tl;dr - This post advocates for setting up proper spending budgets
Good morning everyone!
I hope you had a good transition to Polkadot OpenGov because that’s what we are going with. I see that we had one or two emotional discussions already about funding certain projects. Polkadot is coming of age and is now essentially in the phase of a teenager who suddenly has access to some cash but still has no clear conception of how to responsibly use it.
On the one hand, we think that spending is good because it is an investment in our future. On the other hand, we think spending is bad because it is a waste of money. On who thinks what in which situation is completely different. In simple words: We have many interests competing for the same pot of money. What’s the responsible thing to do in such a situation?
Fighting over every individual project until the end of time is nothing anyone here wants to do and even more importantly, it is not very efficient, since we don’t even have decided on how much money we want to spend. So let’s compartmentalize the problem.
I propose we find a process to decide on a budget that defines:
- spending categories
- for a defined time frame
- and how much we intend to spend in each category
The idea is that we define those categories and allocate budgets that define our expectation of how much impact we meaningfully ascribe to each category. Over several spending cycles, we will get better at understanding the needs, pains, and effectiveness of each category and will get better at efficiently and effectively spending money.
Coming to a meaningful mode of operation and common ground here will be a tough battle, I know, but then again it’s basically the absolute minimum to be considered a grown-up person in the real world. So we better get it done!
Having a budget is the grown-up thing to do and every company, organization and most households have it. I consider the idea validated by default. It’s just a question of actually making it happen. In those cases, the basic strategy should be to establish facts by establishing a process that is open for everyone to participate.
We need to get a minimal number of motivated, influential people to participate in bootstrapping this process. This basically means that you just need to participate in the discussion and drive it forward with forum posts, proposals, calculations, etc.
Once we can show sufficient progress on the matter, we will gain the critical mass/buy-in into the process. So the first milestone is to come up with a budget proposal + process that people can either agree on or dispute, with the goal of reaching a broader and broader consensus.
If we can get a good process working, we will arrive at an actual budget eventually.
What I think might be harder to implement is the actual implementation of the spending process. How do we ensure that money will be spent by the commonly agreed budget? Is it a soft influence by reminding everyone in spending discussions? Is it enforced by putting the money in bounties? This largely depends on the actual buy-in of the stakeholders, but I think a hard commitment to sub-treasuries is the best way forward.
I want to provide some initial inputs to get the discussion going.
- Spending cycle: I think a good timeframe is to have yearly budgets. My short-term concern is that this is way too long for the attention span/turnover cycle in current Governance discussions and shorter timeframes might be a better fit. The problem is that budget discussions take time, implementation takes time, controlling takes time and if we have short cycles and fail on execution, it will create negative sentiment. I think we should have at least 4 months, better 6 months for a try-out, and then decide on future spending cycles.
- Spending categories: some initial things that I have in my mind are
- innovation, research & development
I won’t give opinions on the actual budgeting just yet. I think we should discuss the overall idea (and start by agreeing on categories first) before we talk numbers.
One thing to point out is that we might have issues when denominating in DOT or USD. Maybe the Treasury should buy the appropriate amount of USD from AssetHub as it decides on a budget so that an actual commitment is grounded in the more common unit of account.
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