Ensuring Long-Term Development & Success Of Ergo

I think it is obvious to everyone that the vast majority of value in the ecosystem comes from the developers who are building everything. Despite that, there is no direct developer monetization venue past the initial Foundation funds. This seems kind of a naive approach to pay out the miners for running the protocol, but having no longevity plan for funding the actual upkeep & growth of the ecosystem as a whole (which will actually attract and drive users to use the system, which miners do not do at all).

As such, and now that we are discussing the upcoming hard fork, I would like to propose we take some time to consider the concept of having a portion of tx fees/miner rewards/storage rent go to a treasury to fund ecosystem development.

In my mind, it would make the most sense for us to take a two-phase approach:

  1. Funds go to treasury controlled by the Ergo Foundation (like existing dev funds)
  2. Funds go to a DAO which then relegates how said funds are to be used to fund ecosystem development.

Since we already have the infrastructure & processes in place via the Ergo Foundation, it makes sense to have funds initially go there and be distributed via a more centralized mechanism. This would be a temporary approach which simply guarantees that said funds are dealt with properly and valuable projects to the ecosystem are built.

For this second phase, I would recommend that we have a strict deadline of when the switch is required, say at the end of the 8 years of Ergs being released/distributed. This provides us with an upper limit of how much time we have to contemplate and build a secure and solid DAO protocol that will work. Furthermore, having a number of years before implementing a solution allows us to take advantage of the fact that others are attempting to solve this problem currently (such as Cardano). As such this allows us to observe these treasury systems being deployed live into production on existing blockchains which act as examples which we can learn from.

Thus the questions I have for the rest of the community are:

  1. Do you guys think this is a good idea to implement? If not, what are your proposed solutions to funding development on Ergo for the long-term? (Ergo unfortunately doesn’t have the same excitement of being a first-mover that say Bitcoin had which allowed fundless development)
  2. What percentage of rewards should go to the dev fund?
  3. Does the two phase structure and timeline make sense? Anyone have any ideas for alternatives?

The first assumption during testnet was that after first year of mainnet existence, treasury funds will be distributed in a decentralized manner via a community voting system but there were no free dev resources for it(when dev fund was much bigger than existing treasury). Treasury is still there with its significant part available, what is more important at the moment is bringing back basics of POW economy through fixing the algo, many other assumptions should be back on track then. If that fails, we as community, will have about ~15 months to consider point 2. From interesting things, core developers were never planning to be still core developers after treasury is gone.

Since mainnet launch most of efforts developers are spending on infrastructure: libraries like ergo-appkit (used for the mixers) and sigma-rust, explorer, wallets, DEX, oracles. Research also done about applications mostly (e.g. the mixing scheme which is now implemented by anons).

Applications should be profitable in the future. Mixer UI is already profiting from selling fee tokens (I don’t have precise numbers, but likely the profit is about 5-10 ergs a day, not much, but this is just the beginning). Maybe that’s why it was implemented first.

Thus currently EF is acting as investor which puts Ergs into public infrastructure and also first applications. Can EF profit from applications to be developed further?