Thread by @flantoshi

A beginner’s overview of Catalyst (Cardano’s Treasury and innovation lab)

[A Thread🧵]

#CardanoCommunity #CardanoADA #Cardano $ADA

1/ Intro

Catalyst is often jokingly referred to as Cardano’s VC, as it aims to collect a portion of fees generated from each transaction and use that money to fund projects that are beneficial to the community.

A funding round for Project Catalyst happens around every 6 weeks.

2/ Purpose

Catalyst is still in an experimental phase where its operating procedure is subject to change considerably

But it ultimately seeks to be a means by which to fund projects that help the Cardano ecosystem, irrespective of whether or not they’re necessarily profitable

3/ Loss leaders

It can be considered one of Cardano’s secret weapons. Most other blockchains without communal treasury systems only incentivise easily monetizable projects.

Cardano promotes useful projects, think of tools like Wikipedia which aren’t profitable.

4/ How does it work?

Every 1.5 months a new “fund” is launched with a theme/challenge to address. Community members then propose means of addressing those challenges, which get assessed by their peers for feasibility. After this phase, people vote on the proposals.

5/ Voting

As Cardano is a Proof of Stake blockchain, everyone is encouraged to participate and be a stakeholder of the system

Votes for/against a proposal are counted depending on how much ADA is held in the wallet casting a vote. So it is unfortunately an oligarchy.

6/ Who can ask for funding?

Anyone with a pulse, though with the increasing competition on the platform, it’s advisable to have a sizable audience already, as it devolves into a popularity contest. New entrants still have a chance if they go for less competitive categories.

7/ Intellectual Property

A huge perk that should be highlighted compared to other more traditional funding methods is that you’re not required to let go of business equity or intellectual property

If you can get the votes, and fulfil your promises, there are no strings attached

8/ Process

In theory, there are 3 phases that each fund undergoes:

Innovation - Ideas are proposed, refined and reviewed by users
Governance - Users register their wallets, up/downvote proposals, and votes are tallied
Execution - Funds are paid out, and reviewed every month

9/ Good & Bad

I really like the idea of Catalyst, I think it will be one of our major advantages going forward. That said, in its current prototype phase there’s a lot that could be improved, or is downright concerning.

In the following tweets, we’ll mention some issues.

10/ Accountability

Despite what the marketing will have you believe, there’s a surprisingly little amount of policing so that the funds are properly used. Hence there is a strong potential for money to be mismanaged or just pocketed without further benefits to Cardano.

11/ Rich getting Richer

Whales, or people who are whale adjacent, can bring to bear so much capital as to outshine the efforts of users without the deep ties to the Cardano powers that be.

Whales can drain the fund dry and never give newbies a chance.

12/ Shady Actors

Occasionally, shady actors end up receiving funding as they apply with a lot of proposals and outwardly look OK.

By not being more selective, we end up potentially funding people who aren't great for the ecosystem, here's a thread:

13/ Lack of clear communication

The comms, guidelines, rules and documentation regarding Catalyst are either disorganized or nonexistent. So it’s often difficult to get a handle on details, as sources might contradict each other, don’t cover them, or are out of date.

14/ Success Stories

It’s easy to point to the failures of a project that is still in a prototype phase. But let’s not lose track of the fact that Catalyst has already had some major victories.

Minswap, Cardano’s biggest DEX, was initially funded by Catalyst.

15/ What next?

The next Catalyst round starts next month, and I fully intend on participating.

Hopefully, with a bit of luck and your support, some of my proposals get funded and I can dedicate more of my time to the Cardano community.

16/ Conclusion

Catalyst has problems, from being difficult to audit projects, promoting an oligarchy and having incomplete documentation

Yet, underneath it all, Catalyst is a powerful tool that shows a lot of promise and may yet be able to boost Cardano to new heights!

17/ Shilling

If you liked this, please consider giving a follow. I write one large thread a week, which looks at crypto from a completely different POV

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