Hey guys! I have not been as active in the community / governance news and plans unfortunately, so I may have missed the discussion on this (I apologize in advance to the Iconists that probably already participated in it), but may I please confirm the reasoning behind the CPS Grants being calculated in ICX value, instead of USD value as the Foundation Grants were?
While I understand the easier implementation of an ICX based Grant system, I do believe that it has some major pitfalls that an USD (or stable coin) based ones would not have. I will try to voice a few of the ones that I can think of to the best of my abilities:
- We are expecting teams to have solid business plans and efficient resource and cost planning but in return we are providing unstable funding. In example if we had a project approved for $6k funding six months ago (1000$ per month), here is what they would have received:
- month 1 = $683
- month 2 = $550
- month 3 = $750
- month 4 = $766
- month 5 = $1200
- month 6 = $2333
If we are expecting professional teams to participate in the CPS, we cannot expect that they will agree to limit their spending to ‘wherever the ICX price goes’. We are expecting them to give us the exact costs that they will spend on hiring professionals and services, we cannot expect them to work with half their resources as that is an easier way to set our system
- I understand that there are options to request extra funding in case of price changes. Thats a an odd system in my opinion as there is almost a 0 chance that the price of ICX will be the same as it was a month ago - if anyone doubts this, look at the price movement for a random month on the charts.
That means that although the respective project’s funding was approved, there will be several possible situations:
- the price goes down each month and the team has to reapply for approval of the same project in order to receive the funding that they were already approved for. In case that they dont get approved for a specific month due to not enough ICX in our ‘bank’ they will have to either cut their hired employees’ salaries or pause/quit the project.
Respectively that is a huge risk for any sponsor as if I personally know that the project’s funding for each month depends on the ICX price volatility, I would never sponsor a project, especially for a team that is unknown (as if they dont get funded properly for an already approved project for a certain month, they will probably not waste their time with us anymore as that is extremely unporfessional), no matter how great their potential project is
the price goes up and we are overfunding the projects. So in this case we have to either waste the preps’ time to vote on re-adjusting the funding for each project each month (when this can easily be automated in the smart contract) or waste the ICX value by overspending the inflation generated ICX just because its easier for us to set such system
as the project managers would not like to be stuck without funding, they will begin to overinflate the project costs to be on the safe side. Once again a waste of the inflation just because setting up such system is easier for us
Half of you guys have banking/finance backgrounds so Im sure that you know about all those issues (and probably a lot more). I do understand that an ICX based system is easier to manage, however if we would like to have solid projects (and not only ones that are done by veteran preps that are willing to take a risk with their funding), we have to re-adjust it in the way that a proper business would work
You probably could come up with much better solutions to this than me, but I would like to start off the conversation by offering one, instead of just listing issues. In my opinion this could work:
We set up an ICX based stable coin pinned to the USD value (e.g. ICX_USD) and use it to evaluate the pre-approved project’s monthly funding. The limit for CPS funding for any specific month is a fixed value in ICX_USD (e.g. 200 000 ICX_USD).
We set the monthly ICX_USD funding amount so it has no correlation with the past months (so if projects for 200 000 ICX_USD were approved jor January, for February you still have 200 000 ICX_USD to fund projects with). That value should be lower than what we have originally planned as total CPS funding as you will have the simultaneous funding of the past few months going on at the same time and as price volatility could cause the ICX spent to be more. It should also be re-adjustable via a prep vote
This should not be very hard to implement/change in the current system as well as after the ICX_USD coin is created, the ICX values in the CPS smart contract could be replaced with ICX_USD and we will need a monthly reset to the default monthly CPS funding