How decentralized platforms democratize crypto funding initiatives
While the prevailing traditional financing models resulted in the crypto and blockchain sector raising billions of dollars over the years, they are not without weaknesses, according to Project Catalyst’s group product manager.
At the recent Cardano Summit in Dubai, Kriss Baird, the principal figure of Project Catalyst — a community-driven governance and grants and funds mechanism through voting within the Cardano ecosystem — spoke with Cointelegraph about the initiative, the extent of the collective’s involvement in shared resources and the direction of the platform’s development.
Speaking about the opportunities and challenges of decentralized platforms for raising capital vis-à-vis traditional means, Baird said:
“The problem to be solved [in traditional financing models] is that the decisions being made on who gets the money really comes down to probably a handful of [people].”
He argued that funding decisions made by a small number of people do not produce “great outcomes” and allow communities to play an active role in societal change. On the other hand, decentralized funding initiatives provide “a bit of like direct democracy” and platforms for crypto holders to voice their ideas and concerns.
However, Baird admitted that the sheer scale of such community-driven projects could prove challenging as permissionless, decentralized communities are made up of tens of thousands of stakeholders and projects across the globe.
“It’s actually very difficult, particularly in something like Catalyst where everybody has an opinion… It means there are 10,000 or more opinions on how to operate Catalyst,” he said.
In solving this dilemma within the Cardano ecosystem, Baird said Catalyst launched a pilot where the community not only decides on which proposals get funded but also enables them to verify that the funded projects are reaching their set targets through a milestone-based funding approach and accountability model.
They also launched a new voting system following its recent Fund10 — which allocated $16.5 million in Cardano (ADA) — changing the upvote and downvote mechanics to a “yes-or-abstain” to avoid discouraging newer ecosystem members from participating in submitting proposals.
“Innovation often happens on the fringes. And so if we don’t support [ideas in the] earliest stages, how can we proclaim that were truly and highly innovative” So we want to create conditions that satisfy this global audience of different readiness levels and maturity levels of proposers without creating ring fences around certain types of ideas.”
According to Baird, they may re-introduce the previous voting system in future funding for more “mature” projects that have gone through user testing and community feedback.
When asked about how he would like decentralized funding to evolve, Baird said he envisions it becoming a multi-tenant ecosystem, where more communities of other blockchain networks, Web2 businesses and governments adopt the same approach.
The Catalyst’s group product manager said they have funded more than 1,300 projects, raising 137 million ADA (approximately $60 million) since 2021. He estimates the initiative would allocate over $100 million over the next four years.
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