Function X: August Hash Out

Introducing Ecosystem Genesis Fund (EGF) governance voting v1.0 — the wakening call of decentralized governance in Function X

Preface

The Function X Concept Paper (i.e., our whitepaper) noted that the foundation had allocated 20% (75,720,905 $FX, currently approx. 32 million in USD value) of the initial supply as the Ecosystem Genesis Fund. Its purpose is to motivate, facilitate, cultivate and accelerate the growth of the Function X network’s ecosystem.

To keep pace with the rapid change of the market environment and to execute our commitment to decentralization in ecosystem development, finance and marketing, the Function X foundation would like to now bring the distribution and execution of the Ecosystem Genesis Fund to the decentralized governance in Function X.

Function X foundation is mindful that the learning curve of decentralization is relatively steep and participation can be expensive, so the foundation will implement it step by step.

Usage of the Ecosystem Genesis Fund (‘EGF’)

As mentioned in the original concept paper, usage of the Ecosystem Genesis Fund (‘EGF’) will focus on the following segments:

  1. Consumer (10%): To attract consumers and grow the customer base;

  2. Developer (20%): To encourage developers to create DApps on the Function X blockchain;

  3. Infrastructure Service Provider (20%): To set up or shift to the Function X infrastructure;

  4. Financial Service Provider (20%): To create a trading platform for $FX and increase liquidity; and

  5. Emergency bridge reserve (30%): To facilitate or help the stakeholders in Function X during extreme market conditions.

To further elaborate:

Implementation

To begin implementing decentralization and its underlying ethic of fairness, interested parties should submit a project proposal publicly in the Function X Forum (http://forum.functionx.io/). The proposal should include a prototype, action plan, or an explanation of a work-in-progress together with the amount of $FX needed (“incubation fund”).

Submissions could come from individuals, organizations, project owners, exchanges or governments. Proposals could even be submitted anonymously. Once submitted (security deposit), the proposals will be assessed on-chain by the community culminating in a vote for which proposal(s) should be supported.

Please note that the application for the incubation fund is on a proposal basis, not a team or individual basis. That means a project owner or team can apply multiple times if they have multiple (excellent) proposals. We suggest that a project owner or team submit one proposal at a time.

The incubation fund will be released in tranches. For example, if the approved incubation fund is 10,000 $FX coins, it will be released in stages. In this example, it can be proposed that 2,500 $FX be released after the proposal is accepted, 2,500 $FX will be released after the first milestone and the remaining 5,000 $FX will be released after the end of the project or completion of the agreed milestone. It is up to the applicant to propose, and for the community to comment and request changes. Generally, it is a good rule of thumb for applicants to have funds released in stages, with a tranche released on attaining each milestone. In the example above, the funds are released in three tranches: 25%-25%-50%.

The project owner has the sole discretion to decide which incubator fund is most appropriate, for example, requesting funding from the developer category. It is recommended that the maximum EGF incubator fund for any proposal is 100,000 $FX, however, exceptions might be considered for particularly exceptional proposals. Project owners should consider what kind of funding is needed in light of the nature of the project. For example, the cost needed for a marketing campaign by an individual would be significantly less than the cost needed to build a decentralized exchange on the Function X network.

Interested parties are encouraged to join the discussion and answer questions in Function X’s forum and upload the prototype online. This could be an important factor to persuade community members to vote for the project.

The foundation will not support proposals that actively encourage illegal activities, illicit trade, money laundering or criminal activities.

Voting

Only $FX that are bonded in the f(x)Core are eligible to participate in EGF voting. 100 $FX = 1 vote. In version 1.0, valid delegators can cast their vote during the voting period by sending a random number of coins (for example, 0.1 $FX for ‘yes’; 0.2 $FX for ‘no’) to a designated wallet address. The voting bot will trace and verify the number of $FX that has been delegated / bonded in f(x)Core by the wallet address(es) that cast the valid vote.

For instance, Alice has delegated 40 $FX and she voted “no” ; Bob has delegated 30 $FX and he voted “yes” ; Charles has delegated 30 $FX and he voted ‘yes’. In this case, the vote is in the affirmative (60/100).

