[TIP-2] Creation of the Switcheo Development Fund
This proposal seeks to initiate the creation of the Switcheo Development Fund (SDF), a grant to support community-driven projects that contribute to the decentralization of the ecosystem. The SDF will be funded by activating a community tax of 10% levied on Tradehub’s Block Rewards which includes inflation fees, trading fees and any other protocol fees. To support the initiative, the fund will be bootstrapped with 3 million SWTH by the Switcheo team.
The Switcheo Development Fund (SDF) is a grant that will be awarded to community-driven development projects that are centered around censorship-resistance and decentralizing Switcheo TradeHub.
By incentivising participation to build up the platform, we hope to gradually shift development of the protocol to the wider community. This will allow individuals outside of the core team at Switcheo to collectively contribute to the protocol, thereby enhancing TradeHub’s security, transparency and overall user experience.
To fund the SDF, we are proposing a perpetual community tax obtained from 10% of the block rewards to be injected into the fund. In addition, the fund will be bootstrapped with 3 million SWTH by the Switcheo team as a strong sign of commitment and support for the decentralized fund.
Funds in the SDF can be dispersed to any wallet upon passing a Fund Release governance proposal. While SWTH stakers can vote to release funds in any way they deem fit, we suggest that the SDF be governed in the following manner:
The allocation of funds may vary from project to project. Projects with greater relevance or importance to decentralizing the protocol should be prioritized over smaller projects. Additionally, the amount budgeted for each project should also depend on how difficult, complex or expensive it is to develop. Funds should be released to the project in multiple stages marked by openly verifiable milestones to ensure that every project is seen through to completion, and that project owners are held accountable at every step.
Projects should therefore first put forward a development plan and timeline on community channels. Once the project has gained support, they should then submit a Plain Text governance proposal describing their plan, to get on-chain agreement from SWTH stakers that they will support the project’s development through the SDF. The project owner should only submit the Fund Release governance proposal whenever a milestone is hit.
For a limited period of 6 months, Switcheo will be concurrently running the Switcheo Community Boost Campaign. This campaign will offer an added incentive to help kickstart project development and will be funded by the Switcheo Treasury. It will provide additional funds to projects that have already been approved under the SDF after being screened by the internal team at Switcheo.
Risk & Benefits
Having a community tax that channels resources back to the protocol can bring significant benefits to users and stakeholders. The SDF encourages the freedom to build up Switcheo’s ecosystem according to the interests of the community with no restrictions. This opens up limitless possibilities on what can be developed, from improving Switcheo’s infrastructure to designing new features.
Aside from the risk that projects that are not carried through to completion upon receiving the grant, there is no apparent risk of the SDF. The creation and allocation of the fund will be completely on-chain. The risk of projects not delivering on their commitment is also mitigated by funds being released in stages upon completion of project milestones. These are able to be verified by the community.
Example of projects according to their relevance to decentralization
- Host all public APIs at scale
- High availability
Public Node Indexer and Monitor
- Open source submission
- Monitor for incentives
- Communication point
Demex Frontend Mirrors with USPs
- Mobile app
- Mobile frontend
- IPFS frontends
- Ez-mode frontends
- Complete integration with an existing wallet
Explorers Mirrors with USPs
Improve Explorer / Blockchain API
- The Graph
New Switcheo TradeHub SDKs
- Tipbot - reddit, discord
- Statistics Dashboard
Switcheo will move forward with the on-chain governance vote once the community has understood the contents and motivations behind this new proposal.
Proposal is live: