Stellar Community Fund 2.0

The Stellar Community Fund is a pretty unique grants program: it gives the broader Stellar community the opportunity to vote on which projects deserve XLM rewards.

After five rounds of experience and tons of feedback from participants and voters, we’ve decided to make some big changes to the SCF to make it more fun, more fair, and better suited to the needs of the community.

Splitting the Fund

We’ve realized that the current Stellar Community Fund is trying to be two different things: a seed fund for kick starting business development and a small-project, weekend-hackathon, salary-supplement fund for community developers. Both are valuable in their own right, but they’re also very different, and treating them the same means undersupporting the first and overpaying the second. A business can’t get far on $5k and a tinker project shouldn’t get $50k.

We’ve tried tweaking the rules and maneuvering content, but at this point it’s clear that the best way to balance SCF is to split it into two sub funds. The amount of lumens allocated to SCF will remain the same — 12M per year — we’ll just distribute them with a little more finesse.

The Lab Fund

To inspire experimental use cases, open-source software, documentation, events, market presence, and real-world stress tests.

  • 4 times per year, 500,000 XLM is split between ~12 projects
  • 2 month runs with 1 month breaks
  • Of initial entries, ~12 are chosen by a nomination panel of SDF and Community members
  • Final amount allocation is determined by quadratic community vote
  • Strong emphasis on open-source and public-content contributions

This fund is an entry point for exploration and discovery. It’s designed to encourage and support wide and varied ecosystem experimentation, and will have lower prize amounts, higher frequency, and more entrants than the Seed Fund. The bar for eligibility is therefore quite low: use, talk about, or showcase Stellar in some way and you’re welcome to participate. There’s a nomination panel to filter out ineligible entries and to select the ~12 best for the final community vote, but the idea is that all are welcome to try and keep trying.

The Lab Fund is a fund for completed or proven work, not for a promise of future work. There should be a live element to your entry or a history demonstrating your ability and qualification to carry out your intentions.

The Seed Fund

To help viable, innovative, first-mover businesses and utilities get started on Stellar. These are projects that will still be around in a year.

  • 2 times per year, 5,000,000 XLM is split between 3–5 projects
  • 5 month runs with 1 month breaks
  • Of initial entries, 3–5 are chosen by a nomination panel of SDF and community members
  • Final amount allocation is determined by quadratic community vote
  • Strong emphasis on long term, real world, viable business applications

This fund is designed for established entrepreneurs and teams looking to break into the digital value store and transfer game. We’re seeking to support early-stage Stellar development in long-term utilities for the ecosystem (e.g. Stellar Expert, Stellar Beat) and in viable, for-profit, businesses building products and services for the world (e.g. Coinqvest, DSTOQ, Lobstr).

Applicants for the seed fund will provide a business model as part of their project submission, and the nomination panel will base qualifications for participation off both that plan and a proven track record of building and contributing to successful endeavors. The panel will be looking for ideas that can survive successfully for at least a year.

The Nomination Panel

In the previous iterations of the SCF, there were two rounds of community voting — a nomination round and a final lumen allocation round — and it required a lot of effort to participate in both. Voter fatigue was a real problem.

Moving forward, a panel of judges will handle nomination: they’ll vet all applications, and choose 3–5 projects (in the case of the Seed Fund) or ~12 projects (in the case of the Lab Fund) for inclusion in the final lumen allocation round. The nomination panel will filter out potential scams and technically weak or unachievable entries, and will present a strong and consistent pool of projects for community vote.

The nomination panel consists of a 10-person selection from a jury pool made up of Stellar Development Foundation employees and key Stellar community members. The panel will be a 40% SDF:60% community team that nominates projects for the final quadratic community vote.

The panel judges are the members of the scf_panel Keybase team, a roughly 50-person mix of SDF and key Stellar community members. Unlike actual jury pools, participation is voluntary for a given round. If a member is selected and opts out, names will be drawn again until a full team is assembled. Selection will happen via Keybase’s /flip command.

Judging an SCF round is a serious task, and we expect members to be fair and responsible, and to opt out if they don’t have the time or bandwidth to do a good job evaluating projects.

Panel members must be objective, realistic, understanding, and respectful, and must keep the differences between the Seed and Lab funds in mind when judging. They should act as mentors, ask questions, and suggest improvements. We’ve left a lot of time for submission and review, so panel members should pace themselves, discuss projects with entrants and fellow panel reviewers, and put in the effort to build relationships and foster success.

Flaggable Quadratic Community Vote

Now that we have a solid panel of judges electing the best projects, it’s safe to open the voter participation floodgates: no more Keybase verification, no more weird caps and limits on votes, just one week of SMS verified voting open to the whole wide world.

A key component of the new community vote is a new system we call a flaggable quadratic voting. Community voting as it stands today is one-dimensional, and tends towards a linear distribution that makes it impossible to recognize — either positively or negatively — exceptional projects. Quadratic voting adds velocity to votes, which better captures community sentiment and enables the community to help police bad actors and thwart manipulation.

In a quadratic voting, votes cost credits. You can vote for a project more than once — in fact you probably should if you feel strongly about it — but each additional vote costs more than the one before. The curve is quadratic, hence the name.

1 vote (1*1) = 1 credit
2 votes (2*2) = 4 credits
3 votes (3*3) = 9 credits
9 votes (9*9) = 81 credits
10 votes (10*10) = 100 credits

100 credits give a voter a max of 10 votes for any single project. In addition to upvoting, you can also downvote a project.

A possible problem with this system: it still allows manipulation by a malicious majority using all their credits on a single project. If the suspect project started to steal the competition, everyone else would be using their votes not to communicate their feelings for the projects, but to counteract the malicious activity. Our solution: a simple flagging feature that costs credits (though not as much as a vote). Communicate the sentiment of your flag either positively or negatively, then mark an entry with a flag.

The report function allows you to flag an entry for review by burning a few credits, and then to carry on knowing that you’ve done your part to keep things fair.

Try it: Flaggable Quadratic Voting Demo

Sounds great, when will it all be live?

TODAY!!! 🎉 Starting today you can submit entries to both the new Lab and Seed funds.

🔗 🔗

Lab Fund submissions will be open from now until September 21st. The panel will then review and choose the finalists by October 12th. Community discussion runs from October 12th to October 26th, at which point community voting runs for one week, closing out on November 2nd.

Seed Fund submissions will be open from now until January 18th, 2021. We’re giving some extra time in this first iteration to build, plan, and pitch. The panel will select finalists by March 15th, and the community discussion will be open from then until April 26th, at which time community voting will be open for two weeks, finishing out on May 10th.

The schedule for the rest of 2020 and all of 2021

Open community funding is tough, but with the right rules, the right system, the right design, and a dedicated caring community, we truly believe it can work to distribute the right amounts to the right projects. We’re excited to see what happens next!

Stellar Community

Unlocking the world’s economic potential, together