Galactica’s Academy Of Science and Governance of Ecosystem Funding

Jul 21, 2023

Introduction

The following document is intended to offer the first glimpse of Galactica Network’s governance system in the context of funding R&D within the ecosystem, the design of its public goods funding process, public venture funding as well as grants and other developer incentives. Having a good overview of the funding landscape of the Galactica Network is of utmost importance, as it simultaneously drives developer adoption and the value generation process for Citizens through gUBI. A Cypher State, just like a nation state, is defined by (among other things) its political process that sets the rules for wealth distribution across its subjects (i.e. Citizens).

The Cypher State is a socioeconomic system of virtually infinite flexibility and as such offers a much wider innovation design space and more elaborate governance primitives. Given the sheer magnitude of value flows channeled through the Galactica ecosystem funding process, we have approached its design with attention to the game theory aspects of political processes and what follows is a description of a system unprecedented in its depth and scope within the wider web3 landscape. Likewise, it is a good exercise to showcase what DeSoc-rich protocols are capable of.

Let’s start with the basics: Galactica Network token’s inflation distribution is decided by the Parliament that is in turn elected by all Citizens. More about the governance framework design can be found in the research section on the website.
Within the Galactica Network, inflation is used as a conduit for system-wide value generation and distribution. The principle behind this system design is simple: if value created by inflation funding outweighs the dilution it produces, Citizens will generally be better off. One of the flows for ecosystem inflation is directed towards the projects that apply to work on topics proposed by the Academy of Science (henceforth AoS). AoS is an entity within Galactica Network that is tasked with fostering innovation through facilitating the funding of public goods and research (research frequently is a public good in itself, however, can enable fortunes worth of private goods if successful — think nuclear fusion research in 1980s/90s).
The process of allocating inflation to select research topics and teams working on them is called QSD that stands for Quadratic Sovereign Diversification. It is Sovereign because it works to benefit Citizens of Galactica Network, the Cypher State, it is Diversification because it diversifies the Cypher Capital of Galactica Network and it’s Quadratic because this is ultimately how it is distributed among Citizens. QSD is expected to be among the most potent sources of funding within the Galactica Ecosystem.
Given the sheer magnitude of value flows the QSD procedure entails, it is designed to be democratic in nature with checks and balances. In this vein, while the AoS can propose topics, it’s up for the popular vote (by all Citizens) mixed with some voting power allocated to AoS members to decide upon the funding priority. The Parliament decides upon the voting power distribution between the Citizens and the AoS council.
Once votes are cast and funding priority is determined, eligible teams will receive (split between each other) three months of inflation rewards in freshly minted $GNET coins — in other words a very meaningful amount, far exceeding that of an average foundation grant. Due to the sheer size of the value flows emanating from voting on QSD, the approach taken with regard to due diligence and the handling of token inflation is critical, and there are four stand alone entities tasked primarily with overseeing this process:

I. The Auditing Commission is an entity tasked with performing due diligence on the projects that apply for funding. This entity can also veto funding decisions and blacklist projects;

II. The Galactica Foundation is an entity that can be applied to for funding; circumventing The Auditing Commission, however, its mandate is much more limited and so are the amounts of $GNET it can allocate to teams. The format of the funding process is RFP (Request for Proposal). However, getting a grant at the Foundation can have positive PR effects. The Foundation can also whitelist teams directly into the AoS voting process.

III. The Sovereign is a network-wide sovereign fund tasked with investing and administering the funds flows.

IV. The Excelsior is a stand alone council composed of members of the Auditing Commission, AoS and the Foundation that votes on team composition for every topic and some other aspects of the operations of the Sovereign.

Every entity described above (apart from the Parliament and the High Council) is either governed by a decentralized council or the decision making process is highly centralized. The Parliament can exclude members of councils and also deny funding by administering the inflation distribution. If the Parliament cannot reach consensus, there will be a Citizen referendum (i.e. popular vote). If the Parliament fails to perform as expected, Citizens can cast a Vote of No Confidence and overthrow the sitting Parliament.

