## **Introduction**

This discussion was inspired in two parts by both recent post on the Polkadot website, [Proposal for Common Good Parachains](https://polkadot.network/blog/proposal-for-common-good-parachains/) and through the ongoing challenges of facilitating and scaling on-chain contributions in fully decentralised networks such as [Edgeware](https://edgeware.io) and its soon to launch mirror network, the  Kusama parachain [Kabocha](https://kabocha.network). 

From the Polkadot post: 

> The roadmap that we originally had in mind for common good parachains has been rendered obsolete by many conversations with community members over the winter and spring. And that is a good thing...

> ...As the common good parachain team at Parity grows, we would love to see more community involvement from all types of users.

## **A proto-proposal**

Given the current blunt instrument of on-chain decision making and the resulting frictions this can cause through the rapid entrenchment of binary positions, this concept is presented as a kind of *proto proposal* - a middle ground between a discussion and a concrete proposal, as a way of opening up some creative space to question certain basic assumptions about what relay chains should and shouldn't do, and the same for the parachains onboarding to them. 

The aim is to spark discussion, before developing into a more formalised project - either resourced by Parity as part of the general common good initiative, or as a more organic community approach that would bring together a specific working group. 

Further, the aim is to open the door to considering how existing and future design frameworks, governance policies and even infrastructure may evolve or adapt when considering the emergence of grass-roots and decentralised parachain projects incubated not by VCs but organically through on-chain funding and organisation. 

## **Background**

Currently DEXs on Kusama (and Polkadot) have been delivered by for profit parachain teams such as [Karura](https://acala.network/karura), [Basilisk](https://bsx.fi/) and [Genshiro](https://genshiro.equilibrium.io/) and are focused in general on more speculative uses and users. 

The Kusama treasury has also been tapped a number of times [to provide liquidity](https://kusama.polkassembly.io/post/1503) to these parachain DEXs, setting a precedent for KSM to be used to better facilitate token exchange. In of itself this funding has been contentious, with certain community members believing VC funded projects should not be able to utilise public funds given their business models. 

Both Kusama and Polkadot also have *common good* chains that are akin to public utilities. These chains don't have their own tokens and in return gain certain network privileges such as the ability to receive funding from the relay via on-chain proposals and the ability to be granted a lease via governance rather than needing to provide a sizable KSM bond for a slot in the auction process.  

On Kusama, [Statemine](https://guide.kusama.network/docs/kusama-statemine/) exists for minting assets and [Encointer](https://encointer.org/) for IRL identity proofs, with new chains in the works that will provide functionality to benefit both [Collectives and Bridging](https://polkadot.network/blog/proposal-for-common-good-parachains/). 

In recent discussions, community members have asked if common good chains may compete with For Profit parachains, and the responses were mixed, but all agreed that competition was good since it would then drive up the quality of the products on offer. 

One thing that wasn't discussed was that the competitive matrix on which DEXs seek to differentiate is broad and there are very specific ways that a common good DEX, might be developed in a way that does not encroach on the territory of existing parachain DEXs.

## **The problem**

An area of genuine *common good* demand, is for the facilitation of token exchange from parachain teams who are not financially equipped, philosophically motivated or legally structured in such a way that they would invest heavily in liquidity mining or complete complex centralised exchange listings.

For CEX listings, a sole issuer is demanded and thus takes on the full legal liabilty on behalf of all contributors. In the UK for example, if my company [Decent Partners](https://decent.partners) attempted to deliver a service to the community of listing KAB on Binance, we would likely be considered to be acting as a *cryptoasset exchange provider*. It is a criminal offence to act as such in the UK without being registered with the UK FCA - something we could do (though onerous), but automatically drags the project towards the incumbent system, rather than remaining a parallel and independent experiment.   

In addition, the primary day to day operational issue facing more grass-roots teams who do not have VC backers and rely on scaling grass-roots contributions on a broad and fair distribution base, is the liquidation of proposal funding, rather than market driven speculation of the token.

## **Solution - Kusama public / common good DEX**

The aim would be to develop a Kusama 'common good' DEX narrowly focused on providing exchange and liquidity services for parachain contributors with funded proposals that removes the need for grass-roots parachain projects to list on CEXs and more speculatively minded DEXs.

The KSMDEX, would be selective about the pairs it lists - and require chains that do apply for listing to satisfy certain prior criteria, in the same way common good chains can access treasury funding, but for profit ones (supposedly) can't, 

Similar to a cooperative model, the DEX would **only** set prices within its own sovereign economic zone, and the compromise would be that community led parachains wishing to list on the KSMDEX would face is that they could not list on any other DEXs or CEXs. 

In this model there would be no need for a new token as the Kusama treasury would provide liquidity, making use of the un-used funds and would retain all trading fees. 

If as we hope, more projects such as Kabocha develop and also leverage the common good DEX, then this can develop into a revenue driver for the Kusama treasury, whilst maintaining a simple and publicly focused model. 

## **Issues / challenges**

Currently common good chains are the sole preserve of Parity - so this would it seems need buy in from the developer team there. I'm not sure if this is simply due to the Parity team having more expertise and incentive to deliver this rather than anything *blocking* external / community initiatives so interested to hear from the team on that. 

In the event Parity did not have the interest or resource to progress something like this, then this could be developed by a working group who were interested in the concept, given it was something that could be voted on via referendum. 

## **Questions and comments**

Please tell me why this is a dumb idea if you believe it is, or if not, tell me how it could be better - looking forward to thoughts.

As previously mentioned, the hope is that this and following concepts can loosen a few of the  shackles that are holding back a more open and experimental playground in Kusama.   




- This discussion is about creating a decentralized exchange (DEX) on the Kusama network.
- The DEX would focus on helping smaller projects that don't have a lot of money or resources.
- It would provide a way for these projects to exchange their tokens without needing to list on centralized exchanges.
- The DEX would be funded by the Kusama treasury and would only list certain projects that meet certain criteria.
- There are some challenges to making this idea happen, but the hope is that it can create a more open and experimental environment on Kusama.

#1788 Proto-Proposal: Develop a Kusama 'common good' DEX specialised in providing liquidity to funded proposals