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Governance Reports

Polkadot Bi-Weekly Governance Report — Week 11 & 12, 2024

April 18, 2024

This last fortnight, Simply Staking voted on several spending proposals on the Polkadot network. In this bi-weekly Governance Report, we summarise these referendums and their community feedback along with the rationale behind our voting.

Table of Contents

Referendum 532: Spanish Content and Event Production Bounty V2

The Spanish-speaking community is one of the most active in the Polkadot ecosystem, and referendum 532 requests 52,270.80 DOT (approximately $389,800 USD) to further boost the talent within this community and region by rewarding content creators for high-quality Spanish content and organising events aimed at the Spanish-speaking audience.

This bounty is a continuation of earlier efforts from the Latin American community, and the scope covers the translation of content into Spanish, creation of written and audiovisual content in Spanish, and organisation of relevant events. The bounty has been designed to be distributed through child bounties by appointed curators from the Latin American community with deep knowledge of the Polkadot and Kusama ecosystems, among them Polkadot’s Head Ambassador for Latin America, to assess submissions and ensure relevant and impactful content and events.

So far, the proposal has received mixed reactions from the community. Perhaps obviously, some have highlighted the importance of catering to one of the world’s most spoken languages and the potential impact on the Polkadot ecosystem. However, questions about the efficiency of fund utilisation, the strategic direction of content and events, and the absence of a detailed RoI analysis or content strategy have also been reasonably pointed out.

While we acknowledge the proposal’s good intentions, given these concerns, particularly the lack of a comprehensive RoI analysis and a clear strategy, we are hesitant to fully support the initiative without such important details. Since the Latin American community has already been granted a few $100k already (around 300 to be exact), it is reasonable to demand a deeper analysis of the returns that this has yielded Polkadot as an ecosystem. In addition, ensuring that the content follows a clear plan and strategy would also show that enough thought has gone into the effort and that it links back to the return on investment. What areas of content would the initiative focus on, and why?

Again, the intuition here is to support the proposal, but we must also demand higher standards when it comes to reporting and maintaining accountability. This has been mentioned in previous governance reports, and this one should be no different; otherwise, decentralised governance will not last. It is not enough that something sounds good and is well intended, it should also be shown that it makes economic sense. Hence, Simply Staking has voted Nay for now.

Referendum 544: The Talisman Unified Retroactive Proposal #2

Talisman, a multi-chain wallet and web application, and their team seeks $742,750 USD worth of DOT in retroactive funding for the development, UX improvement, and QA testing of the Talisman Wallet and Talisman Portal done during 2023.

The proposal highlights Talisman’s achievements, including reaching over 80,000 users and contributing over 6 million DOT to its nomination pools; and has received positive feedback from the ecosystem, acknowledging Talisman’s contribution to improving the wallet user experience and its significance to Polkadot’s growth.

Simply Staking has voted Aye on this proposal, recognising the value that Talisman brings to the Polkadot ecosystem and its contributions to enhancing the user experience. Specifically, supporting the proposal aligns well with the goal of fostering a more accessible Polkadot ecosystem, where users can easily navigate and utilise its multi-chain functionality.

Referendum 552: Token Terminal x Polkadot data partnership

Parity Data has put forth the idea of a partnership between Token Terminal and Polkadot that aims to integrate Polkadot’s ecosystem data into Token Terminal’s suite, facilitating direct data sharing with major partners like Bloomberg, MarketVector, and Coinbase SMA. One of the main intentions behind this proposal is to significantly enhance Polkadot’s exposure to institutional investors by making its data and computed metrics readily accessible on these platforms. Token Terminal will construct and maintain a comprehensive data pipeline for Polkadot to their investor and traditional finance audience.

The initiative will enable direct data sharing with Bloomberg and eligibility of DOT for MarketVector indexes, which will be propagated to the Coinbase SMA platform, targeting institutional investors and private wealth asset managers. The partnership is expected to last 16 months, covering both integration and maintenance phases, with a requested funding of 171,827 DOT.

Given Token Terminal’s recognition and reputation in the space, and the potential to significantly enhance Polkadot’s visibility and attractiveness to institutional investors, Simply Staking has voted Aye on this proposal. First and foremost, we see this integration as a great opportunity for the ecosystem’s growth and adoption. By leveraging Token Terminal’s established infrastructure and partnerships, Polkadot can ensure its unique value proposition reaches a wider audience, potentially driving increased investment and participation in the ecosystem.