A valid “yes” voting has to meet two criteria:

  1. Over 40% of the total delegated voting power participated in that voting session (“participation voting power”); and

  2. Over 66.67%(⅔) of the total participating voting power voted “yes” for the project.

Assume there are 10,000 $FX bonded/delegated in f(x)Core.

Scenario 1: 3,000 $FX participated in the voting session and 2,000 $FX voted “yes”

This is an invalid voting session since the total participation vote is 30% (3,000/10,000) although the project has received 66.67% “yes” votes. (2,000/3,000)

Scenario 2: 6,000 $FX participated in the voting session and 2,000 $FX voted “yes”;

This is a valid voting session since the total participation vote is 60% (6,000/10,000), but the project received 33.33% ”yes” votes (2,000/6,000) and thus failed to meet the requirement of at least 66.67% “yes” votes.

Scenario 3: 7,000 $FX participated in the voting session and 4,200 $FX voted “yes”;

This is a valid voting session since the total participation vote is 70% (7,000/10,000) and the project received 70% “yes” votes (4,200/6,000). Thus, the project is accepted and will be funded.

Every proposal needs to provide at least 10,000 $FX as a security deposit to avoid spamming. That 10,000 $FX security deposit will be locked throughout the whole voting period and it will only be refunded if the proposal has passed (‘yes’ voting).

In version 1.0, the EGF voting session will be conducted on a quarter basis and the voting period will last for 14 days, validator voters can cast their vote anytime within the voting period.

References

A proposal should be posted on forum.functionx.io and include, but not limited to, the following content:

  1. Specify the number of $FX requested (incubator fund);

  2. Indicate which segment the proposal belongs to. (The Foundation will reassign the segment, if the Foundation believes it’s better suited elsewhere);

  3. Propose the incubator fund distribution timeframe and milestones. (For ambitious projects, the incubator fund can be released over 1–2 years.);

  4. Provide a description of the proposal, including the name of the proposal, mechanics of the proposal, benefits to the Function X ecosystem, team introduction and any other relevant information. We encourage people to use their real identities to apply, but we will not reject anonymous applicants. We accept external links for contents such as GitHub, Google Docs, etc.

  5. Set out the reasons why the project should be selected and supported and included an analysis of the competitive landscape;

  6. Include attachments, such as GitHub links, product prototype, video, planning, blueprint, twitter, etc.

  7. Feel at liberty to include any additional information that might help the community to understand the proposal better;

  8. To initiate a community voting of granting the EGF, 10,000 $FX security deposit needs to be sent to a holding address once the proposal is accepted to go into voting; and

  9. If it is programming, please state if you plan to use open-source licensing and, if so, which open-source license.

Once the payment of the voting security deposit has been confirmed, the proposal will be included in the upcoming voting session. It is advised to initiate the proposal at least 1 month before that quarter’s voting session. The project owner is also advised to observe the response before transferring the conditional refundable deposit.

If you are unsure of the funds needed, we will allow you to apply for the funds multiple times to build upon the original project. This is better than applying for a fund amount that is too big. Start small.

Scenario 1:

Alice wants to build a decentralized forum on Function X (“Forum proposal”). She spent two months building a prototype. She initiated a proposal in Function X’s forum as follows:

  1. Number of $FX requested (incubator fund) : 50,000 $FX;

  2. Proposal belongs to which segments: Developer Fund;

  3. Incubator fund distribution timeframe and milestones:

Example:

  • Prototype stage: 12,500 $FX
  • UI/UE stage: 12,500 $FX
  • Completion: 25,000 $FX
  1. Description of the proposal, including the name of the proposal, mechanics of the proposal, benefits to the Function X ecosystem, team introduction, etc.

Name of the proposal: FX Forum;

Benefit to Function X: 1) provides a fully decentralized forum for the Function X community; 2) FX Forum will allocate 10% of the DAO token to all participants during the TGE:

Team introduction: Individual, GitHub link: alice.github.com

  1. Reasons the project should be selected and supported and competitive analysis:

FX Forum will allow community members to discuss stuff relating to blockchain technology.

