Focus Area Categorisation Approaches
Exploring some differences between categorisations created based on location, ecosystem function, organisation function and beneficiary based focus areas
For the following comparison we are focused on categorisation for proposal based funding. The comparisons are also for comparing potential fixed core categories that would be used for the funding process. This means that analysis is done upfront for defining the categories to use where any changes would be less frequent instead of changing them every funding round.
Other funding approaches should be taken into account when reviewing this analysis. Full time contributor based funding, such as Catalyst contributors, are a complimentary funding approach to proposal based funding.
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Ecosystem areas

Using different defined areas of the ecosystem as funding categories.
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Categories
  • Governance & Identity - Proposals about maintaining, improving and supporting Catalyst as the governance solution for the Cardano treasury and improving governance and identity tools.
  • Development & Infrastructure - Proposals for improving and maintaining the development ecosystem for Cardano and also supporting the operation of stake pool nodes.
  • Products & Integrations - Proposals for projects building on top of Cardano.
  • Community & Outreach - Proposals that do outreach to anyone outside of the community and for engagement within the community.
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How it might be used
  • Those helping improve Catalyst - Use the Governance & Identity category.
  • Those helping improve Cardano - Use the Development & Infrastructure category.
  • Those building products & integrations - Use the Products & Integrations category.
  • Those doing outreach and building community - Use the Community & Outreach category.
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Advantages
  • Simplicity - The minimum amount of categories are suggested that will result in grouping proposals around core important areas of the ecosystem.
  • High clarity - It is easy to add high clarity on exactly what type of proposal would go in each category.
  • Easier to direct funding - The types of proposal for each category is more well defined using ecosystem areas. This makes it easier to direct funding to another area if one area is performing well and needs less financial assistance then the budget weighting can be changed through a community vote on a subsequent funding round.
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Issues
  • Higher competition - By having a small number of categories the competition between proposals is higher meaning solutions are needed that help bring awareness to important smaller teams.
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Organisation functions

Using different organisation functions along with Products & Integrations as funding categories.
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Categories
  • Research & Development - Any research or development for the Catalyst ecosystem or Cardano developer ecosystem.
  • Outreach & Marketing - All outbound marketing efforts to solve problems with the wider public or to bring new people into the Cardano community.
  • Community - Proposals that help bring the community together and increase engagement.
  • Organisation - Proposals that help deal with the administrative parts for project teams working on the Catalyst ecosystem or the Cardano developer ecosystem.
  • Risk Management - Proposals that cover mitigating risk in the Catalyst or Cardano ecosystem including auditing, legislative compliance or financial compliance.
  • Products & Integrations - Applications building on top of Cardano.
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How it might used
  • Those helping improve Catalyst - Catalyst proposals could fit in research & development, outreach & marketing, community, organisation or risk management.
  • Those helping improve Cardano - Cardano proposals could fit in research & development, outreach & marketing, community, organisation or risk management.
  • Those building products & integrations - Use the Products & Integrations category.
  • Those doing outreach and building community - Use the outreach & marketing or community categories.
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Advantages
  • High clarity - It is easy to add high clarity on exactly what type of proposal would go in each category.
  • More precision when directing funding - The types of proposal for each category are well defined using the different organisation functions. This makes it easier to direct funding to another area if one area is performing well and needs less financial assistance then the budget weighting can be changed through a community vote on a subsequent funding round. However this categorisation is not effective at separating the funding to either the Catalyst or Cardano ecosystems.
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Issues
  • Increased budget weighting complexity - Splitting up the Cardano and Catalyst funding into these more specific ones means that more effort is needed to effectively govern and manage the budget weightings for each of these categories.
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Locations

