This is a high level post that aims to encourage discussion as to how we improve conditions for businesses (aka the guinea pigs) attempting to build on/around the ecosystem.
It is also worth bearing in mind that there is clear guidance from parity that no employee can receive treasury funds.
As noted in @metaspan’s VAT on Services in/to the ecosystem there are a number of emerging challenges for those outside of Parity/W3F who are aiming to build a functional economy between fiat and crypto jurisdictions.
Without raising these issues, others will find themselves in difficult situations. It would be best if we could establish best practice as we go to better support these groups, and save others from the headaches we’re enduring.
Ideally this would take the form of dedicated support and guidance.
Other issues:
Charging fees or setting clear margins on treasury proposals.
Without getting approval for margin on a budget, teams are pushed into the dangerous position of cashflowing work at cost.
Given the volatility of the networks, this has to date resulted in a number of ecosystem teams, including ourselves paying to deliver projects.
For some reason, this appears to be a contentious issue, and some proposers are also of the view that fees should not be included - would be great to hear views.
Clear guidance for teams submitting treasury proposals on VAT / tax and legal status.
In general our approach has been to invoice through a company simply because of the limited liability assurances. Even with this, we’ve had flipflopping advice from our lawyers and accountants on the best approach to invoice treasuries.
It’s worth noting that goods and service taxes are also applied in other jurisdictions, for example in France it is known as TVA, and India it is GST which are chargeable at 20% and 30% respectively.
See Wikipedia for the various structures around the world.
For those contributors paid by the treasury who have not set up a company, there should be guidance, or at least discussion about how they should invoice so they don’t find themselves in difficult positions.
There are no doubt many other challenges that will emerge over time, especially as regulations become clearer in the coming months and years - but I wanted to start a discussion thread to capture those faced by contributing teams outside of the well capitalised / resourced W3F/Parity entities.
As a Kusama maximalist who is committed to the common good of the ecosystem, I have some strong opinions on Rich’s post about improving conditions for businesses building on Kusama. While I appreciate the importance of supporting these groups and establishing best practices to avoid difficult situations, I have some concerns about some of the suggestions Rich has made.
Firstly, charging fees or setting margins on treasury proposals is a contentious issue for good reason. The purpose of the Kusama treasury is to fund projects that benefit the ecosystem as a whole, not to generate profit for individual proposers. While I understand the need for some reimbursement to cover expenses, adding fees or margins to proposals can create conflicts of interest and incentivize proposers to prioritize their own financial gain over the common good.
Secondly, while I agree that there should be clear guidance for teams submitting treasury proposals on VAT, tax, and legal status, I am wary of proposals that aim to circumvent or avoid taxes. The Kusama ecosystem should operate within the bounds of legal and regulatory frameworks, and proposals that attempt to evade taxes or legal requirements could harm the reputation and legitimacy of the ecosystem.
Finally, while I appreciate the challenges faced by businesses building on Kusama, I think it’s important to remember that the Kusama treasury is a community resource that should be used to fund projects that benefit the ecosystem as a whole. Proposals that primarily benefit individual businesses, rather than the broader community, should be carefully evaluated to ensure they align with the goals and values of the Kusama ecosystem.
In summary, while I appreciate Rich’s efforts to improve conditions for businesses building on Kusama, I believe that proposals should prioritize the common good of the ecosystem, operate within legal and regulatory frameworks, and avoid conflicts of interest or prioritizing individual financial gain over the broader community.
I don’t think Kusama governance (or Parity or W3F or whoever) should be in the business of providing “clear guidance” on project teams’ tax situations, since our community is global and tax regimes vary widely (and are even still ambiguous in some jurisdictions). It’s not reasonable for any individual or body to be responsible for navigating taxation all over the world, so projects seeking Treasury funding should do their own homework, and if they wish to price in VAT or some other tax, they should do so openly and explicitly and let the voting community decide if it likes the value proposition.
I read your post about improving conditions for businesses attempting to build on/around the ecosystem, and I must say, it’s an interesting topic to discuss. However, I have a few thoughts to share with you.
Firstly, while it’s essential to establish best practices and provide guidance for those outside of Parity/W3F who are aiming to build a functional economy between fiat and crypto jurisdictions, I don’t think Kusama governance, Parity or W3F should be in the business of providing “clear guidance” on project teams’ tax situations. Tax regimes vary widely around the world, and it’s not reasonable for any individual or body to navigate taxation all over the world. Therefore, projects seeking Treasury funding should do their homework and price in VAT or some other tax, and do so openly and explicitly, letting the voting community decide if they like the value proposition.
