Results: 493 Service Nodes, 218 Yes, 1 No
Status: Burn Funds have been moved to the Community Fund addresses. Awaiting a future soft fork for the activation of the Superblock increase.
Blocknet is in immediate need of funding to continue operating. This proposal is for use of the Burn Fund (BpzPFJaaKQVSvfiH7zXSUdPBrBnfx9v26V) and to increase the Superblock from 4,320 BLOCK to 40,000 BLOCK. Please continue reading to understand the reasoning and the need for this.
To better understand the financial state of the project, a more comprehensive tracking sheet has been created after feedback from the community, which can be seen here: https://docs.google.com/spreadsheets/d/1xFm5LJsRNN62-9XZFqfDckUt2x8ps3pUOBISUxNQYpc/
In this financial sheet, you can see the remaining funds (Balance Summary), a breakdown of expenses (Expense Summary), the relation of expenses to price of BLOCK (Expense Charts), and projected expenses moving forward (Projected Expenses). This sheet will be referenced throughout the proposal.
Many expenses and functions within this project have been cut in response to the market decline and subsequently the value of BLOCK (Expense Charts, Total Expenses vs BLOCK Price). The project has had to make many sacrifices by making cuts to developers, the office, marketing initiatives, other contributors, and cuts in pay to remaining contributors (Projected Expenses, E3:F22).
Current expenses for next month (Projected Expenses, A3:C24) are down to the absolute minimum to support core functions, with a projected estimated monthly expense of $35,400 + 1,045 BLOCK (mixed denominations because some request amounts in BLOCK). At the current price of $1.75 BLOCK, a total of 21,274 BLOCK is needed to support the project. If the market falls further, at $1.00 BLOCK the project would need 36,445 BLOCK to sustain itself.
The project currently has 15,618 BLOCK remaining (Balance Summary, D12), which includes a maximum of 4,320 from the Superblock. At the current burn rate of the project, the remaining funds will not be able to support the core functions of this project and will be depleted this month. After that point, the project will be solely dependent on the the Superblock, which is not sufficient to support even 1 full time developer.
The proposed solution for overcoming the current financial situation comes in 2 parts:
- Increasing the Superblock to give a stronger guarantee of covering our operational expenses.
- Using the Burn Fund to provide us with a safety net against the future potential (downwards) movement of the market.
No amount of cutting expenses changes the fact that the Superblock can't cover the project's operating costs, even when restricted to core functions. The price of BLOCK would need to be $11 (6x increase) for it to sustain just the bare minimum of operations. Increasing the Superblock to 40,000 BLOCK will not only guarantee funding if the price of BLOCK drops to $1, but as the price of BLOCK increases, it would provide the project enough funds to do the following:
- Compete with the larger, well-funded players in the market. At the moment every contributor has their hands full with tasks. An increased budget will allow for more contributors, allowing us to more evenly distribute tasks, expand the team and move more rapidly as a project. As an example of what we're competing against as a project, Komodo (KMD) has 10 Administration and Support staff, 8 Marketing, and Business Development staff.
- Attract investors with additional large exchange listings. As the market picks up and the price of BLOCK recovers, there will be funds available for market makers and the opportunity to get listed on larger exchanges, which will create a healthier market for BLOCK, making the project more attractive to investors.
- Attract partners and integrators. Additional funds will provide the ability to host/sponsor hackathons, create an incubator program where integrators can apply for funding to start developing software that utilizes the Blocknet Protocol, and entice potential partners.
- Attract and retain developers. In addition to hackathons, which would help attract developers, having the funds to pay developers for contributing to the project is also a necessity to build the technical contributor base.
Please note that not all of the Superblock needs to be utilized. At the same time, this increase provides potential future opportunity for the project to grow and expand.
In addition to an increased Superblock, we are proposing use of the Burn Funds. The Burn Fund currently contains ≈127k BLOCK, is already unlocked and in the team’s control, and is accounted for in the circulation. The proposed distribution is as follows:
- Ecosystem Growth Fund - 10k BLOCK
- Marketing Fund - 10k BLOCK
- Business Development Fund - 7k BLOCK
- Development Fund - 100k BLOCK
The point of having both the Superblock and using the Burn Fund is two-fold. The update to increase the Superblock will take 2-3 months to coordinate with exchanges to prevent forking so the Burn Fund will provide funding in the interim.
Without the increased Superblock and just using the Burn Funds, the project will only have a runway of 8 months at the current BLOCK price.
Having both the Superblock and the Burn Fund is also beneficial to secure Blocknet's funding into the future. With increasing the Superblock to a point where it can sustain the project, more proposals for expenses can be voted on by Service Nodes and the Community Funds would remain as a true ‘reserve fund’ (as was originally intended). This is the most ideal scenario to make sure the project remains financially stable.
Some may be concerned about liquidation when increasing the Superblock. This should not be a concern as the market has been absorbing the Superblock and additional expenses just fine. However, we will also be opting to selling funds on the DX when possible as opposed to CEXs and are in contact with a handful of community members that are interested in OTC to help take unneeded sell pressure off the market.
This project is in a dire financial situation and it's not even operating at the capacity it should be. These measures will not only secure Blocknet's funding, but also provide strong future growth to allow maturation as a project and product(s) that are fully capable of competing with the rest of the market.