Stop buying meme coins, kids! The cryptocurrencies with real lasting power are the ones being actively developed on — and these projects have funding platforms to onboard new projects. Developers don’t work for free, but luckily good crypto projects have plenty of grant money available to help fuel growth.
The ICON blockchain has the excellent Contribution Proposal System (CPS) through which new projects can submit proposals for funding. A group of ICON node operators (P-Reps) vote on proposals and progress reports, and those that pass the vote (the majority do) get the full requested amount of funding. Launched in the spring of 2021, the platform has so far been responsible for funding 30 projects, some with successful proposals for extended funding.
In fact, this writer has managed two successful proposals to get funding for The Iconist daily news site. The CPS platform is not without its wrinkles, but I can definitely say that it’s fairly straightforward and that the user experience is constantly improving.
I caught up with ICON Product Manager and Strategy Associate TJ Hunt to chat about the CPS’ traction, recent changes and planned future improvements. Hunt’s role is to coordinate with CPS development team ICONOSPHERE to iron out any bugs and plan future development strategy.
Recent Changes to the CPS
When ICON upgraded to version 2.0 of its blockchain in November 2021, it was announced that the CPF (Contribution Proposal Fund) would move to a stablecoin treasury, instead of being paid out in ICX. The way it was previously set up, proposals had to state upfront the full amount of ICX they are requesting for the whole project, which would then be paid out in equal monthly installments. The volatility of the market often made this tricky however, especially for projects with longer durations. Since December of last year, the CPF is now paid out in Balanced Dollars (bnUSD), one of the stablecoins on the ICON network.
“Current market conditions have proven that stable funding through the bnUSD treasury is pretty important,” Hunt said. “Now you don’t have to worry about ICX price — you’re for sure getting a set amount of money. This can be especially important for teams that have to pay contractors.”
Eight previous proposals have already received their allocation in bnUSD funding. At first, the funding went through a backend process of changing from ICX to sICX, and then to bnUSD. Transaction routing has since been made possible on the Balanced DEX, allowing the process to be optimized, and projects are now paid out with straight ICX to bnUSD swaps.
Other changes include a new landing page and optimization tweaks to the CPS’ user experience.
“The idea is to make a funnel that allows for new and existing developers to easily check out the CPS,” Hunt said. “We’ve also removed the barrier to entry for access to the dashboard console. Now anyone can access the proposals and whatnot without being logged in. It’s an easy way for someone without an ICON wallet to still check out the CPS. This also makes it possible to link to specific CPS proposals now, which is helpful when talking about proposals in places like Twitter.”
Impressive traction
Projects are trending toward decentralized finance protocols, marketing, infrastructure development and initiatives involving NFTs.
While most projects are still being proposed by P-Reps within the ICON ecosystem, “some of these NFT projects are actually newer teams, so we are seeing some new developers coming into the ICON ecosystem through the CPS,” Hunt said. “That’s definitely something we want to focus on in the future now that we have a better user experience. Everything is ready to start reaching out and bringing in developers from other blockchains, or from Web2 to Web3 if they know Java.”
Demand on the CPS has been very high since the system moved to a stablecoin treasury.
“The last two cycles were maxed out,” Hunt said. Each 15-day application cycle has a cap of 200 thousand bnUSD that can be proposed, and enough proposals were submitted to fill this limit two months in a row. “I’m aware of enough projects for the upcoming two cycles to also be maxed out. We’re actually overscribed right now in terms of demand for CPS funding.”
Plans for upcoming improvements
The high demand for project funding proves a need to increase the maximum funding cap per cycle. This need should be filled soon, Hunt says.
“Once ICON 2.2 is live, we’ll finally have inflation coming to the CPS, which should allow us to increase the cap on the treasury and provide for this additional demand,” Hunt said. According to the ISS 3.1 tokenomics model, 10% of ICON inflation is supposed to be going to the CPS, but due to technical difficulties it is currently being burnt. A fix is coming soon to remedy that. “That 10% will soon be able to go to the CPS treasury like it’s supposed to. That will equate to 300 thousand ICX per month that will be going into the CPS directly from ICON inflation.”
Further changes to the user experience of the CPS platform are also planned. Major additions include a new RFP (Request For Proposal) section where anyone in the community can post a request for products to be built, a history tab that shows past proposals, and a statistics section that displays treasury allocation and inflows and outflows. Hunt also plans to implement an off-chain proposal drafting section on the CPS where teams can flesh out their proposals and get feedback from the community before they commit to an on-chain proposal — currently, teams are posting their draft proposals on a separate forum website, which is less than ideal.
Another planned change involves the way that projects will be sponsored. Currently, project teams have to find a P-Rep to sponsor them in order to submit a proposal on the CPS. The sponsor has to put up a bond of 10% of the project’s funding amount, and once the project is successfully completed they receive 2% of the approved budget as a reward.
“Right now, it’s hard for external teams to find sponsors because they likely don’t know any of the P-Reps,” Hunt said. “The new idea is that once a user is done with their draft, they’ll move on to the sponsor request section, and P-Reps will actually request to be a sponsor rather than be requested.”
“A proposal could have two or three P-Reps requesting to be a sponsor. P-Reps are already making a 20 percent return on their bond for sponsoring a successful project, so it makes sense that they may want to compete in order to get that very attractive yield on their bond.”