  1. Attachments, such as GitHub link, product prototype, video, planning, blueprint, twitter etc.

GitHub link: xxx.yyy.zzz

  1. Any extra information that might help the community to understand the proposal better.

Alice’s wallet address (holding $FX since 2019).

After 2 weeks of Q&A in the forum, Alice has received a tremendous positive response and she decides to pay the voting security deposit to join the upcoming voting session. She posts the transaction hash (please note that the incubator fund will be sent to the same wallet address) for confirmation.

Scenario 2

Bob runs a centralized exchange. He wants to list $FX and organizes a listing marketing campaign and trading competition. He initiated a proposal in Function X’s forum as follows:

  1. Number of $FX requested (incubator fund) : 50,000 $FX

  2. Proposal belongs to which segment: Financial service provider Fund

  3. Incubator fund distribution timeframe and milestones:

After the trading competition event.

  1. Description of the proposal, including the name of the proposal, mechanics of the proposal, benefits to the Function X ecosystem, team introduction, etc.

Name of the proposal: $FX trading competition

Benefit to Function X: 1. Attracting users to trade $FX; 2. to promote $FX

Team introduction: Bob’s exchange

  1. Reasons for being selected and supported and competitive analysis

Trading competition can attract new users

  1. Attachments, such as GitHub link, product prototype, video, planning, blueprint, twitter etc.

Exchange link: xxx.yyy.zzz

  1. Any extra information that might help the community to understand the proposal better

Trading volume, user base etc.

After 3 weeks of Q&A, Bob has received a slightly negative response and he decides to retract the proposal and not proceed further.

The details of the proposals and step-by-step guide of EGF governance voting v1.0 shall be updated at a later stage. Please join the discussion in http://forum.functionx.io/.

Last but not the least, please always do your own research.

Together we can grow faster and stronger in a decentralized way.

9 Likes

All in all great initiative.
I am however very skeptical about reaching the 40% voted, looking back on the staking period, fx seems to have a large group of sleepers.
factoring this into the risk, I’m worried that pretty much none of the category 1 projects are worth trying at the risk of losing serious cash unless that risk is offset by asking a pretty large sum (over a 100k) thus making small initiatives/ and those trying to keep the books tight by asking for a small fund a disadvantage.

what amount of FX would now be considered active and willing to participate to vote?

Would it be an idea to have a test vote to see what percentage actually engages?

What happens with the tokens that are lost in the deposit? are they burned?

thb if the first project to take the leap fails due to a shortage of active voters, that would seriously hurt the confidence of any other proposal makers

4 Likes

I am in favor of a scaling initiative to kickstart the process of project creation especially with the lack of participation from the more passive holders as noted by the delay in mainnet staking + general hesitancy and non-response bias many people will have.

My proposal would be as follows.

The team creates a published series of thresholds as “Curated FX Core Initialization projects”

The Thresholds could be as follows

  • 1-15 : These are the first and most active members of the community and their resistance to entry should be near 0 as long as they satisfy submission criteria. See FoxCoin’s proposal as a benchmark first mover. These projects should also have smaller token deposit requirement as they are taking development risk of their personal time with less guarantee of success than if they spent the time developing on another blockchain that is more established.

  • 16- 50 : These projects are the second wave of adoption and should still be incentivized to a greater extent than later adopters but have a deeper less hands off voting requirement and is less curated by pundi labs than the first group. They should have a smaller FX deposit requirement but not as much as the later adopters

  • 51+: These projects are reaching a maturity stage where hands off DAO curation should be fully functional and have significant voter participation

3 Likes

I think, especially in the beginning, the barrier to entry should be low. We want people to build on our blockchain, so we should lower the requirements for the first half a year. Another suggestion would be the deposit should be proportional to the amount they’re asking, I think that would be fair.

2 Likes

Although i totaly understand the responds on the EGF, i wouldn’t change a single thing.
It’s just fine as proposed.

Precisely because of the “threshold” of 10k $fx security deposit, i think quality of proposals can be secured.
I, for one, would rather see a couple of high quality proposals then lots of “more of the same” proposals to benefit the funds.

