What Is Funding Categorisation?
Explaining what funding categorisation is and why it is important

What is funding categorisation?

Funding categorisations are incentive structures that allow people to request funding for initiatives they want to contribute towards.
Initiatives submitted as proposals will need to match the purpose and scope of the funding categorisation to be considered.
Funding categorisations can be focussed on funding ideas that someone wants to execute or for funding contributors that are looking to work in the ecosystem.
Idea based funding categorisations will group together certain focus areas into each categorisation. Examples focus areas could include DeFi, events or identity tools & software.
The community uses funding categorisations by submitting proposals into each categorisations that gets used in a funding round with proposals about either the idea they intend to execute or what they would like to work on as a contributor depending on the categorisation.
At the voting stage the community would compare the proposals submitted in each categorisation to then vote on which proposals they would like to receive funding.
Funding categorisations are used in funding rounds. Funding rounds will have a total available budget for incentivising high impact initiatives.
Each funding categorisation used in a funding round will have an allocated maximum budget. This budget comes out of the total available amount for the funding round. The budgets of all the categorisations combined should equal the total funding available for that funding round.

Why is funding categorisation important?

Funding categorisations determine what incentives exist for the community to participate in an ecosystem. Categorisations determine what ideas will be considered for funding and what type of contributor can be funded.
The categorisations used in a given funding round will determine which focus areas receive access to funding and which areas don’t. Categorisations will determine what exact funding each area has access to.
Both of these factors are why funding categorisation is important. Categorisations determine what areas can be stifled due to a lack of funding and which areas have more chance to flourish due to better access to funding.
Using more effective approaches to funding categorisation will mean helping to enable the most promising and impactful ideas and contributors to request and potentially receive funding.
Funding categorisations impact the overall efficiency, simplicity, flexibility, scalability and fairness of a funding process. Categorisations also impact whether the community is able to effectively direct funding to high impact initiatives and what level of healthy competition is created due to the categorisations being used.
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What is funding categorisation?
Why is funding categorisation important?