Idea Categorisation Analysis
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Decreased Proposal Submission Encouragement

How funding categorisations could discourage proposal submission and potential solutions to prevent this

Problem

Certain funding categorisations could result in reducing the spark of encouragement for proposers to submit proposals due to a lack of priority or focus on a problem the proposal team is working on. If a funding categorisation is focussed on the exact area that a proposal team are interested in working on this can help create a very direct call to action to submit a proposal.
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Relevance to funding categorisation

Encouraging the submission of proposals through using specific prioritisation does not need those priorities to be attached to funding categorisation. The following categorisation approaches could impact decreasing encouragement for proposal submission:
  • Broad vs specific categorisations - Broad categorisations result in there being less of a direct incentive for proposals about a specific focus area. Categorisations focussed on very specific focus areas can help with further incentivising proposers to submit proposals due to the more direct incentive encouragement. Creating a funding categorisations that are focussed on individual priorities leads to using specific categorisations. This means increase the chance of facing a number of issues as covered in the broad vs specific categorisation comparison.
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Lessons learnt from challenge settings
Challenge settings were effective at creating a call to action to potential proposers. The challenges that got set were always changing so the proposer could not be certain it would appear again. This scarcity of funding for specific areas could be seen as an effective way to encourage proposers to take action and propose solutions for these more specific areas in the ecosystem.
The problem with this attachment of challenges to budgets is there is a fixed amount of funding available in total each round. From that funding available only a certain number of challenges can get voted in which means other areas can often be excluded. This puts increasing pressure on the challenge for it to be correct that it is indeed a good focus area for funding and also pressure that proposals of a high enough standard must present themselves in this time period. Another issue is how areas excluded from the funding challenges selected may have better innovation in different areas. If these proposers are not able to access funding fast enough they may find alternatives in different ecosystems where funding may be more readily available.
Catalyst as a funding process needs to be careful in how it incentivises more proposals to be submitted and if that approach could negatively impacts other potential opportunities and options that the voters may want to choose from.
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Potential Solutions

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Broad categorisations
Even if the categorisations aren't specific in exactly what focus areas can submit proposals there is still a large incentive for a team to submit a proposal for what they are working on in a broad categorisation due to the incentive to be funded for that work.
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Community priority and problem voting
Doing democratic votes from the community on which problems exist or what goals and objectives should be prioritised helps to provide insight into what the community is most interested in seeing proposals for. If this information is easily accessible then it helps to encourage proposers to submit proposals as solutions when they know the community is already looking for proposals that address these areas. The benefit of this approach is also that the prioritised goals, objectives or problems don't create any mandates on funding allocation. The community is free to change their mind, not agree with the suggested proposals or even reprioritise if there is a need to do so at anytime. This prevents the risk of stagnating the distribution of funding in events where no proposal opportunities turn up in the short term. The problem and priority voting can also be integrated into the voting experience to influence the ranking of proposals. Using the priorities to influence the ranking of proposals further increases the incentive to propose solutions to the most prioritised focus areas.
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Bonus funding incentives
A bonus funding incentive is the idea that the community could use funds to put up a bonus for proposals that address a certain goal or objective set by a community vote. Funds could come from Catalyst, rapid funding mechanisms, the community or from project teams who want a particular problem solved. For instance if a social network was the priority for the community a 10% funding bonus could be given to any proposal that gets funded through the Catalyst process that is working on a social network. This creates a bigger incentive for proposers to think about and submit proposals that address this specific focus area. The benefit of an approach like this is it would supplement the a simple funding categorisation process and puts no pressure on innovation needing to present itself immediately. Instead the funding would be distributed when the conditions are met for that bonus and could happen at anytime whilst the priority is still there. Another benefit is the same funding allocated towards bonuses could be attached to multiple incentives so there is flexibility in where that bonus amount get allocated. There could also be a number of other alternative approaches such as considering KPIs or execution outcomes that could determine how this bonus incentive functionally works.
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Rapid funding distribution
Using rapid funding mechanisms could be an effective way to fund initiatives that solve time sensitive problems or short term opportunities. A community governance process could make the funds available to whoever can propose and implement se solution to these problems or opportunities.
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Quadratic funding
​Quadratic funding can be an effective tool to more effectively distribute funding to projects or causes in a more democratic way. There is a need to solve the issues around sybil resistance by including one or multiple ways for the voters to verify they are a person. Quadratic funding could be used to create further incentives and calls to action for people to solve certain problems or improve certain areas of the ecosystem.
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Marketing
Currently only a small amount of marketing has been explored for attracting people into the Catalyst funding process. There are a large number of approaches that could be considered to help attract new proposers to submit proposals.