Polkadot Spending Reporting Standards

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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.

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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

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After consultation with a few ecosystem agents, I want to present a refined model. It was pointed out that “Ecosystem” is a very vague category, which can be seen by how it mixes different development and service categories. This model here has re-allocated all the topics that were under ecosystem to other categories. It essentially takes a view of Treasury spending being here for all the ecosystem, with core components being one of the recipients.

The refined model:

  1. Research: Protocol research, reports, and analytics, UX & DX, scam prevention, audits (security, QA)
  2. Development:
    • 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, light clients, multi-sig support, privacy, indexing, tools, protocol subsidies (common good chains), protocol & software incubation, SDKs (e.g. Web3-to-Web2 wrappers), smart contract tech, ZK,
    • 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 (Marketing, BD, community development):
    • Marketing: media production, PR, advertising
    • Business development: consulting, solution architecture
    • Community development: conference hosting, conference attendance, local outreach, events, community building, ambassador program
  5. HR: education, hackathons, recruiting, talent incubation (e.g. PBA)
  6. Economy: Loans, Liquidity Incentives, Active Asset Swaps
  7. Governance: tooling, governance explorers, tracking, foundations, spending audits
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I like the categories so far and I agree that keeping things simple will make it easier to both label proposals and assign budget & costs appropriately. I also think that the categories should be reflective of the submitting party’s intent (and maybe what it advertises with), meaning, if someone develops some software in the hopes of raising the visibility or marketability of Polkadot, then should this be a marketing proposal or a development proposal, or both? Maybe a 1 to N mapping would be good too. In the end, the data model for the categories could accommodate this otherwise we can always argue what a proposal really represents.

A few points of feedback:

  1. I don’t think Governance should have its own category, as any activity relating to it can be covered under research or development (research & report on OpenGov, development of tooling for OpenGov). Governance should be a sub-category. For things impacting the protocol (upgrades etc), why not call it “Protocol”?
  2. I wouldn’t call it HR, another word might be better, for example “Educational Initiatives” or something like that
  3. Maybe also renaming Ecosystem to “Ecosystem Development” would make it more descriptive, but Outreach is great and covers that.

A proposal including your categories:

  • Research
  • Development
  • Operations
  • Outreach
  • Economy
  • Educational Initiatives
  • Protocol

Most importantly however, is to establish a sort of 20 questions framework to properly categorise an initiative under this or that category (or use an LLM/classifier) without too much room for bias/interpretation.

One last thing: let’s submit a PR or change request into Polkassembly to integrate these categories upfront once we agree, to avoid having to manually label and guess the filing of proposals under categories. Ideally, it should be up to the submitting team to decide what category a proposal should fall under and the proposal should be looked at under that specific angle, with the appropriate experts providing feedback. I think this is as important as defining the categories: making sure the assignments are as precise as possible. For instance, a Marketing proposal that involves writing code might not receive the same evaluation than a “Coding” proposal that will result in some Marketing.

Similarly, any data you need for this initiative, please let us know, even if it’s just for cross validation or testing things out, we’re ready to share what we have for the benefit and correctness of data and its representation in the ecosystem. I think we would be in a good spot to do some sort of (statistically ?) relevant analysis to estimate the aggregated impact of proposals so far on the perception and evolution of DOT, and release it together on the 1 year anniversary of OpenGov? :hugs:

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