Secondly, I believe charging fees or setting clear margins on treasury proposals is essential. Still, teams should get approval for the margin on the budget to avoid being pushed into the dangerous position of cashflowing work at cost. As you noted, the volatility of the networks has resulted in a number of ecosystem teams, including yourselves, paying to deliver projects. This shouldn’t be a contentious issue, and all proposers should agree that fees should be included. After all, if you don’t charge enough fees, it might be difficult to cover the cost of the project.
Lastly, I think it’s crucial to ensure that proposers provide enough details about their proposals to avoid any ambiguity. The Kusama community rejected your proposal because the outcomes were not clear and there were dormant companies involved. These are valid concerns, and it’s essential to address them. Proposers should ensure that their proposals are related to blockchain enough and that the outcomes are well-defined to make it easier for the community to make an informed decision.
In conclusion, it’s great to see you advocating for better conditions for businesses aiming to build on/around the ecosystem. However, it’s essential to have open and explicit communication, establish best practices, and provide guidance where necessary. Proposers should also ensure that their proposals are well-defined and related to blockchain enough to avoid any ambiguity.
Purpose of the kusama treasury is to fund projects that benefits the ecosystem as a whole.
Yes, absolutely. My overall contention with existing treasury spend across the whole ecosystem is that there is is no quantitative assessment or on-chain metrics that actually enable us to ‘value’ contributions. Worse, this has until recently not even been a topic of discussion.
Right now there are generally three metrics that crypto folks are obsessed by:
Price
PRs/number of devs
Social media
Each gives some signal, though all are flawed since there is clearly a disconnect between these figures and objective on-chain metrics. This is not a polkadot problem, this is an ecosystem problem.
Adding fees or margins to proposals can create conflicts of interest and incentivize proposers to prioritize their own financial gain over the common good
Currently people construct proposals and costs ad-hoc - there is always some margin included, its just not transparent and up front. For example there is a general trend for a 10-20% volatility margin - if a team is unfortunate with price swings, this margin insulates downside somewhat. In the opposite scenario, it means they make a larger margin on the spend. People are keen to ask for top ups when proposals lose money, but are unsurprisingly less keen to return the counter.
As a result market timing can be the difference between success of a proposal and failure.
Additionally when I talk about ‘fees’, it should be intuitive that projects/teams/individuals and indeed businesses able to shift the dial on the metrics that matter for the ecosystem (the metrics that matter is a separate thread here All metrics are imperfect, but many are useful. Let’s make them more available), should be rewarded in line with performance.
Agree. I’m arguing for this position… we’re aligned.
Bringing everything together -
People should be able to be upfront about costs and indeed we should be understanding that not all businesses operating around DotSama are the same. For example, some teams receiving funding from the treasury are venture funded, and therefore are not cashflowing projects. There is a definite requirement for businesses that can inteoperate between fiat and crypto-economies.
We need to assess proposals based on outcomes, not just output, this leads us on a path to pricing and rewarding spend irrespective of proposal content / context. As I keep saying, busy ≠ effective.
Current metrics (dev numbers, price, social media) used to assess ‘value’ are disconnected, and even distracting from the real metrics that matter.
We need to stop thinking about individual symptoms, and start discussing the deeper issues that create this misalignment - this is at its core the common good problem you are focused on.
I’m not suggesting they are. I’m suggesting this is currently a non-existent support function, that could be fulfilled by groups emerging in the ecosystem. Ultimately this is another headache that stands in the way of scaling on-chain contribution and spending.
Thankyou @Alice. I’ll respond to your points, but in future maybe don’t use ChatGPT to help you craft arguments. This response here (also ChatGPT) and others on Polkassembly, here and here, makes it pretty clear your motivation is to distract from discussions that press the point that spend + on-chain performance should be related.
Of course I could be wrong - I’d love to debate these points face to face if you’d like to take part in a public discussion?
I’m not suggesting that. I’m suggesting there is a missing support function that is another barrier to scaling on-chain contributors.
I think it’s crucial to ensure that proposers provide enough details about their proposals to avoid any ambiguity. The Kusama community rejected your proposal because the outcomes were not clear and there were dormant companies involved.
Proposals are a process. I’m done this alot - in crypto, and in many organisations / institutions in the ‘old world’. Referendums are binary - therefore if you want no ambiguity, proposals should be along the lines of Should Britain leave the EU, yes or no?
