Photo by Maaria Lohiya on Unsplash

Funding donations through a curved bond allows the creation of a network effect around the funding of similar donations. These donations in the form of bounties, grants or patronage can generate residual network value if it’s funded through the usage of a curved bond.

It allows additional value creation across similar projects without the requirement that any of the projects generate a return. It also allows donators to earn from the value generated in the network.

Another way to classify it is: “venture bonding”. In order to understand this, you should understand curved bonding.

How It Works

This style of funding works through a funder staking their funds into a pool with a curved bond and then donating the new tokens (some or all of it) generated from it to the recipients. Upon receiving the minted tokens, the recipient can choose to immediately sell their tokens into the funded pool and get back exactly the expected value at the time of disbursement.

However, they have the option to keep a portion of the minted tokens if there’s a belief that future donations will be made in a similar way: either through a primary funder or donators to the fund itself. The value of the minted tokens would thus increase in value as more donations are made in this way.

On the other side, if they keep their tokens and the donations used in the pool diminishes, the value of their tokens decreases. However, due to price discrimination, it might not be an issue for the people holding the tokens. Holders will sell their tokens based on their immediate need for the underlying, more liquid, staked token.

A donator to the cause can also fund the pool if they believe that the work being done is meaningful. In doing so, it increases the value of all outstanding minted tokens. And such, it’s essentially a networked donation, rather than a donation towards a specific person or team.

As the network effect grows, it could also shrink. This happens when the network deems that additional donations isn’t needed or necessary anymore. In this scenario, like with all curved bonding implementations, it eventually dissolves by itself as all minted tokens gets sold back into the staked tokens.

Since donations occur regularly in the world, the additional value networked donations provides through curved bonding is that optionally generates a network effect through providing the option to defer the claim on the underlying staked assets. By adding these incentives, we might see a world with increased patronage, bounties & donations come to exist.

Variations could include the possibility that the new tokens generated can only be disbursed by specific, verified identities through an Arcade Bazaar model.

Example #1: From Traditional Bounties to Networked Bounties

Bounties are a popular form of incentivizing a community to help develop open source work. Bounties.Network & Gitcoin are examples of this used in the open source community. Currently, a portion is allotted for the work involved (say 0.1 ETH for translation work). Upon completion, it’s disbursed to the person who completed this bounty.

Instead of doing it directly, the bounty funder instead stakes the 0.1 ETH in a curve bonded deposit pool. In doing so it generates, say 100 BountyTokens. Upon completion of the work, the person owed the reward gets the 100 BounyTokens.

This person can then choose to immediately sell their BountyTokens to get back the underlying 0.1 ETH. However, if the collective work being done is meaningful, future bounties can be doled out in a similar way and thus it might be meaningful to hold onto the BountyTokens instead.

A person, a donator can come and buy some BountyTokens, collectively raising the value of all outstanding BountyTokens. They might believe in the cause, but not necessarily be capable of evaluating work necessary to complete the work. Thus, the donation becomes a networked donation.

Over time as work is being done, the value will fluctuate accordingly & the pool will grow & shrink as various, interested parties funds the pool for work being done.

Example #2: Record Labels 2.0. Patronage 2.0.

Patronage is rising as a way to fund many creatives. Patreon is a good example of this. Networked patronage is meaningful if the collective work being done shares a similar goal. This is ideal for something like a record label where it aims to fund & release similar works. Instead of just giving grants to artists to make interesting music, the collective can generate additional value amongst themselves.

Through this patronage, this new kind of record label doesn’t necessarily have to generate returns from licensing, but can generate network effects around its community.

Collectibles in Networked Donations:

This probably warrants a blog post by itself, but proof-of-donation is very valuable. Patronage often involves the need for the patron to be recognised for their contributions.

A simple way to achieve this in this context is that whenever tokens are sold back to claim the underlying staked token, an ERC721 collectible is minted as proof that the person once held tokens. Proof-of-patronage.

Second Order Benefits:

As is always the case with curved bonding, the tokens represent a shared idea/goal or community. These minted tokens can always be used in additional functionality within that community, like being used in a token-curated registry or curation. It depends on the use case.

Conclusion:

We can accelerate donations, grants, bounties & patronage the usage of curved bonding to generate network effects on funding. Those who wish to participate can generate additional value for the whole network of donations. Since it involves patronage, all the money donated would’ve been expected to not be received back anyway, and thus it offers additional value by adding the option to claim it different stages. Donation networks will dissolve naturally if it’s not necessary anymore.