6. The basic principles of the Ecosystem Funding process have now been explained, and before we do a deep dive into each of the entities taking part in the process, we would like to note the core goals a system this elaborate was designed to achieve. As we have mentioned in the Cypher Capital paper, the core premise of the Cypher State is to:

a) replace taxes with inflation (as they are the same thing after all: i.e. explicit/implicit dilution of the existing capital base),

b) explicitly integrate public goods funding process into the inflation distribution process,

c) internalize the value of innovation achieved through public goods funding process across the Citizens through meritocratically distributed UBI, and

d) make the parameters of such a system subject to direct diplomatic vote by the Citizens.

7. Optimizing decision making efficiency and decentralization ultimately converges to the creation of small Councils composed of few (or few hundred) members, as:

a) Frequent system-wide voting procedures can be cumbersome for end-users, and

b) There is higher efficacy of expert councils due to the expertise and reputation they bring to the table (as long as their work is thoroughly documented, accounted for and incentives are set right).

With this in mind, some of the entities listed above will be run by a council with rules of new member admission, voting, economic incentives and member exclusion. Parliament, High Council and the CIG are the entities comprising the Government of the Galactica Network. The Parliament defines the budget for all the entities and can itself be removed through a popular vote. If consensus can not be reached by the two chambers comprising the parliament, subject matter is given to a popular vote. It is a system perfectly balanced in terms of decision making efficiency and power decentralization.

8. Finally, it’s important to note that apart from QSD, there are other ways of getting funding within Galactica Network, including but not limited to direct investments from the Sovereign and grants from the Foundation. The bulk of this paper is concerned with the QSD.

Entities

In this section of the article, we will delve deeper into the specific entities comprising the Ecosystem Funding process as well as the process itself. These entities, which include both decentralized councils and more centralized bodies, work together to ensure the efficient distribution of funding for research and development, public goods, and other development incentives on Galactica Network.

By understanding the functions and responsibilities of each entity, we can better appreciate the intricate mechanics underlying the Galactica Network and understand the power interplay and ‘checks and balances’ that have been explicitly incorporated into the governance process.

These entities include:

Academy of Sciences (Governed by a Council)
The Sovereign (Governed by a Council)
The Auditing Commision (Centralized, to become Council)
Galactica Foundation (Centralized)
The Excelsior (Governed by a Composite Council)

Galactica Network Ecosystem Funding Process

Academy of Sciences (Governed by a Council)

A large portion of Galactica Network inflation goes towards funding of public goods through the QSD process. Public goods are broken down into categories (or topics), and the Academy of Sciences is the body responsible for offering lists of such topics which are thereafter voted on by the Citizens and members of AoS itself. The relative voting power of Citizens vs AoS members is defined by the Parliament.

The members of the AoS form the AoS Council. Its members gather Reputation through actions like attending meetings, voting, and creating proposals. The AoS contributes to the evaluation of project proposals and plays a crucial role in the overall funding process.

The AoS is funded by the Parliament. The admission to AoS is a by-reference and thereafter by-vote process that is elaborate upon below.

The Sovereign (Governed by a Council)

The Sovereign is an entity responsible for allocation of investable capital for present/future R&D areas and projects it finds otherwise attractive and also of administration of the financial administrative part of QSD. The Sovereign is funded via an initial allocation of the total $GNET supply, in addition to the inflation redirected to it through the Parliament vote. The Sovereign is akin to sovereign funds of traditional nation states, such as Norway, Japan and Dubai. The core idea behind it is likewise similar — to diversify the Cypher Capital of Galactica Network in the interest of its Citizens. The Sovereign’s mandate implies three types of investments:

a) Projects from AoS voting process described above — here Sovereign performs mainly an administrative function,

b) Follow up investments into the aforementioned projects — here the assumption is that there is a clear commercial use for the technology developed as a result of the public funding process,

c) Other unrelated projects — here the scope is as broad as the Parliament/Excelsior set it up to be.

Sovereign is governed by a Council that consists of people from other entities and it’s autonomous.

