At the recent Cardano Summit in Dubai, Kriss Baird, group product manager of Project Catalyst, spoke about the benefits and difficulties of decentralized finance methods. Within the Cardano ecosystem, Project Catalyst is a community-driven awards and governance mechanism that lets users vote on funding ideas. Baird emphasized the drawbacks of conventional finance mechanisms, which frequently result in less-than-ideal results and little community involvement since a small number of individuals decide who gets funded.
Decentralised fundraising projects, on the other hand, provide a more democratic method by providing cryptocurrency holders with a forum to express their opinions and concerns. Nonetheless, Baird recognized the difficulties in overseeing expansive community-driven initiatives, given that permissionless, decentralized communities may comprise tens of thousands of participants and projects throughout the globe. Project Catalyst addressed this problem by introducing an accountability model and a milestone-based financing method that let the community decide on funding bids and ensure that supported projects are meeting their goals.
In order to encourage greater engagement from new ecosystem members, Project Catalyst recently modified its voting mechanism. The upvote and downvote procedures were replaced with a ‘yes-or-abstain’ paradigm. Baird proposed that for future, more developed projects, the old voting mechanism might be brought back. With the help of Web2 companies, governments, and other blockchain networks, he sees decentralized funding developing into a multi-tenant ecosystem. Over 1,300 initiatives have been sponsored by Project Catalyst since 2021, raising 137 million ADA (almost $60 million). According to Baird, the effort will likely disburse over $100 million over the following four years.