Referendum 556: DED Bounty

Referendum 556 can be said to seek to gauge community interest in long-term support for DED, proposing to allocate 1 million DOT from the Polkadot treasury for the future funding of the DED meme coin (though emphasising that the funds may not be fully spent but are available if needed to achieve successful outcomes).

The proposal outlines two scenarios: a yes vote would distribute 100% of DED tokens to DOT holders as initially planned, while a no vote will result in a smaller distribution to DOT holders, involving private investors and allocating some tokens to influencers.

The community’s response to this proposal has been somewhat negative, with concerns about the lack of a clear plan, potential regulatory issues, and the proposal being seen as draining the treasury without providing tangible benefits. Critics argue that the treasury has already allocated significant funds to DED without clear outcomes, and additional funding should not be pursued without a detailed plan and accountability measures.

Generally speaking, there’s a big question mark over meme-coins. Is there any actual utility to them, or do they mostly encourage speculation and people being burnt as exit liquidity? For now, we tend to agree with the latter. Given the community’s concerns and the significant amount of funding requested without a detailed plan or accountability measures, voting Nay on Referendum 556 seems prudent for now.

Referendum 560: Polkadot Hydration: Treasury LP

The following two referenda, 560 and 561, are both part of HydraDX’s “Polkadot Hydration Campaign”. Starting with number 560, this referendum aims to directly enhance the liquidity of DOT within the Polkadot ecosystem by allocating 1,000,000 DOT to the HydraDX Omnipool AMM.

By increasing DOT liquidity, the proposal seeks to improve order execution for DOT trades, making it easier for users and DAOs to engage with the ecosystem; particularly relevant for those looking to diversify into or out of DOT, including the Polkadot Treasury itself, which utilises the Omnipool for various financial operations.

Referendum 561: Polkadot Hydration: Liquidity Incentives

Complementing the just-mentioned proposal 560, referendum 561 aims to build a deep layer of native liquidity to support the Polkadot ecosystem’s growth by granting the HydraDX Treasury 1,000,000 DOT to co-fund a liquidity campaign, offering incentives for liquidity provision into DOT and other ecosystem assets.

The HydraDX team has pledged to match approximately 40% of the requested amount to provide additional liquidity mining (LM) rewards in HDX, on top of the vDOT rewards funded by this proposal. The LM campaign will target DOT and over 8 other major ecosystem assets, including iBTC, vDOT, and native stablecoins, aiming to create a deep and accessible liquidity layer across the Polkadot ecosystem (more info on the proposal and its liquidity incentives are detailed by the HydraDX team here). The proposal is expected to lead to deeper liquidity for all incentivised assets, enabling more efficient trading, attracting new liquidity, and signaling the ecosystem’s vitality.

Simply Staking has voted Aye on both Referendum 560 and 561, as we believe it’s an obvious strategic opportunity to significantly enhance the liquidity and overall health of the Polkadot ecosystem. Treasury DOT should indeed be used to grow DeFi on Polkadot, and these two referenda are good examples of just that. Combining the direct liquidity provision of 560 with the liquidity-mining incentivisation of 561 will enhance the attractiveness of providing liquidity for DOT and other selected ecosystem assets, and appears as more than a sound move to deepen DOT liquidity, facilitate smoother transactions and better order execution for a wide range of ecosystem participants. HydraDX’s commitment to match ~40% of the requested amount with additional LM rewards in HDX further amplifies the attractiveness of these proposals, promising a substantial boost to the ecosystem’s liquidity and, by extension, its appeal to both current and potential stakeholders.

Riding on the hype that HydraDX has been able to generate, the combined effect of these initiatives could not only improve trading conditions but also signal to the broader Web3 community that Polkadot is indeed a vibrant and growing ecosystem, ready for new projects and investors. Voting yes is thus to support a strategic vision aimed at fostering a more liquid, efficient, and attractive Polkadot ecosystem, positioning it for sustained growth and innovation.