I know, we can always vote “no” on a proposal.
But my point is, we all want a high class, rocking ecosystem, different and better then the rest.
And i truly believe the f(x)core is and will just be that.

And don’t underestimate the “sleeping” part of the community.
My guess is that there is a fairly amount amongst them waiting to get the chance to build great stuff on the core.

1 Like

I completly understand your stance, and i agree with the fast majority of what is done. Its just that given the staking experiance there is a fair posibility that not a single idea can pass because not enough people vote to make the vote valid. So even thos few hq proposals would get to do their thing.
So i hope we can get something that shows that this would not be an issue.

On the other side, the 10k also makes smaller ideas too big a risk, imagine having an idea for 4k, and then losing 10k cause people did not like it enough. So it pushes most ideas well above the 10k before its intresting to consider

I belive in the defi marketing plan, and fully support having measures to prevent spamming, bad ideas and grifters, but the accebility is something that i’m still going over with a finetoothcomb

1 Like

What is missing is a voting incentive to bootstrap the voting process.

2 Likes

Perhaps a vote lottery prize pool to start things off?

Yes, for a start, an off-chain voting incentive such as a lottery prize pool could work as a bootstrap.

There will, however. be a need to develop an on-chain voting incentive system after the bootstrap to keep the interest to vote high for the voting process, which is at the heart of the success of a decentralized decision making process, to achieve high participation rate consistently in the long term.

I think we are all on the same page.

But let’s not forget that all this is about a request for funds. A request for assets to carry out and develop ideas.

If i have a great idea and because of lack of voting power i dont qualify for EGF, thats to bad, but i can stilll work out my idea and build my great app in the f(x)Core i guess.?
I only have to raise funds (if needed) myself.

Ii mean, it shouldn’t be too easy to get free funds :slightly_smiling_face:

I think the first round of projects should be PAID to be on our ecosystem. They are taking the risks of their time to develop here and we do not have the prestige, market saturation, market liquidity, renown, goodwill, or a slew of other concerns that can easily be solved by said project seeking development on another host who would be happy to have them Risk Free.

This is analogous to a person owning a strip mall in a brand new town that was just built asking for rent prices on par with New York City.

Developer time and head space especially in crypto is extremely competitive. We should do everything in our power to cultivate the fx “Garden” with the early seeds so that we establish great roots.

Of course we must qualify each of these new first starters, and that is what the team can personally curate for suitability.

I will reiterate from my post above simpler,

  • Phase 1: First 10 qualified projects have 0 deposit requirements.

  • Phase 2: Second set of 10 to 20 have a smaller deposit and is more strict

In short. Deeper subsidies for new project creation with more risk on the Function X foundation EGF to entice devs.

1 Like

First few projects in function x core lets say till December 2021 should have lower security deposit like 2000 fx, to attract many projects.
Increase security deposit step by step as more projects come.
Atleast first 10 projects should have relaxation of 2000 security deposit.

That is exactly the thing, we are asked to risk our own private funds to have a chance to get some funds to make promotions for a company.

Absolutely, thats 10k Fx down the drain, to a lot of people that is a lot of money. its not whether its easy, it is simply an admission price that will stifle good ideas from those that have less to spend. A good portion of the community don’t have 10k fx, let alone dare to burn on a failed application cause not enough people could be bothered to show up.

I personally think the deposit should be returned if not enough voting % can be reached. that way the voting requirement can stay intact to prevent gaming the system, but eliminate the largest uncontrollable risk.
lets not forget it took months to get to the 60m in staking, now we need 77m in two weeks with less incentives.
My youtube numbers are equally depressing considering less than 1% engages, and that already took into account the 75% are bots.

I am still working on a proposal, but i simply cant risk multiple months of salary on a total gamble that based on recent experiences that are stacked against the expectations.

2 Likes

Yes, i agree with that.
That would be fair, would be better stimulation for many to propose.

1 Like

I agree. They could introduce a penalty (e.g 10% of deposit) for unsuccessful voting to eliminate spam, but keeping all of the deposit is excessive.

Also, I believe a blanket deposit is not fair either. It needs to be a percentage of how much is someone asking for up to maximum of 10,000 FX.