Polkadot launched a $770M development fund before its parachain auctions
Gavin Wood, the founder of Polkadot (DOT), has recently unveiled a $777 million development fund just before the network’s parachain lease auctions.
On October 17, Wood had tweeted that Polkadot’s treasury had allocated over 18.9 million DOT (worth approximately $777 million when writing this) for a development fund. The amount would be disbursed in a series of rounds through community governance.
Wood has also given broad suggestions on how the funds must ideally be spent, further stating that the money would be mobilized in realizing the community’s vision of “building, improving, educating” the Polkadot ecosystem.
According to Polkadot’s Wiki page, the treasury funds would be allowed for spending when approved by the council that votes on proposals. Currently, the Polkadot council consists of 13 members, but it plans to expand the seats to 24 in the future.
As many Polkadot governance votes have been witnessing poor community participation in the past few instances, the development fund is intended at bolstering DOT holders’ engagement with the procedures of governance.
According to Polkassembly, at least three governance proposals submitted in the last week have noted total voter turnouts of zero, six and seven votes, respectively.
It is being said that stakeholders who wish to put forward proposals must reserve at least a 5 per cent deposit of the proposed spend, with the deposit either returned if accepted or slashed if rejected. Funds being placed at risk on the occasion of an unsuccessful vote, Polkadot’s slashing mechanism can potentially become a factor impeding governance engagement on the network.
Polkadot’s new development fund has been revealed only weeks before its highly anticipated parachain auctions are beginning in early November, suggesting that the funds can kickstart development to target its forthcoming parachain ecosystem.
Polkadot’s parachain auctions would be employed in realizing its vision for a sharded ecosystem. The auctions would see projects building on Polkadot compete for securing one of the 100 parachain slots by bidding to lock up DOT.
Parachains are actually Polkadot’s sharded side-chains that are able to host decentralized applications and protocols other than offering specialized computation, and communicating with its proof-of-stake “Relay Chain” for finalization of transactions.
The existing relay chain of Polkadot exclusively processes governance, transfers and staking services for the network. At the same time, the upcoming parchains are tasked with providing advanced features like cross-chain compatibility and smart contract functionality.
The new development fund would therefore be intended to encourage developers to begin the building on the platform to prepare parachains to go live.
Many onlookers have said that the Coinbase-backed Acala Network is a frontrunner who could win the first parachain slot on Polkadot. Karura Network had won the first parachain auction on Kusama by a sizeable margin in June.
Karara pulled its support from over 15000 entities and won its slot with a bid of more than 500,000 KSM (worth about $184 million while writing).