Community Fund Activation
Epoch rewards in Celo serve multiple purposes, including providing rewards for voters and validators, bolstering the Celo Reserve, and incentivizing protocol development through the Community Fund. Currently, 25% of epoch rewards go into the community fund, yielding a current balance (as of September 28, 2020) of ~2.25 million CELO.
Given its significant balance, we wish to encourage the Celo community to begin activating the Community Fund through governance and begin using it to fund Celo development.
What is the Community Fund?
The Community Fund (CF) is simply the funds held on-chain at the Governance contract. Based on governable parameters (see the docs page for more details), a certain percentage of daily epoch rewards is sent to the contract’s address. At the current rate of 25%, 3.325M CELO per year on average will be deposited into the CF. In addition, slashing events and a portion of transaction fees also end up in the fund.
What could it be used for?
Celo governance enables the community to direct the CF. Generally speaking, the funds can be directly transferred to an account or to a smart contract, or used to fund a new ReleaseGold instance to apply a vesting schedule or other conditions. One recommendation from the community is to use the CF for open-source engineering contributions to the Celo protocol and associated tools and services. Examples include new features or bug fixes for celo-blockchain, Celo core contracts, and other Celo services; open source UIs for validators, staking, or governance; operating data services exposing on-chain data, etc.
How is the Community Fund related to the Celo Foundation?
With the Community Fund (CF), members of the Celo community have the opportunity to share their voice through voting on allocation of communal resources. The CF is a publicly auditable, on-chain fund activated by governance – the very architecture of its decision-making enables the opportunity to participate within the process, and to make decisions affecting shared resources.
The Celo Foundation administers funding to projects and teams working on Celo through a separate process. Therefore, the Foundation plays no direct role in the Community Fund, other than potentially being able to vote on proposals, much like any other CELO holder. Given its holdings in CELO, the Celo Foundation will generally abstain from voting for CF proposals. The only exception to this will be in cases where it believes a proposal may violate Celo’s community tenets or Code of Conduct.
How can I submit a proposal to use these funds?
cLabs recommends that the first proposal be a “meta proposal” for managing the Community Fund, much like the Cosmos Governance Working Group Community Spend Proposal. Ideally outcomes of a proposal like this would include a process that the community agrees upon, as well as documentation and instructions for anyone looking to tap into the CF.
It is also highly recommended that anyone suggesting a process include electing a committee that could help manage and shephard future proposals. This committee should be composed of community members that have contributed to Celo, and also represent a diversity of opinions and backgrounds, and represent a range of stakeholders in the community (for example validators, developers, users, exchanges, and so on). The process should also detail how committee members may rotate, such that this position of privilege does not remain stagnant.
There are of course many factors to consider when designing a holistic process. The Ostrom tradition is one helpful reference when designing processes for common pool resource management. The proposal would ideally address these eight principles and adapt learnings into the process proposed.
That said, it is up to the community to move forward and use this opportunity to ensure that organizations building on Celo receive funding and recognition for the work that they do.