Dear NEM Community,

This is an update from the Core Team on the latest funding proposals for the NEM Foundation and NEM Labs.

As many of you know, the NEM Foundation and NEM Labs submitted proposals and completed POI voting requirements in February. These steps, while important, are not the only requirements for receiving funds from XEM reserve accounts. The proposals must also be vetted and approved by the Core Team. The Core Team is the original group of developers, supporters, and community members that were involved in creating the NEM blockchain.

The community has an important governance role, which includes watching over these reserves until such time as the reserves are no longer needed. But the Core Team also has an ongoing guardianship role to make sure that the substantial, but finite, reserve funds are used most effectively. The Core Team can also perform due diligence research and otherwise verify details that the community may not be able to. This guardianship is especially important during market downturns such as this one.

The NEM Foundation proposal passed its community approval on 20 February 2019. Since then the Foundation has been working with the Core Team to verify capabilities and incorporate feedback. Based on this review we believe much of the proposal has a good chance of success and 25 million XEM were released as the first installment of funding for the NEM Foundation, with later installments pending.

The NEM Labs proposal also passed its community approval on 20 February 2019. However, based on further review and discussions with the NEM Labs team, we have decided that the NEM Labs funding will not be approved.

We value the talent and contributions of the NEM Labs team members, and we hope they continue in their contributions. Although we found value in some of the projects enumerated in the NEM Labs plan, the NEM labs team was unable to convince the majority of the Core Team that:

There is a compelling justification as to why the NEM Labs team needs to be a completely separate organization as opposed to carrying out its planned activities in partnership with or as part of the NEM Foundation. There is a big enough effort at reducing the redundancies and expenses between the two organizations, as requested by many community members and us. There is enough incremental value added by NEM Labs given the existence of the NEM Foundation to warrant funding another organization. That funding the NEM Labs team will accelerate the launch of the catapult public chain. (Nearly all of the NEM Labs resources allocated to launching the catapult public chain can and will be funded by the NEM Foundation. Although certain biz-dev activities will likely be delayed, we don’t view them as critical pre-launch.) There is enough detail about how the NEM Labs team plans to achieve their goals (e.g. which resources will be allocated to which projects).

We recommend that the NEM Labs team rework their proposal and submit it under the NEM Foundation Service Provider (contractor) program. The Core Team encourages affected NEM Labs employees to apply for positions within the NEM Foundation in order to continue their contributions on growing the NEM ecosystem.

We want to say thank you to the community for your patience and understanding while we have been working through these issues. We take these decisions seriously and hope you can see how important this work is in setting up NEM for success in the future.

While we strive to be strong custodians of NEM’s resources, we still see great opportunity for community-driven projects and organizations. We are committed to growing and supporting the broader NEM ecosystem. We will work to ensure there are multiple options and pathways to success for every good project.

One of the most important pathways is the Project Management Committee. Anyone who wants to create a NEM project can submit to this committee, which will help the project find its place in the ecosystem and engage with the community. You can find out more about the PMC here https://github.com/nemtech/community