As Parachain Auctions Close In, Polkadot Introduces $777M Dev Fund
Recent trend in crypto has been blockchain networks, each having its unique and distinguishing features. One of these is Polkadot, usually referred to as the blockchain of blockchains due to its multichain nature.
Earlier this month, Gavin Wood, the founder of Polkadot, announced a development fund of about $777 million before the network’s parachain lease auction.
The @Polkadot treasury currently has 18,936,300 DOT (DOT, not USD – do the math) in it ready to spend on *your* ideas for building, improving, educating and indeed, anything else that the Polkadot governance believes valuable.
The development fund announced comes weeks before the blockchain’s parachain auctions launch, which is scheduled to kick off in early November. The funds might then be possibly useful in addressing developmental issues for the network’s future parachain ecosystem.
Polkadot Fund Explained
Wood tweet mentioned an allocation of over 18.9 million Polkadot (DOT) from the network’s treasury. The tokens have an estimated value of about $777 million. They are dedicated to a development fund for later disbursement via community governance.
Wood also suggested the spending plan for the funds citing the capital mobilization in realizing the community’s vision. The network vision is to develop, improve and educate the ecosystem and whatever the Polkadot governance values.
According to Polkadot’s Wiki the use of the treasury funds, requires an approval from the council. Usually, the Polkadot council votes on proposals presented to them. It currently has 13 members and plans to expand to 24 members in the future.
Several Polkadot’s past governance votes involve its community participation. So there’s the possibility that the development fund can be channeled to increase DOT holders’ participation within the governance processes.
A report from Polkassembly revealed that there were three governance proposals forwarded for the past week. The voting turnouts are zero, six, and seven, respectively.
The procedure on the network is that when a stakeholder puts forward a proposal, he reserves at least a 5% deposit of the spend proposed. If accepted, the deposit is returned, but it will be slashed if rejected.
Slashing is a burning mechanism the network uses to keep validators from misbehaving. Thus, it’s possible that Polkadot’s slashing process, which puts holders’ funds at risk, impedes governance participation on the platform.
The upcoming parachain auctions are means for Polkadot to realize its vision for a fragmented ecosystem. This will lead to projects on Polkadot competing to grab any of the 100 parachain slots through their bids to lock up DOT.
Parachains are Polkadot’s fragmented side-chains with the capacity of hosting decentralized protocols and applications. In addition, they can provide specialized computation and relate with the network’s proof-of-stake Relay Chain in executing transactions.
Furthermore, the existing Relay Chain of Polkadot has the sole function of processing transfers, governance, and the network’s staking services. So, the new parachains have the function to offer advanced features, which include cross-chain compatibility and smart contract functionality.
Hence, the development fund can serve as an encouragement for developers to create more on Polkadot before the release of parachains.
