Polkadot Spending Reporting Standards

tl;dr - In this thread, we share a proposal for spending categories and seek your feedback.

GM everyone!

Every household, every company, every organization has a budget. A list of in- and outflows. As the biggest DAO on the planet, Polkadot shouldn’t fly blind. We must understand how Polkadot is spending its money.

As a first, step, Jeeper and I have published two Treasury reports:

These reports were the first attempts to categorize past spending. In the process, we learned a lot about the intricacies of Treasury spending. For the first time we are able to understand the real, manifest priorities of the Treasury, as measured by its spending behavior.

We are now ready for the next step: Collectively agreeing on a shared view of the spending categories and finding ways to integrate them into more tools and reports in the ecosystem.

Spending Categories

We are asking for your feedback on the following concept. We will take the outcome of this discussion and apply it to our future work and will also reach out to other teams in the ecosystem that are building Governance tools to see if we can find consensus here.

To categorize spending, we consider the following categories:

  1. Research - original research, reports
  2. Development - mostly software development for Polkadot components
  3. Operations - everything that keeps the network running
  4. Outreach - Marketing and social activities
  5. HR - everything related to recruiting and upskilling people in Polkadot
  6. Ecosystem - Business Development and everything that supports protocols and teams
  7. Economy - supporting the financial/capital structure of the ecosystem
  8. Governance - OpenGov and related tooling

Categories 1-5 are borrowed from some typical functions of businesses. Categories 6-8 derive more from the fundamental activities happening in Polkadot.

Subcategories

The suggestions here are based on past reports and ongoing research regarding stimulating activity for the proper development of the ecosystem. Subcategory research is not yet as developed, but we want to present a best-effort insight into what we currently see in the ecosystem.

  1. Research: Protocol research, reports, and analytics
  2. Development:
    • subcategories
      • Software (and in the future possibly hardware) development that directly affects relay and system chains or can be used to use them: wallets, bridge, Substrate clients, SDKs, light clients, multi-sig support, privacy, indexing, tools
      • Technical Fellowship payroll
  3. Operations: software, hardware, and service costs incurred to operate…
    1. the network: RPCs, archive nodes
    2. auxiliary services: explorers, indexers
  4. Outreach:
    • subcategories
      • Marketing: media production, PR, advertising
      • Social activities: conference hosting, conference attendance, local outreach, events, community building, ambassador program
    • additional dimensions
      • scope: global, local
      • language: English, Spanisch, …
  5. HR: education, hackathons, recruiting, talent incubation (e.g. PBA)
  6. Ecosystem: business development, solutions, UX, legal costs, foundations, protocol subsidies (common good chains), protocol & software incubation, SDKs (e.g. Web3-to-Web2 wrappers), smart contract tech, ZK, scam prevention, vouchers for security, UX, Discord audits
  7. Economy: Loans, Liquidity Incentives, Active Asset Swaps
  8. Governance: tooling, governance explorers, tracking

Towards a Treasury Budget

In October 2023, I published the thread Towards a Treasury Budget, which advocates for approaching a state of soft consensus on future Treasury spending: a budget.

OpenGov needs to transition from reactive to proactive. Today, it only reacts to whatever proposals reach it. We want to change that by establishing a broad consensus on how to move Polkadot forward. Polkadot needs to formulate a proper strategy (see Polkadot Governance Framework - v2023.09 for ideas on a framework). The most tangible form of consensus can be in the form of a budget that expresses our strategy and priorities.

Developing budget categories will also help with categorizing bounties, allocating forward-looking subtreasuries, and eventually developing a forward-looking budget.

Please provide your feedback

We appreciate any feedback regarding the proposed categories and subcategories. Eventually, the categories should work as a tool to talk about how we want to advance the ecosystem.

6 Likes

Why are bounties not on the list?

There can be bounties on any of the categories. Sorting out bounties into separate categories (where you would mash together bounties from all kinds of different work) completely falsifies the result.

As an example, assume a hypothetical scenario where most of the spending might flow into bounties in the future.

One way to think about things like regular spends vs. bounties is as extra dimensions. There could be a dimension for the proposal type with values

  • spend
  • bounty

So a proposal can for example belong to the category development and be a type of bounty