During the discussion and voting phase of the 100M vote, the community raised questions regarding the financial support for Lisk, especially:
- Why are you using newly minted tokens to fund the DAO, and not existing funds from the Onchain Foundation?
- Isn’t 45M LSK enough to grow the Lisk ecosystem? Do we really need an additional 100M LSK?
Before answering these questions, we as the Lisk team want to emphasize that the Onchain Foundation and Lisk Ltd. are independent entities with different management teams. As such, we from the Lisk team also cannot make an official statement on behalf of the Onchain Foundation regarding the questions above.
What we can say, however, is that the Onchain Foundation continues to fund all Lisk operations and its team, as it has been for almost a decade. As was shared at the time of Lisk transitioning to a Layer 2, parts of the former team were split into additional projects (Pass App and Onchain), which the Onchain Foundation also supports. An overview of these projects is available on the Onchain Foundation page and more details can be found on the Onchain Foundation’s About Us page.
Lisk is supported with far more resources by the Onchain Foundation than the other projects, however, each project is expected to drive revenue and become sustainable. The end goal being - like for any business - to cover all operational expenditures themselves. This ensures that each project prioritizes profitable business strategies and manages overhead appropriately.
Additional notes on funding for Lisk:
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In addition to the Onchain Foundation’s dedicated support, all LSK and OP tokens that are held by the Onchain Foundation or Lisk Ltd. (excluding the Foundation’s legacy wallet, ~7.9M LSK from the original ICO) are also solely for Lisk’s use. This includes the 30M LSK allocated for strategic investors at migration.
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As was shared in the LSK 2.0: Migration to an ERC-20 Token blog post, only 7% of the total original Lisk token supply in 2016 was reserved for community initiatives and growth campaigns. The lack of token standards and established best practices at the time ultimately limited our ability to incentivize a robust ecosystem and community, and to create liquid markets. Today’s leading projects no longer hesitate to allocate a significant portion towards their growth initiatives, with some even allocating up to 80% of their total token supply. Ecosystem growth activities were always paid primarily using Lisk tokens (as is the case in the majority of L1 / L2 ecosystems), while the Foundation funds are used to support the core team’s operations. Our intention is that the Lisk DAO, with its treasury, is the key driver of funding ecosystem growth going forward.
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As an example of the amount of native tokens other infrastructure projects use to incentivize their ecosystem growth, here is an overview of publicly available data on what Optimism (which launched in 2021) has spent so far:
- Lifetime Airdrops: 266M OP (~200M USD at current value)
- Lifetime Incentives and BD Grants: 410M OP (~350M USD at current value)
- Budget for Season 8 (currently going on Season 8 Intent - Intents - Optimism Collective):
- Up to 26M OP to fund core teams to develop the Blockchain
- Up to 12M OP for DeFi Incentives
- Up to 22M OP for Growth Programs
- Combined that’s 60M OP (~47M USD at current price) in Season 8.