Treasury

Treasury

Edgeware uses a treasury mechanism to achieve self-sustainability and permit creative incentivization of all stakeholders in the ecosystem, including core and dapp development, ecosystem support and much more.

These funds can be deployed through a Treasury Spend action which is subject to council approval but can be proposed by any EDG holder.

Proposing a Treasury Spend

When a stakeholder wishes to propose a spend from the treasury, they must reserve a deposit totaling 5% of the proposed spend, with a minimum of 1000 EDG

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Parameter Note: The Treasury Spend Deposit is 5% of the proposed spend action, with a minimum of 1000 EDG.

This deposit will be slashed if the proposal is rejected, and returned if the proposal was accepted.

Plausible Project Concepts

Proposals may consist of (but are not limited to):

• Infrastructure deployment and continued operation.
• Network security operations (monitoring services, continuous auditing).
• Ecosystem provisions (collaborations with friendly chains).
• Marketing activities (advertising, paid features, collaborations).
• Community events and outreach (meetups, pizza parties, hackerspaces).
• Software development (wallets and wallet integration, clients and client upgrades).
• Core Technology: Implementing of scaling technologies such as runtime improvements, sharding, and off-chain extensions.
• Governance: Governance systems, including on-chain identity as well as tools for organizing and coordinating the work of core developers.
• Developer experience: A mature toolchain for developing, debugging, and testing smart contracts.
• User experience: Wallets and user experience primitives (e.g., JavaScript libraries) to make decentralized apps simple and easy to use. • Ecosystem support: Engaging developers, end users, and other stakeholders through in-person events.

Projects that serve the broader Edgeware ecosystem are much more likely to succeed than other kinds of efforts. This list is not exhaustive, but it gives you a sense of what sorts of things are good propositions.

The treasury is ultimately controlled by the stakeholders, and how the funds will be spent is up to their judgment.

EDG Accrual to the Treasury

The treasury obtains funds in several ways that mimic governments - minting, fees and taxes.

1. Minting: A portion of the EDG produced with each block goes to the treasury.
2. Slashing: When a validator is slashed for any reason, the slashed amount is sent to the Treasury. Slashed EDG may also accrue to the treasury through failed governance proposals.
3. Transaction fees: A portion of each block's transaction fees goes to the Treasury, with the remainder going to the block author.
4. Staking inefficiency: Inflation is designed to be ~20% in the first year, and the ideal staking ratio is set at 80%, meaning 80% of all tokens should be locked in staking. Any deviation from this ratio will cause a proportional amount of the inflation to go to the Treasury. In other words, if 80% of all tokens are staked, then 100% of the inflation goes to the validators as reward. If the staking rate is greater than or less than 80%, then the validators will receive less, with the remainder going to the Treasury.
5. Lost Deposits: These may be abandoned bonds from voting, proposals or otherwise.

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Parameter Note: The ideal staking ratio used in the Edgeware economic model is currently 80%. Inflation is currently set to about 20%, or 158 EDG per block.

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Conducting a Treasury Spend Proposal

Once you have an idea that might be appropriate for funding from the Edgeware Treasury, you can complete several steps to test the public interest, convey your argument, and then submit your formal treasury proposal. This guide is written as a recommendation both to proposers and decision-makers, and will track best practices over time as they emerge.

Similar to traditional RFPs (request for proposals) that governments use to solicit bids for work, treasury spends optimize the productive value of the EDG and seek to extract maximum work for their recipients. Proposers should be prepared to defend their position or experience competitive bids for the same or similar work.

Technical Process of a Treasury Spend

1. Pre-Proposal Stage - Planning, writing, advocacy, outreach.
2. Treasury Spend Proposed
3. Council either adopts or refuses the proposal.
4. If approved, it enters a queue within a budget period of 24 days.
   1. The treasury attempts to fulfill as many spends in the queue within this time period.
   2. At the end of a budget period, the remaining treasury balance is subject to a small percentage burn. This incentivizes the usage of funds and creates deflation through the destruction of EDG.
5. If refused, the treasury proposal remains able to be accepted until the end of the 24 day period, then it is removed from the consideration table but can be resubmitted.

Proposal Description Document

The first step is to describe the proposal in full to the community. A great place to start is a single document that contains all the following information. Once the document is ready, create the on-chain spend in the next step, then share the document after.

1. Date of Proposal
2. Who is proposing?
   1. What is their motivation?
   2. Do they have any conflicts of interest?
   3. To who do these payments go?
      1. For building, who will be handling what?
      2. What is their background and expertise? Describe the whole team.
3. What is the historical context of this proposal?
   1. What previous actions does this proposal relate to?
   2. Does it have any impacts on future actions to note?
4. Clear, short Problem Statement and Proposed Solution
   1. Evidence for that Solution
   2. Who does this solution help?
5. Describe, if relevant, the Milestone Structure of goals and disbursements.
6. Are these funds going to be used for non-funding, on-chain purposes? e.g Will you be using these funds to vote, nominate or bond for staking?
7. Financial Details for all Proposed Transfers
   1. Amount/s requested
   2. Financial timeline - when are installments due?
   3. What are the Addresses of the fund recipients?
   4. Who will be managing the funds, how can we contact them?
   5. How will the manager of the funds report on status proactively? Where we can follow progress and ask questions?
8. License (if applicable)

Propose The Spend On-Chain

To propose a treasury spend, a deposit totaling 5% of the proposed spend amount, with a minimum of 1000 EDG is required.This deposit will be slashed if the proposal is rejected, and returned if the proposal was accepted.

One way to create the proposal is to use the Polkadot JS Apps website. From the website, use either the extrinsics tab and select the Treasury pallet, then proposeSpend and enter the desired amount and recipient, or use the Treasury tab and its dedicated Submit Proposal button:

The system will automatically take the required deposit, picking the higher of the following two values: 1000 EDG or 5% of the requested amount. If the user cannot pay the deposit, an error will be returned and the proposal creation will fail.

Once created, your proposal will become visible in the Treasury screen and the council can start voting on it.

Note the on-chain # of your treasury proposal- shown as a large number on the left of the row (11 in the image above), you'll want it for the next step.

Now the council can take action, either turning it into a motion to approve or a motion to reject. 51% or more of the council must agree to take an action on any treasury spend.

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Parameter Note: The Treasury Spend Deposit is 5% of the proposed spend action, with a minimum of 1000 EDG. Treasury Spends require 51% of the council to agree.

Speak with the Community

Because the formal spend proposal lacks metadata for efficiency, sharing the details about the proposal off-chain is essential. We recommend using Commonwealth.im/Edgeware and the community channels including telegram and discord.

• Post a discussion thread on Commonwealth
• Tag the title and body with EDG_TP_# where # is the official number of your treasury proposal, found on block explorers or Polkadot UI.
• Announce the thread in other channels like Telegram to encourage awareness and debate.

Tagging helps users understand what module is being activated and what threads connect to what actions. Expect questions, challenges, and other remarks. This can begin before or after you create your formal treasury proposal on-chain, but you won't know the TP# until then.