Treasury in the Polkadot Ecosystem

Introduction

The treasury refers to a pool of funds held in system accounts within the Polkadot network. These funds are exclusively utilised by the system’s internal logic. The treasury is a decentralised and community-driven resource that aims to support various projects within the Polkadot ecosystem.

Treasury Funds

There are several methods by which funds can be added to the treasury. Block Production Rewards, Transaction Fees, Slashing penalties, and even staking inefficiencies contribute to the treasury’s growth. As we mentioned in our staking video, validators who fail to comply with staking protocols forfeit their DOT tokens, which are then added to the treasury.

How does the Treasury Work?

The treasury operates through the mechanism of OnChain Governance. There are three primary ways in which projects can secure funding from the treasury: Proposals, Bounties, and TIPS.

Submitting a Proposal

To submit a proposal to the treasury, follow these steps:

1. Join the Polkadot Direction channel on Elements and share your proposal idea, seeking feedback from the community.
2. Draft your proposal, using a provided template as a guide. Clearly outline your project and specify the desired budget.
3. Publish your proposal and share the document’s link on the channel, ensuring that it is officially counted as a proposal submission.
4. Address any questions or concerns raised by community members regarding your proposal.
5. Incorporate feedback and make necessary updates to your proposal.
6. Submit your proposal to the chain and await the votes from both community members and council representatives.
7. If your proposal receives enough positive votes, your project will be approved and move forward.

You may find the Treasury Proposal Template here.

Bounty Proposals

In some cases, the Polkadot council may have limited capacity or lack the necessary expertise to evaluate and approve certain projects. To address this, the concept of bounties was introduced. Bounties are designed to attract external expertise for specific projects.

Bounty Proposals can be submitted through the following steps:

1. Start the conversation : Download Element if you don’t already have it, join the Polkadot Direction channel, and ask the community for feedback on your proposal idea. Be prepared to answer questions. If you need help on the process, fill out this form
2. Draft your proposal : Your proposal should address a problem, outline a goal, give a detailed account of how you will reach that goal, and include any ongoing maintenance needs. As much as possible, you should itemise the tasks to be completed so fees can be evaluated and milestones can be followed. You may find proposal template here.
3. Publish your proposal : Post your proposal on Polkassembly, Subsquare or Dotreasury. Once published, share the link to your proposal in the Polkadot Direction channel for feedback. Be prepared to answer questions.
4. Revise your proposal : Incorporate the feedback received and revise your proposal accordingly.
5. Submit it on-chain : If your proposal has enough positive feedback, submit it on-chain as an OpenGov referendum for a vote.
6. Curator Selection : If approved, the requested funds are earmarked/locked in the treasury, and the bounty is ready to be assigned to a curator or curators. Community members can signal their intent to be considered as curators for the bounty at any time during the bounty proposal discussions. The community will evaluate all possible candidacies submitted through this template, and then vote on a referendum to approve or reject the candidates.
7. Implementer and (optional) sub-curator selection : Once curators have been assigned their role on-chain, they can select implementers to work on the bounty. Potential implementers can also signal their intent to complete the work in any of the discussion channels. Using the child-bounties feature, curators can also select sub-curators, delegating responsibility over a portion of the project to them. Sub-curators in turn select appropriate implementers to complete that part of the project. Child-bounties can be used for more complex or long-term projects that require sub-tasks to be delegated to specialist sub-curators who report to the primary bounty curators (who in turn report back to the community).
8. Bounty execution : The newly-formed team of curators and implementers have three months to complete the bounty, with the option to extend the time allocated to the completion of the bounty, if needed.
9. Report on your progress : Be sure to share the progress of your project every quarter with the community on governance forums, showing relevant deliverables, results, links to work done, and any relevant achievements. This is crucial for ensuring accountability and community alignment, particularly if you want to continue working with treasury funds in the future.

TIPS

Another way to receive funding from the treasury is through Tips. Tips are allocated for work that has already been completed. Any DOT holder can propose a tip to be paid out to a community contributor after they have completed work. Tip proposals need to be submitted under the relevant OpenGov referendum tracks, and proposers need to take into account the caps that apply on the payouts.

Types of activities that can be awarded by tips include but are not limited to: content production (video tutorials, news, updates, and tech explainers), translations (of the Polkadot Wiki, blogs, video subtitles), Substrate PR contributions, channel moderation and community support.

Treasury Burn

To prevent unused funds from accumulating indefinitely, the treasury employs a mechanism called “treasury burn.” Funds that remain unutilized over time are destroyed or burned. Currently, the burn rate is set at 1%. You can check the treasury burn rate through Governance Tab on Polkadot JS.

Checking Treasury Proposals

If you wish to explore the treasury proposals, you can visit polkassembly, subsquare or dotreasury.com. These websites display data for various treasuries, including Polkadot, Kusama, and Edgeware. In the future, it may include other networks as well.

Conclusion

The treasury plays a crucial role in supporting projects within the Polkadot ecosystem. By understanding its mechanisms and actively participating in the treasury process, you can contribute to the growth and development of the network. If you have any questions or ideas related to the treasury or the Polkadot ecosystem, feel free to share them in the comments section of the blog or reach out to us at [email protected].

FAQ’s (Frequently Asked Questions)