Shaking Things Up: The Limitations of Traditional Financing
In the world of capital raising, traditional financing models have long been the go-to for businesses, raking in billions for the crypto and blockchain sectors. But let’s face it—these methods come with their own set of hiccups. Kriss Baird, the group product manager at Project Catalyst, recently noted at the Cardano Summit in Dubai that funding decisions are often left in the hands of just a few individuals. If you thought finding a parking spot in New York was tough, try getting funding with a handful of gatekeepers! Baird argues this model doesn’t lead to the best outcomes and just doesn’t capture the flair of community involvement.
Direct Democracy: Letting the People Speak
Enter decentralized funding initiatives, which Baird describes as a “bit of direct democracy.” Imagine a world where crypto holders can voice their ideas and concerns without feeling like they’re in a tedious board meeting! By crowd-sourcing these funding decisions, we’re actually giving those in the trenches a chance to influence societal change. However, with great power comes great responsibility—when you let thousands of people weigh in, you often get thousands of opinions. Think social media comments on a viral post; chaos is all but guaranteed!
Navigating the Challenges of Community Decisions
Baird shed light on the reality of managing a project like Catalyst, where every stakeholder has something to say. “It’s hard! Everyone loves to weigh in,” Baird laughs. And who wouldn’t want to share their opinion? But this plethora of voices makes consensus difficult. To tackle this issue, Catalyst launched a pilot program to not only fund projects based on community votes but also hold them accountable through a milestone-based funding model—because let’s be honest, who hasn’t thought, “What on earth did they spend that money on?”
Game Changer: A New Voting System
In yet another twist, the team launched a new voting system after Fund10—$16.5 million to be exact—trading the infamous upvote/downvote mechanics for a “yes-or-abstain” system. Baird claims this change is aimed at keeping spirits high and preventing new members from feeling like they can’t join the conversation. After all, the last thing you want is to scare potential innovators away! However, Baird admitted that for more established projects, the old voting system might return, allowing for some good ol’ critical feedback. Let’s hope they don’t start ordering coffee based on votes!
The Future is Bright for Decentralized Funding
Looking forward, Baird envisions a multi-tenant ecosystem, where communities outside of Cardano—Web2 businesses and even governments—can take a page from the decentralized funding playbook. Since 2021, Catalyst has backed over 1,300 projects and raised a whopping 137 million ADA (roughly $60 million). Sounds like a winning recipe, doesn’t it? With an estimated $100 million earmarked for the next four years, it’s clear this initiative is just getting started. Grab the popcorn; this show is only heating up!
