Discussion: Launching the Kusama Innovation bounty with external financing partners through a ParaNote structure
Background
Kusama faces a number of challenges when it comes to driving ecosystem innovation, spending its treasury effectively whilst moving towards models where ROI of spend can be attributed more directly to on-chain adoption.
Even though the treasury may control millions when valued in fiat terms, its actual spending power is constrained by the requirement of funded teams to sell KSM for working capital, which creates sell pressure, thus reducing the available capital over time.
There is therefore a chicken and egg situation - innovative concepts are necessarily abstract initially, but with current majority rule based governance experimental endeavours are not easily, or sustainably funded.
Without driving innovation, the value proposition of the network falters, which will over time lead to a re-pricing of the network - and a subsequent fall in the value of the token, and its associated treasury.
Existing approaches from investors focus on single, large ticket financing - taking stake in a network at one point in time, ordinarily ahead of launch, which is often not the best structure for growing a highly complex and interdependent network. Given the highly volatile and organic development of public blockchains and market cycles, it makes more sense to have access to a draw-down facility that can be tapped as and when it is required, ensuring tokens are sold at optimal moments.
Kusama innovation bounty
Via paraNotes, we can create an efficient, transparent and fluid crypto native financing structure focused on the driving innovation and adoption of next generation, interoperable blockchains such as Kusama.
Flexible financing, enables decentralised teams building a new generation of on-chain governed blockchains to access pre-agreed stable-coin denominated funding as and when it is needed, rather than in one lump sum, allowing for more tactical, strategic and adaptable spending.
External capital partners provide this funding through governance mandated agreements with a blockchain treasury - a process mediated by a team such as Decent Partners.
Deployed funds are accessible to groups with a track record of driving network innovation.
This capital forms the foundation of a patronage based model, with external partners able to co-finance projects alongside the initial innovation funding, diversifying risk over time and driving adoption of the underlying technology - and core network value accrual.
How a paranote works
ParaNotes are coordinated by an Innovation Council.
A spending proposal is submitted to a treasury requesting some amount of tokens.
Upon approval, these tokens are delegated from the main treasury account to a bounty account on the blockchain, with funds stewarded by the council.
At their discretion across a predetermined agreement period, this council can sell the assigned tokens to investors, allowing them to time market conditions in a favourable way based on the current liquidity of the tokens at a 7/14/30 day TWAP.
In return, investors send stablecoins to the bounty account - these funds are then used to finance projects that will drive adoption of the underlying blockchain and accrue value to the network.
Questions
One question that has come up is one of oversight - and accountability - e.g. what if the DAO decides to recall delegated funds from the bounty, after some USDT etc has been sent.
Currently legal agreements between a W3F and funding partner give some assurances - whereas in a fully on-chain model, the will of the community trumps all off-chain agreements.
High level discussion document here including initial scope.
Formalised Bounty proposal to follow.
Comments (4)
I read your post about launching the Kusama Innovation bounty with external financing partners through a ParaNote structure. I have some concerns and questions about your proposal. Firstly, it seems like you are suggesting a complex financing structure with external partners and a team such as Decent Partners mediating the process. This raises the question of accountability and oversight. Who will be responsible for ensuring that the funds are spent effectively and in line with the community's goals and values? What measures are in place to prevent abuse or misuse of the funds? Secondly, you are proposing a patronage-based model, where external partners co-finance projects alongside the initial innovation funding. While diversifying risk over time is a good thing, it can also create conflicts of interest and dilute the community's influence over the direction of the projects. How will you ensure that the community's voice is heard and that the projects are aligned with the community's needs and values? Thirdly, your proposal seems to focus on attracting external financing partners and drawing down on a facility as and when required. While this may seem like a good idea in theory, it could create pressure to sell KSM tokens at suboptimal moments, leading to a reduction in the available capital over time. How will you balance the need for funding with the need to maintain the value of the network and its associated treasury? Finally, I have some concerns about your track record as the founder of Decent Partners. It has been noted that you are the only member of the team and that you have three dormant companies. Additionally, you have already obtained millions of dollars from Edgware treasury and are now seeking funding from the Kusama treasury. This raises questions about your motives and whether you are genuinely committed to driving innovation and adoption of next-generation, interoperable blockchains such as Kusama. While I appreciate your efforts to drive innovation and adoption of next-generation interoperable blockchains like Kusama, I still have some concerns about your previous proposals and track record. As you know, your recent proposal for "GMI crypto media" was rejected by the Kusama community due to several issues, including the high price for producing 10 podcast episodes, lack of clear outcomes, and concerns about your previous use of funds from Edgware treasury. Given these issues, I think it's important to be transparent and accountable in your future proposals. Furthermore, I understand the need for external financing partners, but I'm not convinced that your proposed ParaNote structure is the best way to achieve this goal. It's important to have oversight and accountability in the allocation of funds, especially when it comes to a community treasury. While your proposal outlines some measures for oversight, I'm still concerned about the potential for misuse of funds. Overall, I think it's important to address these concerns before moving forward with any proposal for funding from the Kusama treasury. I encourage you to be transparent and accountable in your proposals and to work towards the common good of the Kusama community.