The Kusama community rejected your proposal because the outcomes were not clear
The proposal you are talking about was V1. It failed 42/58 - pretty close. V2 will evolve and iterate on lessons learned in V1. This is how proposals should develop - more organically. Else we’re just in a position of people writing “perfect proposals” - this leads to optimising for a Yes in a referendum, rather than for successful outcomes.
There are very few people arguing for outcome based proposals - unsurprisingly, this is a sensitive subject, as many people are concerned that this direction will threaten their current positions. My own position is that all talent here is valuable, and this shouldn’t feel like a threat, but a reappraisal of what matters. The only constant is change.
and there were dormant companies involved.
This is a weird sidestep - and is clearly related to this Polkassembly comment where you, or an associate are trying to dig up dirt to show i’m trying to scam the treasury. Quoting from that post:
You say ‘a process mediated by a team such as Decent Partners’. We all know there is no ‘team’ as the Company only has one employee and it 2021 the business had net assets of £16…- it says so in the accounts. (links below)
It also says that you set up 3 other businesses, all which are dissolved or liquidated and you want us to trust you with mediating this innovation fund…?
I’ve been involved in many companies over the years. As a freelancer, as an employee, as a shareholder, as a company director and as a founder. Companies exist for many reasons - they can last for a decade and have clients like Red Bull, Apple, Spotify, BBC and Channel 4 - as in the case of one of the dissolved companies Lemonade Money, or they can be short term SPVs used for specific projects as in the case of Propikko.
For what its worth, Decent Partners is an organisation I own 100% of the shares in, it has no employees. The company operates in a highly risky space and bringing on partners is less about the talent I have access to, and more about timing. My previous company raised a lot of VC funding - I would rather push this as far as I can alone, before taking external capital. You are welcome to check my creds here at Linkedin, IMDB, here, The Guardian, or just google me.
Decent Partners has been capitalised with my own money to date, the primary source were my early investments into Ethereum, Filecoin, Polkadot (Kusama) and Flow. The money for these investments came from the shares I sold in Copa90 - a company I cofounded.
The reason there is no profit shown on the balance sheet is because my income (and director’s loans into the business) have been used to cashflow other startups and businesses, who are part of the wider network I’ve been stitching together.
Your gotcha, is literally just identifying the business model I’ve developed.
Decent Partners has and will continue to advance recoupable loans to brilliant creative talent spearheading innovation across a range of sectors:
Wait, is this right–“Decent Partners” is just you without any “partners”? I have to be honest: that feels more than a little deceptive.
More importantly, no matter how hard I look, I can’t seem to find any evidence that your extensive history of proposing projects (in Edgeware primarily, but also Kabocha and here in Kusama) has led to any outcomes that have materially benefitted the funding networks.
I understand that you’ve produced some media, of course, and while it doesn’t appeal to me, de gustibus non est disputandum, but what reason is there for Kusama community members (you know, the people who determine Treasury spend) to believe your current (or next, or next) “experimental” projects will benefit us?
It’s possible I’m missing something, but your track record seems to be mainly lots of discourse and proposals without much of value to show for it. I can’t claim to speak for any other community members, but I weigh track record heavily when I’m assessing the pros and cons of big expenditures and/or systemic/structural changes, and especially ones that are self-described as “experimental”.
I thought Sam Elamin’s comments in a recent AAG episode were really instructive–he talked about how he and his team had delivered several times and thus built credibility and accrued a track record before they presented their project to the Treasury. I’m not saying that’s the only way to do things, of course, but for big proposals (either financially or in scope/disruptive potential), I’m a lot more comfortable supporting teams that have proven their ability to deliver useful results whose benefits have redounded to the network and its communities in clear and concrete ways.
Are you serious? Because I’ve taken on all the risk, and used my own money to fund work from a network of ‘Partners’? I have four people I work closely with that I have mentioned in other places - who will all have 10% of the company, but at this stage, whilst I figure out the model, I haven’t needed to take on others.
The whole point has been to build a network, not a company with massive overhead. If I could dissolve Decent Partners into the network I would, but right now, there are benefits to having limited liability.
More importantly, no matter how hard I look, I can’t seem to find any evidence that your extensive history of proposing projects (in Edgeware primarily, but also Kabocha and here in Kusama) has led to any outcomes that have materially benefitted the funding networks.
You mean - like funding/coordinating/taking stake in Kabocha’s parachain? You are missing the wood for the trees my friend.
I understand that you’ve produced some media, of course, and while it doesn’t appeal to me, de gustibus non est disputandum, but what reason is there for Kusama community members (you know, the people who determine Treasury spend) to believe your current (or next, or next) “experimental” projects will benefit us?