Using locations such as different countries or continents as funding categories.
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Categories
  • Africa - Proposals focused on Africa
  • Latin America - Proposals focused on Latin America
  • India - Proposals focused on India
  • Japan - Proposals focused on Japan
  • ... Other continents or countries!
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How it might be used
  • Those helping improve Catalyst - Could make smaller proposals across all countries if it impacts people globally or focus on specific locations if that is relevant.
  • Those helping improve Cardano - Could make smaller proposals across all countries if it impacts people globally or focus on specific locations if that is relevant.
  • Those building products & integrations - Sometimes the team may be decentralized from the start and they may decide to do proposals in where the end user will benefit most. The team could also use a location in which their business resides.
  • Those doing outreach and building community - Separate community members could create local events and community hub proposals in their own location. Global events or outreach could split their proposal across different location categories.
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Advantages
  • Spreads funding across locations - Using locations means ensuring the funding gets distributed across different areas across the globe.
  • Less proposal competition - Having an increased amount of categories would mean there could be less competition for proposers in certain categories. This is good for proposers however does not necessarily mean it produces the best outcomes.
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Issues
  • Directing funding to ecosystem areas - A location approach makes it more difficult to direct more or less funding to certain areas of the ecosystem such as the Catalyst ecosystem or Cardano development ecosystem as they are not location focused.
  • Risk of missing locations - There are 195 countries in the world so separating by countries increase the likelihood of missing out on some areas. There are 7 continents but this then doesn't add much localisation to targeting proposals. Thought would be needed on what a fair approach is needed here that could have one location benefiting more than another.
  • Budget weighting complexity - Deciding on the budget weighting for each of the location categories is complex unless a simple rule is in place such as basing it on total population weighting. How does the community justify why one location should receive more than the other when not using a simple rule? Especially if many of the proposals have global availability.
  • Multiple proposals complexity - Many DApps, online events, Catalyst or Cardano tools and improvements often have a global audience. This makes location categorisation more burdensome as they would often need to split the same proposals across multiple categories for the same funding request. This adds a cost of resource effort to assess more proposals and also makes voting more complex for voters.
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Category combinations

Using a combination of the above approaches in a combined category approach. This is more similar to the current challenge setting approach. The intention would be to determine a more fixed list of categories to prevent the current bad incentives caused by
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Categories - Example combination given using categories mentioned above
  • Governance & Identity
  • Development & Infrastructure
  • Africa
  • Latin America
  • Japan
  • ... Other countries
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How it might used
  • Those helping improve Catalyst - A Catalyst focused category if it is included, otherwise proposals may fit into multiple categories
  • Those helping improve Cardano - A Cardano focused category if it is included, otherwise proposals may fit into multiple categories
  • Those building products & integrations - A Products & Integrations focused category if it is included, otherwise proposals may fit into multiple categories
  • Those doing outreach and building community - An Community & Outreach focused category if it is included, otherwise proposals may fit into multiple categories
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Advantages
  • Strong category and proposal alignment - Having multiple forms of categorisation means that proposals can pick the category that most strongly aligns to what they are proposing. This makes it easier for people to find similar grouped proposals. However it must be noted this same benefit can also be achieved through better tagging of proposals.
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Issues
  • Increased justification complexity - If multiple categorisation approaches are used there is even more need for good justification of which categories are included as many smaller categories will more precisely determine where funding is allocated.
  • Increased budget weighting complexity - More categories means there is a need for better judgement on what budget weighting to apply to each of the categories. Increasing the category number increases the complexity of this task.
  • Increased governance effort - More time is needed to govern the justification and budget weighting complexity from the voters to try and produce the best outcomes.
  • Difficulty directing funding - Proposers may often be able to propose the same idea in multiple categories which makes it more difficult for the community to easily direct funding to a certain area.
  • Weaker competition - Increasing the number of categories means there will be less proposals within each category. Decreasing the competition in each category increases the risk that certain categories have a lower quality of proposals than others which can increase the chance of less effective funding allocation.
  • Multiple proposals complexity - Many DApps, online events, Catalyst or Cardano tools and improvements often have a global audience. This makes location categorisation more burdensome as they would often need to split the same proposals across multiple categories for the same funding request. This adds a cost of resource effort to assess more proposals and also makes voting more complex for voters.
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Summary

  • Locations add a lot of complexity around budget weighting, causing complexity through multiple split up proposals and also creates harder justification for how to decide which countries and areas to group together or keep separate as over 190 country categories would not be practical. Location based categorisation does not map well with most ecosystem tools and DApps that are built to be global.
  • Organisation functions could be effective at directing funding to more specific areas within Cardano and Catalyst however when those same ecosystems use the same categories it makes it harder to direct funding between them. The increase in budget weighting complexity is also a concern.
  • Category combinations make most areas more complex around justification, budget weighting and the governance surrounding it. The benefits of this approach of simpler categorisation are not clear making it a less attractive approach.
  • Ecosystem areas is the simplest categorisation approach and effectively allows the community to direct funding between Governance & Identity, Development & Infrastructure, Products & Integrations and Community & Outreach efforts. Another reason ecosystem areas is an effective approach is that organisation functions can also be covered by complementary categories that fund contributors full time which are suggested in the categories.
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References

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Outline
Ecosystem areas
Organisation functions
Locations
Category combinations
Summary
References