Polkadot's Future Investment Fund (PFIF)
Copied from the original Polkadot forum post.
Definition
This is a draft for an investment fund dedicated to increasing Polkadot adoption and generating capital returns through strategic investments, with a strong focus on JAM and forward-looking developments both within and beyond the Polkadot ecosystem.
Motivation
Below are several characteristics of the current treasury grants model, especially for higher-medium and big spenders.
- Spend-oriented.
- Low to no accountability except for community credit.
- No legal binding for responsibilities.
- Lacks a milestones model.
- Tracking efforts place an extreme burden on the community's shoulders.
- Passive, with low engagement, as there is no proactive request-for-proposals process.
Proposed PFIF model:
- Actively and consciously invests with a focus on adoption and growth.
- Employs both traditional and modern investment strategies, techniques and legal procedures.
- Operates with 100% accountability, aiming for investment transparency and efficiency.
- Clearly defines investment targets, identifies development teams, and invests for equity and broader adoption.
- Seeks capital returns for sustainable funding and profitability.
Objectives
- Increased Polkadot Adoption Across Sectors: Identify and invest in projects and companies that could leverage Polkadot technologies (with JAM in focus) in their operations and contribute significantly to the Polkadot ecosystem.
- Capital Efficiency: Address the limitations of the current treasury grants model by enforcing strict accountability measures.
- Capital Returns: Secure financially viable and profitable investments, thereby providing capital appreciation to the fund's investors.
Fields of Interest
PFIF's fields of interest include but are not limited to:
- Software
- Protocol development
- Gaming
- Tooling
- Industry-specific operations software
- Hardware
- Mobile
- Networking
- Internet of Things (IoT) devices
- Infrastructure
- Communications
- Data centers
- Physical network infrastructure
- Energy systems
Investment Ticket Size
Initial investment ticket sizes range from $50K to $500K USD. Ticket sizes will be periodically reviewed and adjusted as the fund grows and evolves over time.
Fund Size
- Initial Target: $10 million to kick-start operations.
- Medium-to-Long-Term Target: $100 million.
Operations
- Operations should be carried out under a legal foundation to ensure compliance.
- Ten members on the investment committee, each locking 10,000 DOT in OpenGov at maximum conviction (6x) on a newly created identity-verified account dedicated to PFIF. This deposit remains locked in OpenGov throughout their membership.
- An advisory board of reputable leaders in the ecosystem, and parachain team representatives.
- Decisions operated under a 6/10 multisig.
- 2% operation cost. Committee members are compensated at $150 per hour and receive performance-based fees.
- Quarterly publication of transparency reports and profit distribution to all investors.
Fundraising Sources
- Treasury
- Web3 Foundation (W3F)
- Polkadot Community: Polkadot community at large should be able to invest in the fund in a trustless manner. Real-world examples should be examined to model public investment.
- Investment Committee & Board Members
- Individual and Institutional Private Investors
Closing Thoughts
I believe that a well-managed PFIF can be very successful in creating widespread adoption and generating capital returns, and can set a great example of how to manage ecosystem resources. While there are many details yet to be discussed, I hope this post serves as a productive starting point for discussions.
Thank you for your attention, and please share your thoughts.