Types of Projects supported by CPS
As mentioned on the foundation website, the goal of the CPS is to give anybody the opportunity to contribute to the ICON Ecosystem and receive compensation for their work. The types of projects it hopes to see funded include, but are not limited to: Community building initiatives, non-profit infrastructure projects (analytics platforms, developer tools, ecosystem tools, loopchain core code enhancements, BTP bridges, etc.), educational projects, developer community initiatives, and bootstrapping for-profit businesses built on ICON.
Giselle Schout writing on Medium website describes CPS as a governance and funding mechanism that is being developed to support contributions to the ecosystem. The CPS should enable any ICONist to apply for funding within the network, and the Main P-Reps will decide to grant this funding. The funding mechanism of the CPS is still under debate. The Contribution Proposal System combines decentralized, distributed, autonomous, and meritocratic governance principles that could shape how organizations are structured and operated in the future. As a beta version of this novel governance design, the Contribution Proposal System eliminates the necessity of a central authority in decision-making processes. The DApp Booster Program (DBP)and Ecosystem Expansion Projects(EEPs) implementations provide an opportunity for ICONists to fund new initiatives and accrue governance rights through their voting and delegation. These implementations are a first step towards the migration of the ICON Republic into one of the first fully operational Decentralized Autonomous Organizations (DAO).
The importance of CPS:
One of the ways distribution of wealth and power will happen is through the Contribution Proposal Fund (CPF). The CPF will be managed by the Main P-Reps and funding will come from the ICX held in the Contribution Proposal Fund (a smart contract on the ICON Network, funded with block rewards). The maximum size of the CPF will be 1,000,000 ICX, which can still change, however, as this is subject to voting on Network Proposal. The CPF is managed by the Main P-Reps, however, since the network has the aim of improving its decentralization, the number of Main P-Reps will be able to grow. And thus, the management pool of the CPF will as well.
The CPF brings the ICON network closer to decentralization. Notably, it equips it with a solid financing mechanism rarely seen in other blockchains, where most of the ecosystem financing is usually decided in a centralized approach with funds managed by the Foundation. In addition to giving power to Main P-Reps, it is a great opportunity to incentivize these actors to proactively seek and look after projects building on ICON. It is expected that the CPF will spur the growth of a thriving ICON ecosystem.
Besides the decisions about the CPF, the Contribution Proposal 2.0 Paper illustrates that the ICON Network has made its mind up about Sponsor P-Reps. As part of the new application process, applicants must ensure the sponsorship of a P-Rep that is listed in the top 100, before submitting their Contribution Proposal. It will be the responsibility of the Sponsor P-Rep to stake 10% of the approved budget, called Sponsor Bond, into a smart contract that is held for the duration of the Contribution Proposal and returned at the end of the project. Whenever the proposal is approved, the Sponsor P-Rep obtains 1% of the approved budget as a Sponsor Reward. In the case of disqualification of the proposal, the Sponsor P-Reps investment will be burned.
With the Sponsor P-Rep mechanism and the 10% staked bond requirement, the ICON Foundation gives incentives to P-Reps to look for solid projects and conduct their own due diligence before submitting these to the community. But it’s not all about punishing the ones who would have submitted bad projects, as 1% Sponsor Reward will also be offered to the P-Rep who sponsored a successful project. With such an interesting economic mechanism, it is expected that some P-Reps will start to offer value-added services in order to attract the best projects and sponsor them.
With this release, the core responsibility of P-Reps becomes clearer. They are required, at the minimum, to operate a node and participate in Network Proposal votes (on-chain enforcement will be implemented in ICON 2.0). Active ICONists should then be looking to vote for teams that go above and beyond the core responsibilities through managing the CPS, sponsoring projects for the CPS, and/or have made contributions outside of the CPS such as building their own business on ICON, promoting ICON on social media, building tools for ICON, etc.
Some skeptics including Jim O Neill of premier British think tank Chatham house point out that “cryptocurrency must serve as a means of exchange, a store of value, and a unit of account. It is hard to see how a cryptocurrency could meet all three of these conditions all of the time. True, some cryptocurrencies have demonstrated an ability to perform some of these functions some of the time. But the price of Bitcoin, the canonical cryptocurrency, is so volatile that it is almost impossible to imagine it becoming a reliable store of value or means of exchange”. The CPS is one way that the ICON ecosystem can popularize and make the cryptocurrency system more stable, legitimate, and sustainable.
The third article of this series will look into how to use the CPS system from application submission to pending (review) stage to approval stage.
