Donations

Donations from an ecosystems community members

Donations mean that community members would be voluntarily giving their own assets to help fund the different initiatives in the ecosystem that help to maintain or improve the network. Donations could be handled in a few ways. Donations could be sent to a central pot that helps to pay for different initiatives that is then decided by the community or the people who donate the assets could send their donations directly to the contributors who they want to be paid for their contribution efforts. Ecosystems such as Bitcoin currently adopts a donation based approach which means the ecosystem relies on the social layer of the network for donations to be made that help to fund any development initiatives that maintain and improve the network.

Low short term income potential (Score - 2)

Donations from community members or from projects building in the ecosystem would be needed to fund any ongoing network and infrastructure development efforts. For new and smaller ecosystems that have a low number of launched projects this could mean there are a limited number of people who will be involved and willing to donate their own assets to support ecosystem initiatives. Limited funding in the short term could result in a much higher risk that development efforts could stagnate due to being underfunded. If the ecosystems surrounding environment suddenly changes or new requirements emerge there is a concern that the biggest problems and opportunities will not get addressed due to a potential lack of funding to compensate any contribution efforts.

Low long term income potential (Score - 2)

Relying on donations over the long term is a risky proposition for the sustainability of a global network. The passionate early adopters of the technology could eventually become outnumbered by the average user that could likely be less willing to send their own assets to support the network. Other ecosystems that adopt other income approaches beyond donations could have a serious advantage over the networks that rely heavily on the limited amount of income that they raise through donations. Relying on a donations income means fully relying on the community to self organise and donate assets to support important development efforts in the ecosystem. This approach by itself could meaningfully increase the overall effort and complexity involved in maintaining the ecosystem over the long term.

Very high incentive complexities (Score - 1)

Community participation and ongoing effort would be needed to gather assets to pay for maintenance and development efforts. Any income achieved with a donation based approach can add complexity around a lack of fairness about who is paying for the ecosystems maintenance and improvement and who isn’t. Community members could donate much less or more than others. A large incentive complexity could emerge when certain wealthy people in the ecosystem donate far more than others towards supporting the ecosystems network development efforts. These donations could lead to an excessive amount of influence over the contributors and what they work on. The contributors are incentivised to secure ongoing income which means there is an increased complexity for the contributors to try and not be heavily influenced by the donators that are paying for their contribution efforts.

Very high game theory risks (Score - 1)

Those who donate larger amounts to the ecosystem to help fund any ongoing maintenance and improvement of the network would have a larger amount of influence over the contributors who receive that donation. If those actors want to influence those contributors to prioritise certain features or outcomes they could have a higher likelihood of achieving that outcome due to their influence on how much these contributors get paid. These actors could encourage and push through changes that are more beneficial to them than they are for the wider ecosystem. Relying on donations as a form of treasury income could result in increasing the influence of wealthy individuals in the ecosystem due to their ability to make larger donations than others.

Total score = 6 / 20