funneling or rewards” to the Polimec team. This I think is the right “vibe” for these kinds of requests.

→ Incentives on Polimec are already structured such that projects have an incentive to be oversubscribed, as they can sell their tokens at a higher price. It is the project teams ultimately responsible for ensuring that their funding target is hit. The Polimec protocol makes the process for this as seamless as possible.

@shawntabrizi

@Max

I think this is a good initiative overall. My main feedback is that 23.3% of non-PGI capital is a pretty low threshold. Would you consider raising it?

I generally agree with this.

→ This is outlined above already, but just to highlight it again and adjusting for the 33% threshold (which I fully support - more on it below):
The treasury co-investments are fixed at 10% of the project’s funding targets. Meaning in Max’s example of a $100k raise, $10k would come from the treasury and a minimum of $33.33k up to $90k from private investors with the PGI as a success booster (see below).

@shawntabrizi

Having looked at your model, it seems like there is an implicit idea that if a team can’t raise 33%, then probably they shouldn’t qualify to “make it”. This proposal basically reduces that rule by an additional 33%.

It would make sense to me that the 33% cutoff of non-PGI investment stays, but that if they can raise 33%, then they can access the additional 10% as a success booster. So in this case, you do not have the treasury helping teams artificially pass through the Polimec protocol design.

Or is that the goal here? That the protocol thought that teams were going to be able to make it past 33%, and that in fact they can’t even reach that bar without the help of the treasury?

I think it would be good to qualify if this 10% bonus from the treasury is a success booster, or a “help from failure” booster. I think it can’t (or shouldn’t) be both.

→ Strongly agree with that point, thanks! The PGI is meant to be a success booster, not lower the threshold for projects to pass the raise. Increasing the probability of success in the team’s deliverables is key. The PGI participation should be placed once a project reaches the 33% threshold.

Ultimately, the PGI’s value proposition is to help fund promising projects coming to Polkadot and increase their probability of success. DOT holders benefit directly through the usage of more blockspace by those teams, and hence increased coretime sales, and indirectly by starting a positive flywheel effect once the first success stories helped by the PGI emerge.

[LucaPolimec]

Hey @mister_cole

Please excuse the delayed reply!
Agree with you regarding DOT as a fee token, which would also simplify UX and hopefully can take a more prominent role in the ecosystem once Plaza is live and all that it enables. In the meantime DOT holders still benefit as outlined in the answer to Shawn:

→ “Ultimately, the PGI’s value proposition is to help fund promising projects coming to Polkadot and increase their probability of success. DOT holders benefit directly through the usage of more blockspace by those teams, and hence increased coretime sales, and indirectly by starting a positive flywheel effect once the first success stories helped by the PGI emerge.”

@mister_cole

More importantly, though, the appeal of a using Treasury to fund speculative, for-profit projects is contingent on those projects’ likelihood of success. Voters can’t assess that likelihood very well unless the project opens up its books and lays all the relevant information out for public scrutiny, so imo full transparency, open source, etc. is the bare minimum bar for this kind of an arrangement to even be worthy of consideration.

Question for the OP: If enacted, will PGI have a transparency/OSS requirement?

→ Couldn’t agree more. On Polimec, projects can share all relevant documents via their data room and are incentivized to do so since naturally, investors are more likely to commit if trust can be built through transparent roadmaps and open-source tech.

On a side note: Eliminating the prevailing asymmetry between retail investors and professional VCs is partly why we started Polimec, so that ethos is deeply engrained in our culture.

[mister_cole]

Thank you for the thoughtful reply! I’m pleased to hear that there is a structural incentive for transparency, but I don’t see mention of an Open Source requirement, and am I right that this incentive for transparency isn’t a requirement but rather a structural/game-theoretical motive?

[LucaPolimec]

That is correct.

While there is no hard requirement - in sense of enforcement directly on-chain - it is a commitment by the teams and we’re currently still exploring ways to additionally incentivize this behavior.

The PGI relies on other investors doing their due diligence (“Is the tech open source to reduce risks and increase transparency?”) through what is available in the data room and published elsewhere by the team, and will be able to invest at the same conditions, ensuring fairness.

[Armentsk]

I see the Polkadot Growth Initiative as a promising proposition. By offering 10% co-investments for projects in Polkadot and with transparent management by Polimec, this initiative will incentivise innovation and success in Polkadot’s ecosystem… LFG.

[KayYuli]

This plan for co-investing 10% in new Polkadot projects, with clear milestones and compliance, is a great way to boost innovation!

[frlfrlfrl]

This is a great initiative! This will add extra motivation for projects newly built / integrated with Polkadot to improve their service and quality, which will definitely help grow the Polkadot ecosystem as well. Would be keeping an eye on this.

[guido]

The Polkadot Growth Initiative (PGI) Proposal is Live:

Polkadot Growth Initiative (PGI)

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