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CIP 0082

  CIP: CIP 0082
  Title: Establish a 5% Development Fund (Foundation-Governed)
  Author: W Eric Saraniecki
  Status: Active
  Type: Governance
  Created: 2025-09-24
  Approved: 2025-10-01
  License: CC0-1.0

Abstract

This CIP ratifies the creation of a Development Fund equal to 5% of all future CC mint emissions, allocated to a Foundation-governed Fund. The Fund exists to sustain long-term investment in the Canton protocol (core R&D, dev tools, security, audits, reference implementations, DeFi app(s) liquidity seeding, critical infra). The fund is prospective (no retroactive allocation) and is taken pro-rata from all issuance streams so that every pool contributes, reflecting that everyone benefits from protocol investment.

A subsequent CIP will propose the implementation mechanics (addresses, start epoch/height, accounting hooks, spend process, guardrails).

Motivation

Many networks finance protocol growth initiatives via a premine/treasury. Canton was fair-launched, so there is no large premine to draw from. Meanwhile, protocol improvements are public goods: security upgrades, performance work, and core features accrue to all participants (validators, builders, venues, users).

Two commonly suggested alternatives are (a) a mega Super Validator (SV) or (b) ad-hoc grants. A single large SV dilutes the SV pool and decays quickly, undermining funding sustainability. Ad-hoc grants lack predictability and are fragile to market cycles.

A reasonably sized fund (5%) creates durable, programmatic funding without changing the overall issuance schedule—reallocating, not inflating beyond plan—and ensures all pools contribute to a shared public good.

The Foundation, with its current SV Weight of 10 and approximately 1.5 billion CC in its treasury, faces significant expenses as it bootstraps the ecosystem. These costs will deplete a substantial portion of its funds. Furthermore, the value of an SV is subject to decay due to the expansion of the SV pool and upcoming halvings. Therefore, it is crucial to establish a sustainable funding source that can support the network's long-term objectives.

Specification

# Decision Scope / What Must Be True Parameter / Target Notes & Acceptance
S1 Establish Development Fund A Foundation-controlled Development Fund is recognized as the canonical sink for the fund; custody and signers per Foundation bylaws. One primary on-chain address Activation contingent on subsequent CIP specifying address, custody, and accounting hooks.
S2 Fund Rate Fund applies to all future mint emissions (prospective only). 5% of each mint event. No retroactive allocation. Does not change total planned issuance—reallocation only.
S3 Source of Funds Fund is taken pro-rata from all issuance streams (validators/SVs, ecosystem, other pools). Pro-rata reduction to each stream equal to 5% of its otherwise-due amount. Ensures “everyone contributes” because everyone benefits. Avoids concentrating dilution solely in the SV pool.
S4 Governance of Spend Foundation administers and allocates funds. Community participation occurs via Foundation processes. Foundation governance; processes to be defined and refined by the Foundation. Subsequent CIP must detail spend workflows, disclosures, conflicts policy, and appeals.
S5 Transparency & Reporting Foundation publishes quarterly reports (receipts, balances, commitments, disbursements, outcomes) and annual audit/attestation. Quarterly ops report; annual independent attestation. First report due ≤90 days after first receipt of funds.
S6 Sunset / Review Formal review of fund effectiveness and rate. Every 12 months. Review may propose rate change or wind-down via new CIP.
S7 Migrate code repositories This CIP ratifies the decision to move the Splice, Daml, and Canton code repositories to a Foundation controlled repo. As soon as practical Relying on setting up the appropriate infrastructure at the Canton Foundation and governance to take over those processes from Linux Foundation Decentralized Trust (LFDT) and Digital Asset.

Rationale

When Canton launched, it was believed the Foundation’s SV would be sufficient to fund core needs. In practice, once you include grants, listings, and forward protocol development, SV emissions alone are not sufficient—and we don’t want funding gaps to slow or prevent critical work. This request is about establishing a predictable, programmatic base for protocol investment before we expand grants and other ecosystem-growth activities.

  • Why a fund, not an SV? A single, large SV concentrates dilution on the validator pool and decays—producing a front-loaded stream that undermines long-term sustainability. A thin slice over all mints is lighter-touch, fairer across stakeholders, and predictable.

  • Why Foundation-governed? The Foundation includes members beyond SVs and has a mandate to run open processes (RFPs, grants, audits). Protocol work is a public good; the spending venue should be broader than validator governance alone.

  • Why 5%? Small enough to maintain competitive validator economics, large enough to reliably fund core protocol work across cycles. It is also simple to communicate and implement.

Alternatives Considered

  • Large Super Validator: Simple to reason about, but centralized, rapidly decaying, and disproportionately dilutive to SVs.
  • Ad-hoc Grants / Donations: Unreliable over market cycles; fails the predictability and sustainability tests.
  • One-time “treasury mint”: Creates retroactive inflation and governance contention; lacks ongoing alignment between protocol growth and funding.

Economic Impact

  • No change to total issuance—this is a reallocation of 5% of each future mint.
  • Uniform, predictable dilution across all issuance streams.
  • Expected to increase long-run network value via sustained investment in security, performance, and core features—benefiting validators, builders, and users.

Backwards Compatibility

Prospective only. No retroactive reallocation. Existing balances and historical distributions are unaffected.

Security Considerations

  • Fund custody/operations must follow Foundation controls.
  • Concentration risk is mitigated by reporting, audits, and periodic review (S7).

Copyright

Reference implementation

The final implementation was merged into the Splice main branch via the following PRs:

Changelog

  • 2025-09-24: Initial draft of the proposal.
  • 2025-10-01: CIP Approved.
  • 2026-03-24: Implementation linked.