Treasury spending, public goods and ‘bad actors

Treasury spending, public goods and ‘bad actors’.

In the recently posted Adjusting the current inflation model to sustain Treasury inflow @jonas makes the following argument:

Recently conversations in Kusama have moved more concretely towards assessing past, present and indeed future treasury spending against more concrete metrics.

Large holders have used Nay votes to direct proposers and voters towards more critical analysis of the role of the treasuries when it comes to supporting public goods in the ecosystem.

This has in large part not just slowed spending, but stalled it entirely.

Whilst ‘retro-active’ funding is now considered the new normal, it is just one funding structure that can be used to support research, innovation, product development and go to market across a more fluid process.

At the same time, we see pretty much the same issues playing out in Polkadot’s treasury spending, with a larger pot obscuring the value proposition of a shared treasury for bootstrapping meaningful adoption.

Bad actors

This term is thrown around without any real thought as to what it means - in my mind a bad actor is one who prioritises short term private interests, over the long terms interests of a collective or public.

Venture funded teams are using the treasury to test out their projects, before openly returning to financiers to raise more funds. These investors will expect returns, almost certainly through the creation of a native token.

By playing both sides of the game, these investors may on the surface be seen to be working in the (network) public interest, but they are in fact creating independent sub-economies that ultimately abstract value away from the core network (DOT or KSM) and exacerbate problems further down the road by adding in complexity to the projects they incubate through a reliance on token based systems, thus creating systems that struggle to gain adoption.

These entities are presented as saviours of the ecosystem, and yet they are vampires.

This is not new - it simply mirrors the challenges faced in the real world, where private entities lobby the public sector under the pretence of being more effective and efficient guardians of public capital, then taking over control of national assets which they then asset strip, degrading shared services in the process.

A recent example are the UK’s public water companies which were privatised in the 1980’s.

Analysis of the accounts of Thames Water between 1990 and 2022 reveal a story that is echoed to some degree across the industry. The figures show how privatisation – which was intended to lead to a new era of investment, improved water quality and low bills – turned water into a cash cow for investment firms and private equity companies - The Guardian

Public goods

If the aim is to make the treasuries both sustainable and effective at expanding the public interests of the whole, then we need to continue to ask tough questions and in turn use these prompts to evolve the collective intelligence of the group.

  • How do we ensure the primacy of the public good?

  • How do define what is and what isn’t in the public interest?

  • What are the metrics that (might) matter?

  • How should token holders be assessing projects?

  • If we want adoption, what are the projects that we should be sourcing?

  • What do we mean by adoption?

  • What standards will ensure value will primarily accrue to common assets?