Polkadot announces a $770 million development fund before the start of the parachain auction

Gavin Wood, the founder of Polkadot, announced a $777 million development fund before the network’s parachain lease auction.

On October 17, Wood said on Twitter that Polkadot’s Ministry of Finance has allocated more than 18.9 million DOTs (valued at approximately $777 million at the time of writing) for a development fund that will be paid through community governance.

Wood has made extensive recommendations on how to use these funds. He stated that in addition to ” things that Polkadot governance considers valuable, ” these funds will be used to realize the community’s vision of “building, improving and educating” the Polkadot ecosystem.

According to Polkadot Wiki, if the board of directors approves, the funds of the Ministry of Finance can be used, and the board of directors votes on the proposals submitted to them. The Polkadot Council currently consists of 13 members, but plans to expand to 24 seats at some stage in the future.

Due to the low level of community participation in many Polkadot governance voting in the past, this development fund may be aimed at enhancing the participation of DOT holders in the governance process. According to data from Polkassembly, the total number of votes for the three governance proposals put forward in the past week was 0, 6, and 7, respectively.

Stakeholders who wish to make a proposal must reserve at least 5% of the deposit of the proposed expenditure. If rejected, the deposit will be reduced (a mechanism for burning money to prevent improper behavior of the verifier), and if accepted, the deposit will be returned. Since funds are placed at risk in the event of unsuccessful voting, Polkadot’s reduction mechanism may be a factor hindering participation in network governance.

The new development fund was announced a few weeks before Polkadot’s highly anticipated parachain auction will begin in early November, indicating that these funds may be intended to initiate development of Polkadot’s upcoming parachain ecosystem.

Polkadot’s parachain auction will be used to realize Polkadot’s vision of the sharding ecosystem. In the auction, projects built on Polkadot will lock DOT through bidding to obtain one of 100 parachain slots.

Parachain is Polkadot’s sharding side chain. It can host decentralized applications and protocols, provide specialized calculations, and communicate with Polkadot’s proof-of-stake “relay chain” to complete transactions.

Polkadot’s existing relay chain specializes in handling transfer, governance, and pledge services for the Polkadot network, while the upcoming parachain is responsible for providing advanced functions such as smart contract functions and cross-chain compatibility.

Therefore, the new development fund may be designed to encourage developers to start building on Polkadot in preparation for the parachain’s launch.

Many bystanders believe that the Acala Network supported by Coinbase is the front runner to win the first parachain slot on Polkadot. In June of this year, Acala ‘s Karura Network deployed on Polkadot’s sister network Kusama won Kusama’s first parachain auction with a significant advantage.

Karara was backed by more than 15,000 entities and won the slot with a bid of more than 500,000 KSM (worth approximately $184 million at the time of writing).

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/polkadot-announces-a-770-million-development-fund-before-the-start-of-the-parachain-auction/
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