This is pain point we’ve felt for 2/3 years in Edgeware having submitted / delivered and curated about 25 different proposals and projects. We’ve only ever seen the downside (plus thin liquidity which compounds the issue) as EDG price peaked at $0.056 and then consistently fell to around $0.004.
This was majority caused by consistent sell pressure from the requirement to bootstrap contributors and them in turn needing to sell to live as we sought to adapt, evolve and discover the tech in an organic way. The same challenge and associated concern is beginning to be felt in Kusama and across the ecosystem.
We ended up debating the top up / recoup model a lot - and it was divisive. In the end, we agreed only two top ups (via simplemajority, not council tips), where immediate price volatility between submission and receipt threatened the viability of the team delivering.
In all other cases, it was seen as being the price of contributing and the risk / reward on offer.
All proposals we submitted had a 10% network service fee which was calculated on top of the budget - this became our standard way of billing.
With the suggestions above - top ups and recoups, we’re moving closer to a structure that may please voters and holders (accountability/protecting the treasury), but a far worse deal for contributors.
This is a pattern that follows the general trend of treasury conservatism which seems like an inevitable slide in on-chain governed networks with shared pots of money that are subject to wild price swings in fiat denominated terms. (Side note - most conversations focus on how to spend less, almost none focus on how to build greater demand and direct value accrual, this was true in EDG and so far in KSM and DOT.)
If upside is returned (and presumably downside topped up) where is the margin for growing an on-chain service provider? It doesn’t make sense to operate at cost if the upside potential is removed, which is imo the whole point of the incentives (when done right).
There can be a bonus earmarked and pre-agreed onchain which is paid at the discretion of the community - which was the direction @shawntabrizi was going in with this post:
However the likely outcome of this retrospective funding is we get into all sorts of issues with voters having ability to approve a job well done, which leans once again into a dangerous path and more bureaucratic stagnation.
There could of course be a ‘remuneration review collective’ - this again exists in most big businesses and is generally known as ‘cost control’.
Ultimately teams don’t just need to make ends meet - they need to be trusted and supported financially, culturally until bad behaviour proves otherwise - aka an optimistic stance.
Suggestions
- All proposals should be able to charge a fee on top of their costs.
- There are no top ups, except in demonstrably extreme situations, where a team has hard costs to cover and the downside swing is prior to payout, and before they can sell.
- There is no return of KSM or DOT to the treasury - this removes the incentive to work at the most difficult and early stages of networks.
- Consistent contribution through bull and bear should be the convention we aim for - akin to contributors dollar cost averaging into the networks via their contributions.
People believe stable-coins will solve a lot of this - it solves one dimension of the issue but in reality, it also removes the upside and stake that these networks provide to contributors and is a path to detaching them from the incentives that make these networks so interesting, so its important to not see it as panacea.