Referendum 573: PolkaWorld Ops and Maintenance proposal: 2024.4–2025.4

PolkaWorld, a prominent community education and content creation platform within the Polkadot ecosystem, is seeking operational funds for the period of April 2024 to April 2025. The proposal requests a total of 31,474 DOT to support a comprehensive plan that includes the production of 288 articles, 60 online livestreams, 48 educational short videos, 12 ecosystem interviews, and the management of media channels in both English and Chinese.

PolkaWorld has a rich history of contributing to the Polkadot community, and over the past five years has published some 1,195 articles with approximately 3 million reads, conducting 191 online live broadcasts with over 113,000 participants, and uploading 237 videos, among other accomplishments. These efforts have been aimed at educating the Chinese-speaking community about Polkadot, Kusama, and related technologies, fostering a deeper understanding and engagement within the ecosystem.

Simply Staking has voted Aye on this proposal, based on PolkaWorld’s proven track record of delivering high-quality educational content and fostering community engagement within the Polkadot ecosystem. Having shown clear long-term commitment in providing educational content has made PolkaWorld an important contributor to the community, especially in such a large market such as China.

Referendum 576: Continuation of Work through Messari Protocol Services

In this referendum, Messari is seeking $120k in DOT, including a 10% premium for market volatility, to renew its engagement with Polkadot to provide institutional-grade recurring research using data supplied by the Parity Data team. For this renewal, the proposal suggests focusing on quarterly reports to streamline costs, reducing the budget by approximately 30% from the previous year.

The reports, reaching 350,000 subscribers and major research platforms like Bloomberg Terminal, S&P Capital IQ, and Refinitiv, aim to enhance visibility and understanding of Polkadot’s ecosystem. The proposal requests

Simply Staking has voted Aye on this proposal. The strategic importance of engaging with a reputable research firm like Messari, known for its extensive distribution network and institutional-grade analysis, has the potential to significantly benefit Polkadot’s ecosystem by attracting new users and investors, fostering a deeper understanding of its technological advancements and future potential.

Referendum 580: StellaSwap Incentive Program

The StellaSwap Incentive Program seeks a grant of 1,000,000 DOT to bolster liquidity and user engagement within the Polkadot ecosystem. StellaSwap, a DEX built on Moonbeam, aims to utilise these funds to deepen market liquidity for key assets and amplify their utility for a more vibrant trading environment.

The proposal has elicited mixed reactions from the community, with some advocating for an extension of the liquidity incentive duration and an increase in the requested DOT amount, while others express reservations about the proposal’s specifics and StellaSwap’s capacity to effectively manage the grant. Critiques have pointed out the proposal’s perceived haste, typos/lack of attention to details, and comparisons to initiatives by other projects like Bifrost and HydraDX, which have tabled similar liquidity proposals but with stronger bids or commitments to match funding with their native tokens. Concerns have also been raised regarding the StellaSwap team’s dedication and the balance between protocol revenue and grant dependency.

The StellaSwap proposal is similar to the HydraDX proposals in its aim to boost liquidity and DeFi activity within the Polkadot ecosystem. However, significant differences in the approach and community reception are evident. HydraDX proposals have been noted for their detailed planning and commitment to matching a portion of the incentives with their own token, HDX, thereby demonstrating a higher level of investment in the success of their campaigns. In contrast, StellaSwap’s proposal has faced scrutiny over its larger request for DOT without a clear commitment to matching funds with STELLA tokens, raising concerns about the proposal’s feasibility and the team’s capacity to deliver on its promises.

These comparisons are valid, and we do agree that the HydraDX proposal stands out as a better example of how these proposals should be presented and structured. We also note that the StellaSwap team has addressed some of the issues that have been raised. Despite these concerns, it’s important to give credit where credit is due and recognise StellaSwap’s position as the DEX with the highest trading volume, liquidity utilisation and efficiency within the Polkadot ecosystem. Its strategic placement on Moonbeam uniquely positions it to route liquidity and users into the DOT ecosystem, presenting a compelling case for its support.

Given StellaSwap’s significant contributions to liquidity and its strategic importance to the Polkadot ecosystem, supporting the proposal makes the most sense as it aligns with the goal of fostering an active and efficient DeFi environment on Polkadot. Recognising StellaSwap’s potential to further bridge liquidity and users into Polkadot, Simply Staking has decided to vote Aye on this proposal.