New Grant Approach

The NEAR Foundation recently announced it would examine and update its grant approach and fundraising strategy “in line with the Foundation’s goal of providing a clear and concise update to continue to foster transparent communication.”

According to the blog post linked below, the Foundation is currently working to create a more decentralized model of capital allocation. Now, we want your help in designing that ecosystem.

Design and create a new strategy for grant and fundraising allocation that will aid the NEAR Foundation in its goal “empower the ecosystem to make decisions that support the strategic approach that will drive NEAR to the next phase of its roadmap.” Your strategy should be backed up by on-chain data, as well as your own opinions on what will create a strong capital allocation strategy for the Foundation.

Learn more here.

Introduction

A grant approach refers to a method of obtaining funding for a specific project or initiative. In this approach, an organization or individual submits a proposal or application to a funding agency, such as a government agency, private foundation, or non-profit organization, outlining their project and requesting financial support. The funding agency then reviews the proposal and, if it meets their criteria, awards a grant to the organization or individual.

For blockchains to be at the heart of collaborative and exciting ecosystems, projects and use cases must focus on social identities and communities rather than just money. Vitalik Buterin, co-founder of Ethereum, along with Puja Ohlhaver, strategy counsel at FlashBots, and E. Glen Weyl, political economist and social technologist, wrote a paper called "Decentralized Society: Finding Web3's Soul" to solve this problem and introduce the notion of soulbound tokens.

Proposal quality, applicant history and experience, and the project's expected impact on the community or field are all factors that can influence the decision to award a grant. Research, teaching, community service, and artistic endeavors are just some examples of the types of activities that benefit from the grant method. This method of financing projects is widely used by NGOs, SMBs, and private citizens.

Soulbound tokens (SBTs) are a type of digital identity that uses blockchain technology to create a unique, non-transferable token that represents a person or entity. This token can be used to store and secure a wide range of personal information, such as medical records, work history, and other identifying information. The wallet that holds or issues these SBTs is often referred to as a "Soul." These tokens are designed to ensure that the personal information they contain is tamper-proof and cannot be duplicated, providing a secure way to store and share personal information.

Proposed Approach

One potential strategy for grant and fundraising allocation for the NEAR Foundation using Soulbound tokens (SBTs) could be to establish a decentralized autonomous organization (DAO) that utilizes SBTs as the native token for governance. This DAO would be governed by holders of SBTs, who would vote on proposals for grants and fundraising initiatives.

To ensure transparency and accountability, all proposals and their associated on-chain data, including voting results and fund disbursements, would be publicly accessible on the NEAR blockchain. Additionally, the Foundation could establish a set of guidelines and evaluation criteria for proposals, to ensure that they align with the Foundation's goals and values.

Another aspect of the strategy could be to give priority to proposals that demonstrate a clear path to driving NEAR to the next phase of its roadmap. For example, proposals that focus on scaling the network, increasing adoption, and building a strong developer community would be given higher priority than others.

Additionally, the strategy could include a system of rewards for successful proposals, for example, SBTs, to incentivize participation and align the interests of the ecosystem with the foundation's goals. The SBTs could be distributed to the proposal creator or the proposal contributors or both depending on the proposal design.

In summary, the proposed strategy for grant and fundraising allocation for the NEAR Foundation using SBTs would be to establish a decentralized autonomous organization (DAO) that utilizes SBTs as the native token for governance, with a focus on transparency and alignment with the foundation's goals and values, and a system of rewards for successful proposals, for example, SBTs, to incentivize participation and align the interests of the ecosystem with the foundation's goals.

Method

The proposed approach aims to create "SBTs" (Soulbound tokens) to reward users for their participation in a funding DAO on the ecosystem. The metrics that are proposed to measure user activity include: transaction count, timezone, actions taken, staking activity, and the degree to which their interactions contribute to decentralization, security, and scalability. By effectively tracking and rewarding users based on these metrics, the ecosystem can become more decentralized, secure, and scalable.

Analysis

✍🏻 Conclusion

Since their introduction, SBTs have quickly become a major talking point in the Web3 community. In principle, SBTs could make it possible for individuals to build and evaluate digital reputations on the blockchain. Whether or not an SBT can replace Web3's "identification card" is an open question.

