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Class 1: What is Catalyst?

1) What is Catalyst and why does it exist?

Catalyst is an innovation funding system… (TBC)

Catalyst is an innovation funding system

2) Where does the money come from?

Each transaction on Cardano blockchain has an associated fee, and a small percentage of this fee goes to the treasury that is managed by Catalyst. In this way, everyone that stakes ADA is indirectly contributing to Catalyst, since their profit is also related to the transaction fees and block validations, and their contribution is proportional to the amount staked.

A small percentage of transaction fees goes to the treasury

3) How does the Catalyst process work?

The Catalyst process is constantly evolving. As per Fund 5, it consists of the following phases:

Insight sharing

The insight sharing phase consists of a week when the Catalyst Community shares ideas about problems that need to be solved, possible ways to improve the Cardano and/or Catalyst ecosystem, and anything else that the Community intends to discuss.

Proposals submission

During this week, any community member is able to submit proposals in IdeaScale. The proposals can be edited anytime until the end of ‘Proposals Finalizing’ phase. So, if the idea/project/proposal is not complete yet, for example, the proposer can submit a seed/draft of his proposal and edit later on.

Proposals refining

The ‘Proposals Refining’ phase is when the interaction between proposers and the community is at its peak. All community members are encouraged to go through the proposals and talk to the proposers about their perception of each idea, suggest ways to improve, mention similar projects to encourage cooperation and help the proposers in any way they feel like.

Proposals finalizing

During the ‘Proposals finalizing’ phase, the proposers have their last chance to do modifications in their proposals prior to the ‘Proposals Assessment’ phase. During this week, the proposals comment section in IdeaScale is closed, so proposers have the time to consolidate the suggestions made by the community, go through the proposer checklist and finalize their proposals.

Proposals assessment by CAs

The ‘Proposals assessment’ phase is the time when Community Advisors evaluate the proposals based on a set of criteria, as described in the Community Advisor Guideline [add link].

Assessments review by proposers

During the ‘Assessments review by proposers’ phase, the proposers have the ability to flag CAs assessments if they believe that some of them were unfair, unjustified or should not be considered for any particular reason. The Red and Yellow Card Thing [add link] is used by proposers during this review phase.

Assessments review by vCAs

After the proposers are finished with their review, the vCAs come to play and review the assessments as well, prioritizing those flagged by the proposers in the previous phase. The vCAs also use the Red and Yellow Card Thing to review the assessments, and, based on the rules stated in the mentioned document, each assessment is evaluated and then be considered in the final score of the proposal, or disregarded if it’s a low quality assessment for some reason.

Governance

The ‘Governance’ phase consists of the voting phase, in which all eligible ADA delegators or Stake Pool Operators (SPOs) can register to vote on their preferred Catalyst proposals and decide who will receive the Fund.

4) What are the roles inside Catalyst?

As per Fund 5, the roles inside Catalyst are:

Proposer

A Proposer is basically anyone that has submitted a proposal in the current Fund. There are no requirements for someone to become a proposer.

Referer

A referer

Proposal Mentor

A Proposal Mentor is someone who is able to support Proposers on improving their proposals. Preferably, a Proposal Mentor should have some experience within Catalyst to know how the process works so they can properly advise the proposer on how to be successful and maximize their chances of being voted and receiving funds, although currently there are no formal requirements to be a Proposal Mentor.

Community Advisor (CA)

The Community Advisors’ main role is to assess the proposals based on a set of criteria as described in the Community Advisor Guideline [add link]. Their assessments should be fair, and should support both the proposers in improving their proposals for the next fund (if not funded), and also to help voters by providing them a score to support their decisions. The only requirement to be a CA is that he/she shouldn’t also be a proposer in the same Fund, with the exceptions of two challenges: ‘Distributed Decision Making’ and ‘Challenge Setting’.

Veteran Community Advisor (vCA)

Voter

Voters are those responsible by choosing the funded proposals in each Fund. Anyone who has a minimum amount of ADA staked in any stake pool is eligible to vote in Catalyst. Voters need to register to vote in each Fund. The minimum amount in Fund5 is 500 ADA, and it’s getting smaller each Fund to increase participation in the process.

5) What is IdeaScale?

IdeaScale is a platform chosen by IOG where some phases of the Catalyst process take place. All the stages until ‘Proposals assessments by CAs’ are done in IdeaScale.

6) What are the Challenges?

The Catalyst Challenges are subsets of each Fund, and every proposal has to be submitted in a specific and single Challenge.
Each Challenge has a clear objective, some guiding questions, suggestions of metrics to measure the success of proposals submitted on them, and potential directions that proposers could use as reference to create and/or improve their ideas.
The total Fund is distributed amongst the Challenges, so each one receives a percentage of the total budget. This percentage depends on the perceived importance of each challenge and it’s defined by IOG, except those challenges which were voted in the ‘Challenge Setting’ Challenge.

7) What does ‘voting power’ mean?

Voting power is basically the weight of someone’s vote in the overall process, and it’s directly proportional to the amount of ADA staked. Therefore, those who have more ADA staked also have more influence in the voting process.
There are some reasons to justify the existence of this voting power. For example, those who have more ADA also contribute more to the Catalyst Treasury since the Treasury’s ADA comes from a percentage of transaction fees, which are distributed amongst the delegators proportionally to their contribution in the pool.
Those who own great amounts of ADA also have more ‘skin in the game’, and therefore are those who would benefit the most from good projects or initiatives being funded, since these tend to add more value and strengthen the ecosystem. Also, if every vote had the same weight, the voting process could be distorted by people creating multiple wallets with the minimum ADA required to participate in the voting process.

8) How does the voting system work?

Each voter can decide to vote favorably or against each proposal, and also to abstain from voting in some/any of them.
After the voting period, each proposal has a final score, which is the net amount of voting power: all favorable minus all contrary.
The proposals in each Challenge are then listed based on their scores. The first proposal is funded, and its requested fund is subtracted from that Challenge’s budget. Then, if the second proposal in the list has required less than the remaining Challenge’s budget, it also gets funded. If the required amount is greater than the remaining Challenge’s budget, then the second proposal is not funded and the third proposal in the list goes through the same process. This is repeated until no further proposals can be funded with the remaining budget.
As an example, these are the voting results for Fund 3.

9) Where do the discussions about Catalyst take place?

The main channels to discuss about Catalyst are the Telegram groups [add link] and the Discord server [add link]. There are also many other channels to discuss topics related to Catalyst that were created by the Community to discuss various different topics.

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