Dear Council,

Since Referendum 171, wallets receive [NFTs](https://singular.app/collections/3208723ec6f65df810-ITEM) as a reward for participating in Kusama Governance. The project's initial phase has been funded through the treasury up until the point of the release of a RMRK2 collection. 

![](https://i.ibb.co/hZV0YXC/Screenshot-2022-05-14-at-14-32-59.png)

From that point onwards we devised a business model where the project would be entirely funded through royalty income from secondary sales of the NFTs we send out for free. This model has worked well initially as the community was actively trading the NFTs. As of late however, due to the downward trend in the general market, NFT sales (our collection included) have drastically declined.

We have costs of approximately 600USD per referendum. 
This includes: 

- **artist costs** (we create custom items for each referendum, projected to go up as we create more items as voter participation increases)

- **development costs** (code maintenance, send-out testing and send-out monitoring)

- **minting costs** (projected to go up as voter count continues to increase)

- **social media costs** we are actively engaging the the community on [Twitter](https://twitter.com/GovPartRewKSM)

- **project management** artists relations, community brainstorming as well as partnership management.

The RMRK2 Collection was started in Referendum 181 and Referendum 199 is currently up for vote. Our total costs for sending out these NFTs has thus been 19 (amount of referenda since inception) * 600USD = 11.4k USD. Till this point we have had income through royalties of about 37KSM. These were used to cover some of minting and artist payments. Any additional costs have been paid out of pocket by me until this point. The development hours were contributed by me without payment until now in the form of an investment as I expected to be rewarded as trading picked up in the future. 

I have used [wallety.org](https://wallety.org/kusama?wallet_address=DhvRNnnsyykGpmaa9GMjK9H4DeeQojd5V5qCTWd1GoYwnTc) to get an idea of our total revenues. Total deposits according to this tool were 42KSM (approximately 5KSM were initial minting fee deposits paid out of pocket by me) 42 - 5 = 37KSM. It is hard for to place a USD value on these KSM revenues due to the fluctuation in the KSM price as of recent. The KSM price has been moving in the 70USD-190USD range since the inception of the project and I assume a value in this range would be most appropriate to price the revenues. I will leave it up to council to decide a fair value here. 

![](https://i.ibb.co/zJrrP4W/Screenshot-2022-05-14-at-14-20-04.png)

Our costs are running into red territory with the lack trading and there is no end in sight. We are asking council to provide short-term help to overcome this rough patch. As soon as trading picks up again we will be able to cover our costs through royalties alone again as we have done in the past.

We are extremely proud of the positive change we are invoking on voter turnout.

![](https://i.ibb.co/KmQRVMQ/Screenshot-2022-05-14-at-14-40-01.png)

Since inception of this project the amount of participating wallets has gone from 300 to 1550 wallets!

An extremely positive trend is also visible in the turnout!

![](https://i.ibb.co/hHQffC0/Screenshot-2022-05-14-at-14-44-05.png)

We can classify the referenda into 2 categories based on their turnout:

- Those where whale wallets vote (assumed to be under control of parity).

- Those where mostly average holders vote and parity wallets don't.

This project is focusing on increasing participation from **average holders**. We should thus focus on the "lower dots" where a clear uptrend is also visible. Turnout for referenda where whale wallets don't participate used to be 0.1% at the inception of this project and has now **tripled** to about 0.3%. This means more wallets and more KSM are participating in voting!!!

To achieve this we have made many changes to our code base along the way. One crucial element to increase turnout rates has been to create multiple Items with **different rarity** for each referendum. These different items are randomly distributed to voters. 
![](https://i.ibb.co/2Np5KpX/Screenshot-2022-05-14-at-15-12-10.png)

**The likelihood to receive a rarer item increases however as the vote amount of a wallet (considering conviction) increases.** The curve below shows how the luck to receive the rare item is calculated with our implemented method. The example uses just two items (one rare and one non-rare) to simplify things.

![](https://i.ibb.co/FK1XRDV/Screenshot-2022-04-19-at-16-00-38.png)

I am definitely not the only one behind the success of this project. We have an amazing community that helps with all things from item idea brainstorming, [discord](https://discord.gg/sHzk4rdc) management (I invite you to come have a look), information spreading, translating and also script generation for WL spot partnerships. We have also received a lot of support from other projects that have offered additional rewards to holders of shelf items! 

Together we continue to work hard to push up participation in Kusama governance in a fun and interactive way!

0x466f722050617261636861696e205265706f7274202850726f6772616d61203129202f2f204d6f6f6e7269766572206e6f20736567756e646f20536c6f742c2053686964656e2065204b68616c6120646973707574616e646f20636f7261c3a7c3b56573212068747470733a2f2f796f7574752e62652f327446484449675f586b63

- **Problem Statement & Audience:** 
  - Facing financial challenges in funding NFT rewards for Kusama Governance participants, seeking short-term assistance from the council.
  
- **Significance:** 
  - Struggling with declining NFT sales impacting the ability to cover costs, hindering the positive impact on voter turnout.
  
- **Proposed Solution:** 
  - Requesting short-term financial support from the council to overcome the financial difficulties until NFT trading picks up again.
  
- **Expected Outcomes & Value proposition:** 
  - Anticipated ability to cover costs independently through royalties once NFT trading improves, continuing to drive increased participation in Kusama governance.

Emergency Funding for Governance NFTs