NEAR cryptocurrency has a bright future ahead of it. Even though there aren't many stakers, the network's future seems bright because of the rising number of users. More and more people are becoming aware of the benefits of NEAR crypto, and this is a good sign for the platform's future. When designing the NEAR protocol, the developers put a premium on scalability, a feature crucial to the success of any digital currency. To ensure the network's continued viability, its capacity to scale up to support more users and transactions is crucial. And because security is essential to any cryptocurrency's long-term viability, NEAR has put a lot of effort into making sure it is as safe as possible. The success of the network is positively correlated with the number of people who are a part of it. The network's long-term viability and popularity are both anticipated to increase as its user base grows. Moreover, the network is anticipated to grow more robust and reliable as scalability and security are prioritized.

So, to make the ecosystem more decentralized and secure, we can create a grant and fundraising allocation DAO based on SBTs gathered by users through their interactions with the ecosystem. 

Hey there 👋!

Firstly, I appreciate you sticking with it until the conclusion.

I'm Hamed, a civil engineering Ph.D.

student interested in data analysis.

I've made many similar dashboards and visualizations since I started at Flipside in January.

Please take a look at my various contact details and let me know what you think.

About:

• Author: HaM☰d

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• Discord: 0xHaM☰d#8391

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:santa: Users State

Over the age of near ecosystem, there has been relatively little change in the total number of new and active wallets on the NEAR network. The number of weekly new users, however, soared to 225K or more on third week of May, and over 150K on Second week of Sep. A negative skew is suggested by the fact that the weekly transactions count is dramatically greater than the active users online. Despite this, more than 3.6 million wallets have been active on the NEAR network for only one day, 1.9M have been only 2 days active and just 1.6K have been active by more than 200 days, in total.

The following two charts show the timezone of users active on Near and indicate where they come from.

This section is credited to this dashboard.

:mag_right: Findings:

Observations on the data presented around decentralization

> The Nakamoto coefficient is the number of validators (nodes) that would have to collude together to successfully slow down or block any respective blockchain from functioning properly

This is definitely something that should be addressed especially if the chain starts gaining significant traction. The Lorenz curve (on the left) and Gini coefficient, validate the idea of a needed improvement in this criteria. For reference, a value of 1 means that only one decision maker (validator) is needed to compromise the system. The closer we get to 0, the more decentralized and “equal” the distribution is.

> The Lorenz Curve shows the cumulative share of voting power in the validator set. In a case of perfect equality, the chart would show a straight 45-degree line connecting the x and y-axis.

In practice, when trying to actually conduct an attack on the blockchain, the power and capital needed to actually be able to take over the chain is higher than what these coefficients state since additional variables come into play.

• There is a requirement for 8 validators, or 33% of the entire staked amount, as can be shown.

:hourglass_flowing_sand: Staking and Decentralization

As of charts below, there is only one week where there are more users unstaking than staking when looking at the net number of users. More unstaking transactions occurred than staking transactions in the third week of November, 2021, highlighting the strong relationship between the two indicators. Since most days show a net positive amount of NEAR staked, this also underlines the possible risk of the network being unduly reliant on a single user or small number of users.

Since the beginning, both the number of staking users and the volume of transactions have gone down.

Note that the user count here is low as we are looking at users that have made transactions in >20 unique hours, which is necessary for this analysis.

NEAR citizen seems to come from Central Asia to Southeast Asia Region.

We see users clustering around the -2 UTC to +7 UTC region. This suggests that most of the users were from Mid-Atlantic (? which is odd) and South/Central Asia region.

Here, we add an additional filter to look at the active users defined in this analysis. Similar to the previous analysis, we see a similar distribution, but with spikes in user count in specific timezones:

• -3 UTC: Brasilia, Buenos Aires Region
• 1 UTC: UK, Spain AsiaRegion

:hourglass_flowing_sand: Transactions State

• The visuals below show the state of transactions and user counts based on action type by week.
• As can be seen, swapping on dex and staking are the most popular based on user and transaction counts.
• Also, from January to May 2022, the NFT interaction went on an upward trend and then decreased.