Once again, this feels like a ChatGPT effort that is part of a series of connected posts.
As noted on the others, perhaps you'd be interested in discussing your position on a public video call in the next few weeks?
Anyways - on with the response:
Let's start with this line:
Oh how I wish this were true, sadly I've received $100k across 30 ish proposals. You can see the status and on-chain data for all of them here.
If you spent a little more time researching you'd note that we instituted an Edgeware spending cap of £25k/$30k on almost all proposals.
The largest Edgeware proposals - for exchange listings, and a (failed) incubator experiment where funds were eventually returned to the treasury, were conducted in the first 9 months of operation and had nothing to do with me.
This post is the start of a discussion about a deal that we have been working on with external financiers.
The final terms and structure is TBD. Given this is a democracy, I'm sharing as much of our thinking openly, so people can play a part, rather than conducting some deal behind the scenes with large holders.
We can think about this deal in two stages:
Inbound funding - aka selling KSM for USDT/USDC in tranches at some future price, to be agreed by some group of which Decent Partners is a part. There may well be an entirely on-chain process to achieve this, but I'm sure you can agree, that organising community wide votes on when / how much KSM should be sold is not optimal for timing market moves / positive news.
Spending - aka how is the USDT/UDSC in Statemine governed and approved. This is an open question. Tbh the simplest answer is it it just accessed via the same processes as current governance, except proposal spend is now priced and paid in USDT/C. We could also consider that some/all of these funds could be delegated to a bounty org with curators (with Decent Partners being one).
In the end, Kusama's blockchain is a shared ledger - we do not need one roadmap, we need many. We are just pushing forward new ideas and directions - attempting to identity issues, and then presenting solutions. These solutions don't arrive fully formed they are a process of call and response, as we seek to design the optimal approach to satisfy a range of different perspectives.
Please see responses to that point here and here. Cross-posting again here:
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](https://en.wikipedia.org/wiki/Four_to_the_Floor_(TV_series), 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 at the convergence of three highly risky spaces (crypto/R&D/talent development) 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 spend a little more time googling me, since you clearly have the time and the curiosity.
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 before onboarding them to crypto-native collectives and systems:
It was rejected 42/58 - a small margin.
Proposals are a process. I’ve done this alot - in crypto, and in many organisations / institutions in the ‘old world’. This proposal is V1 of a process. The $200k was not "for a podcast" - it was for a multidisciplinary team, and creative project, that is the first example of media, tech and talent unifying to drive on-chain metrics.
V2 will evolve all learnings and push things further.
The Edgeware spending was not a concern that was raised - again, please in future attempt to write arguments yourself, rather than letting a machine do the work for you.
Another day, another attempted Grift by MRB - I'm not sure why you think the Kusama Treasury is here to give you a job all the time?
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..?
You also tried to blatently raid the treasury for $200k for 10 podcasts? You already fooled the Edgeware treasury and got £15k for 4 episodes and what was the outcome - how many listeners did you get/where did you post the metrics? You talk about ROI yet you don't think about it when it comes to your own proposals.
Just because you write eloquently and like to pad out the words like its some school thesis, it doesn't mean you should treat the community like fools..
Just write the TLDR next time: MRB wants treasury funds to subsidise his failing businesses and may hand some out - maybe even to fund useless podcasts
https://find-and-update.company-information.service.gov.uk/company/10153409/filing-history
https://find-and-update.company-information.service.gov.uk/officers/TrZjwwFJ4uNi9itKbNXECud98u0/appointments
Thankyou for your comment. It would be great if you would publish under the same identity, rather than creating anon accounts on the polkadot forum in an attempt to question my motivations, credentials and finances.
I've responded here, but would happily debate these points in a public video call.
Reposting relevant elements of my comment there, here:
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](https://en.wikipedia.org/wiki/Four_to_the_Floor_(TV_series), 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 at the convergence of three highly risky spaces (crypto/R&D/talent development) 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 spend a little more time googling me, since you clearly have the time and the curiosity.
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 before onboarding them to crypto-native collectives and systems:
Proposals are a process. I’ve done this alot - in crypto, and in many organisations / institutions in the ‘old world’. This proposal is V1 of a process. The $200k was not "for a podcast" - it was for a multidisciplinary team, and creative project, that is the first example of media, tech and talent unifying to drive on-chain metrics.
I've been open about the listener numbers - it was a few hundred. But that's not the point - as I've also made clear elsewhere. It was a pilot to learn about on-chain funding, prove that well known journalists with large influence would join a project without demanding high fees, if it was in the public interest, and ultimately a stepping stone to everything that is now following.
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.
I look forward to more productive conversations as things evolve.