- Stellar has set funds aside for its activities over the next decade
- So far 9 billion XLM has been moved to three different escrow accounts
- Zcash is also changing its funding model as Stellar
Stellar News Today – The Stellar Development Foundation is reportedly changing its funding model. SDF’s latest mandate gives a breakdown of how the new model will take shape. The entity published a mandate highlighting its plans for future spending thus altering its funding model. The SDF currently holds no less than 30 billion XLM (equivalent to $1.3 billion).
The firm has the task of spending those funds to facilitate the growth of the Stellar protocol focusing on development and promotion. SDF announced this mandate in November. Recent reports show the entity has set aside funds. As of December 20, 2019, about 9 billion XLM (equivalent to $400 million) has been moved to three different escrow accounts. These accounts will be unlocked annually until the year 2023. The remaining funds will be used over the next decade.
A Breakdown of the New Funding Model
According to SDF’s mandate, 12 billion XLM has been allocated to development. The rest of the funds will cover employee salaries, cost of operations, business relations and other commitments. It is also possible that some of the funds that have been set aside by SDF will end up in circulation. 10 billion XLM has been set aside for use-case investments, which will be spent on new projects, VC-style backing, and acquisitions.
Another 2 billion XLM has been set aside to support the Stellar ecosystem like offering grants to developer events, independent projects, and currency-issuance efforts. The SDF mandate also states that the entity has reserved another 6 billion XLM for user acquisition (particularly offsetting marketing campaigns). A portion of the funds will reach users via in-app distribution and airdrops.
How the Stellar Development Foundation is Doing More With Less
Last month, SDF cut down its holdings from 85 billion XLM to 30 billion XLM which destroyed half of Stellar’s supply. SDF believes the decision will drive the value of XLM. Recall that Stellar recently announced that it has discontinued inflation back in October. The network decided on grounds that inflation rewards have failed to reach the projects on the space. Instead, the network’s users mostly claimed the rewards for themselves.
Now that Stellar has ended inflation, ecosystem funding must now be drawn from the network’s existing funds. Which is something that the SDF’s new mandate would do more effectively. Stellar isn’t the only project that has made changes to its mode of funding. Zcash’s two primary organizations are in a trademark battle that could potentially affect the funding structure of the project. Meanwhile, Parity Technologies recently withdrew its support for the Parity Ethereum client. It has now adopted the DAO funding model.