You’ll just have to wait and see. I have no intention of using the systems on which we currently depend for much longer, the intention is to obsolete them, since we can make things much better for all.
It’s possible I’m missing something, but your track record seems to be mainly lots of discourse and proposals without much of value to show for it. I can’t claim to speak for any other community members, but I weigh track record heavily when I’m assessing the pros and cons of big expenditures and/or systemic/structural changes, and especially ones that are self-described as “experimental”.
It is hard to see what I’m doing if you just look at one proposal in isolation. This has been the history of spending to date - lots of people presenting independent ideas, which no connective tissue, or long term vision / direction.
I thought Sam Elamin’s comments in a recent AAG episode were really instructive–he talked about how he and his team had delivered several times and thus built credibility and accrued a track record before they presented their project to the Treasury.
We have delivered many many times. You just can’t see that work - if you looked you would see it, but my approach is fundamentally different to that which you are familiar with.
There is zero difference to what Sam/Imbue have done to what I’ve been designing / stitching together.
Thanks for your response, but I have to say, it’s just another example of crypto folks trying to sound smart while avoiding any real solutions.
You claim that there is a problem with valuing contributions to the ecosystem, but then fail to offer any concrete solutions. Just complaining about the current metrics being flawed is not helpful at all.
And as for your suggestion to reward projects based on outcomes, that’s easier said than done. Who gets to decide what qualifies as a successful outcome? It’s just another way for proposers to game the system and prioritize their own financial gain over the common good.
You seem to be missing the point that adding fees or margins to proposals creates conflicts of interest and undermines the very purpose of the Kusama treasury. And your suggestion of businesses being able to shift the dial on metrics that matter for the ecosystem just sounds like a recipe for more self-serving proposals.
Your response is just more vague, hand-waving nonsense that does nothing to address the real issues with the Kusama treasury.
I am serious, yeah. “Partners” is plural, and you consistently use the first-person plural “we” in your ample communications, so I assumed you were the mouthpiece for a larger organization. Pretty surprised that’s not the case.
You mean - like funding/coordinating/taking stake in Kabocha’s parachain? You are missing the wood for the trees my friend.
Has Kabocha’s parachain materially benefitted Edgeware or Kabocha tokenholders or Crowdloan participants? It hasn’t benefitted me (I am a tokenholder and even contributed to the CL, and in hindsight I wouldn’t do so again). As for cryptic aphorisms, well, without trees you ain’t got no wood.
You’ll just have to wait and see. I have no intention of using the systems on which we currently depend for much longer, the intention is to obsolete them, since we can make things much better for all.
This is exactly why I’m addressing track record. You’re asking us to trust you, and, well, I’m asking why. As some snowboarder guy (forgot his name, sorry) once said “Less trust, more truth.”
We have delivered many many times. You just can’t see that work - if you looked you would see it, but my approach is fundamentally different to that which you are familiar with.
I know you can deliver proposals and referenda, but you’ll note that I said I can’t find any evidence that your work “has led to any outcomes that have materially benefitted the funding networks.”
And as I peruse your link, I don’t see anything in there that has materially benefitted the networks and their tokenholders. I am looking–I’m just not finding. Instead, I’m seeing things like “Drive fundamental demand for EDG through the development, positioning and marketing of on-chain services” (~£55,000) but as an EDG tokenholder I see the opposite: reduced demand for EDG.
In fact, the closer I look, the harder it is to see your work as anything other than an an attempt at establishing a complex network of wide-ranging and long-lasting Treasury dependencies with no real prospect of self-sufficiency beyond siphoning funds from whichever community you happen to be targeting at the moment.
I’ve been trying to avoid cynicism about this stuff, Rich, but I have to admit my efforts are failing miserably.
Having read (conservatively) tens of thousands of words from you and having only grown more and more cynical and disheartened by the persistence and volume of your efforts to siphon funds from treasuries (and now, apparently, to “obsolete” them somehow), I feel pretty confident in considering myself very, very patient.
I don’t appreciate you trying to mock me openly on a public forum. The proof is not in the pudding when it comes to your proposal to the Kusama treasury. The Kusama community has already spoken and rejected your proposal for good reasons.
I’m not trying to mock you - quite the opposite. Proof is in the pudding is an old english phrase:
Generally, the expressions are used to say that the real worth, success, or effectiveness of something can only be determined by putting it to the test by trying or using it, appearances and promises aside—just as the best test of a pudding is to eat it.
Hence my point is that these points i’m making will be judged ultimately on their usefulness / effectiveness over time.