How does distribution of the @steem.dao funds work? Is there a set amount that is spent per year? Could a single proposal request all the funds... etcetera?
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How does distribution of the @steem.dao funds work? Is there a set amount that is spent per year? Could a single proposal request all the funds... etcetera?
My understanding, and someone please correct me if wrong...
The DAO can spend 1% of its balance daily. So much like content voting, it’s impossible for it to ever spend itself empty, especially since it’s replenished with inflation, donations, and now this slow release of the Steemit stake earmarked for funding.
It’s also of note that the better the price of HIVE, the more funding the DAO gets, since it earns a % of the inflation pool, but always in Hive dollars. For instance, if the pool earns 1000 Hive a day via inflation, if Hive is .20 and Hive dollars are at the 1.00 peg, then the pool would get 200 Hive dollars. If Hive climbs to 2.00, then that same 1,000 Hive are now depositing 2,000 Hive dollars daily in the pool instead of 200. Better Hive price equals more DAO funding.
Proposals are voted on similar to witnesses, stake weighted, but vote on as many as you want. So the highest weight voted proposal gets funded first, then the second, third, and so on. If all of the daily funding is allocated, the last proposal may only get partial payment of the remaining balance.
The reason the entire 1% of the pool isn’t spent daily is because of the “return” proposal. This proposal is structured as a proposal that gets 240 million Hive dollars a day... with the beneficiary being the DAO account, essentially returning it to the fund and not spending it. Voting on the return proposal sets the threshold that every other project must cross in order to see any funding, since if the return proposal is #1, there’s no remainder in the daily budget to be spent. As is, the return proposal currently gobbles up that “remainder” since we’re not maxing our spending with our approved projects at the moment. So yes, one project can take all the funding... but it’d either be the will of the community, or a Steemit Inc. style takeover.
Incredible explanation! You should consider making this its own post so I can rehive it!
The return proposal is an innovative use of the proposal system to set a floor on which proposals are funded.
When voting for proposals in the future, I need to consider not only whether I support the project but also whether the requested funding is reasonable. I didn't understand that nuance before.
Seems that the proposal system is susceptible to vote selling, similar to content and witness voting? For example, imagine a proposal that distributed its payout to everyone who votes for it. Perhaps even with some mechanism to reward early votes that allow it to surpass the return proposal more than later votes. Ignoring reputational damage for supporting this proposal, the incentives seem to lead to this outcome?
Other commenters here seem to think the @steem.dao holdings are too large. I tend to disagree. Development is a crucial ingredient for growing and sustaining the blockchain. @steem.dao is a way in which the blockchain can effect change outside its own protocol, but in support of its protocol. It's a major step in blockchains become self-sustaining and adaptive entities, almost like a digital life form.
But this really depends on whether the system is used to fund valuable work or whether it is susceptible to embezzlement.
you are right @dhimmel.
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