DFINITY Foundation

Internet Computer Association

ICP Maximalist Network

cycledao.xyz

ICDevs.org

Present design proposal for the community fund



## What we vote on
* We present a design proposal for the community fund (CF). 

## Summary and objective
* The success of the IC is dependent on the services built on the IC. Similar to Ethereum, we envisage that, in the long run, the value of services built on the IC will collectively be worth more than the IC itself.
* The CF introduces the concept of an NNS controlled treasury. The goals of this treasury are to aid the bootstrapping of the SNS DAO ecosystem, and later be able to re-invest in the continued growth of the ecosystem. The NNS will be the decision maker in choosing where its treasury or CF resources are to be invested. This will be extended in the future to support additional community developed governance and fundraising frameworks (i.e. opportunities from these frameworks will also be featured in the Launchpad).
* To allow the CF to create this treasury, community fund neurons will expose their maturity to the risks the CF fund is taking when investing. Maturity of CF neurons will be reduced when the CF decides to make investments. At a later date CF neurons whose maturity was reduced will be rewarded with maturity increases, dependent on the success of the investments the CF has made.
* Involving the maturity of CF neurons instead of their stake in ICP minimizes the impact on the overall ICP tokenomics.

## Proposed design for the community fund
The community fund process can be split into five phases: (1) joining the community fund, (2) making an investment decision, (3) the decentralization sale, (4) participation in SNS governance, and (5) increasing maturity when SNS neurons dissolve. In the following we describe these five phases in more detail.

**Joining and leaving the CF**
* Using a tick-box in the NNS FE dapp, a neuron can join and leave the CF at any time, also during a voting period.

**Voting on investments**
* The CF investment proposal is part of the SNS proposal. It is essentially a statement, like Invest X ICP from the CF into this SNS.
* As a consequence, all NNS neurons will vote on both the creation of an SNS for a dapp and on whether the CF invests into that dapp.

**Decentralization sale**
* If a proposal to create an SNS is adopted, the decentralization sale starts. The maturity of CF neurons is reduced pro rata by an amount related to X.
* If the decentralization sale is successful, the NNS mints X ICP as specified in the proposal. The SNS treasury receives the X ICP. The NNS CF treasury receives SNS neurons corresponding to X ICP. This is provided as a basket of neurons with various dissolve delays.
* If the decentralization sale is not successful, the maturity of CF neurons is increased again by the amount it was decreased by earlier.

**Participation in SNS governance**
* Participation in voting on the SNS proposals is passed through to the CF neurons via hotkeys on the NNS neurons owned by the NNS.
* The voting weight is proportional to the maturity exposed.

**Increasing maturity of CF neurons**
* The NNS CF treasury holds SNS neurons and tokens in its treasury, to be sold at its discretion.
* When a set of neurons from a decentralization sale of an SNS dissolves, the NNS marks to market the value of the dissolved SNS neurons. In the first stage, the marking to market is done by a proposal. In a later stage this could be done by pulling data from a DEX.
* The maturity of CF neurons whose maturity was reduced when an investment in a SNS-controlled dapp was made is increased by the amount determined by the NNS.
* The NNS can sell the tokens from an SNS at a later point in time with the goal to maximize the sale price. After the NNS sells tokens from an SNS, the received ICP will be burned.



Community fund | Design proposal