The mandate of the Sovereign is closely intertwined with that of the Auditing Commission: the latter works closely with the teams funded by the former to establish KPI-based payout schedule and has authority to blacklist teams applying for QSD and abort their vesting.

For unrelated projects, Excelsior approves the shortlist in close collaboration with the Sovereign, the Parliament and the Academy of Science. Sovereign cannot invest outside of this ‘whitelist’ unless consent to by Excelsior. Excelsior is able to blacklist a certain number (to be defined) of projects from the shortlist before the investment and Excelsior is also able to ask the Parliament to veto the projects from the shortlist. After the initial investment, the Auditing Commission is able to blacklist projects and Parliament can revert this decision.

The Auditing Commission (centralized at inception)

The Auditing Commision plays a pivotal role in the AoS funding process. It evaluates project proposals, acts as a body hardwired into the ecosystem-wide ongoing due diligence effort by providing opinions about the project teams, and has the power to blacklist them from participating in the AoS voting process. Only the Parliament can overrule such a blacklist.

The Auditing Commission is also involved in agreeing upon KPIs with teams seeking funding and can halt the payouts of vested funding streams at its own discretion.

While initially a centralized entity, the Auditing Commission will evolve into a fully decentralized Council.

Galactica Foundation (centralized)

The Galactica Foundation is another centralized entity within the Galactica Network that has a wide range of governance and business activities that will be elaborated upon elsewhere, however in the context of the ecosystem funding, it may provide small grants independently to individual projects. Furthermore The Foundation can whitelist projects and by doing so will enable them to pass through the Excelsior’s initial voting process.

The Excelsior (Council)

The Excelsior is a decentralized entity that takes the form of a Council that is composed of members from The Academy of Sciences, Parliament and The Auditing Commision. Its purpose is to determine which projects proceed to the first and second round of QSD (description of QSD rounds can be found below).

QSD Rounds

We now turn our attention to the distinct funding rounds that exist within the QSD. These two rounds are designed to ensure a fair and thorough evaluation of project proposals while maintaining transparency and accountability all throughout the process.

After examining the steps and key players involved in each round, we will gain a deeper understanding of the checks and balances in place to promote efficiency, innovation, and responsible use of resources within the Galactica Network ecosystem.

Round 1

All possible topics subject to funding are determined by the AoS, while $GNET is made available from inflation over time.
Projects apply.
Citizens vote with their distribution (and power) and so does the AoS. The AoS funding is split according to the topics.

a) The AoS proposes its voting weight [ 0 . 1 ] for a predetermined period and provides sound reasoning for its voting behavior;

b) The Parliament votes what the AoS’s voting weight () is going to be, and for the period for which it applies;

c) Total distribution of funding is calculated as:*DistributionAoS + (1-)*DistributionCitizens

4. The Excelsior is assembled.

a) The Excelsior (which will eventually become a Council) is composed of:

i. 2 members from The AoS per each topic:

Number sent is MAX{Number Of Topics*2, K}

where K is a parameter dependent on the size and structure of the AoS. Not more than 50% of the AoS representatives can be from the same department (if the AoS does not have a specified Topic);

ii. 2 members from The Parliament;

iii. 2 members from the Auditing Commision;

iv. Members inside Excelsior receive also a salary in Galactica network tokens for their involvement in the funding process.

5. Excelsior votes for funding of Projects that possess potential and are proceeding further in the funding process

a) The Auditing Commision creates an official document with comments and opinions about the Project Teams.

b) The AoS members draft a funding proposal and determine Teams for each Topic.

c) The Parliament oversees the process and prevents AoS collusion and also possible Auditing Commission’s intentional veto blockade.

d) The Auditing Commission’s representatives can veto teams (permanently).

e) Council votes on the proposal, and if no consensus is reached, after several rounds the proposal is moved to the Parliament.

f) If consensus is reached, the voting proceeds to the final round.

g) Parliament representatives give a report to the Parliament about potential collusion or malicious behavior.

i. If no malicious behavior was found the proposal is final and the Teams are determined;

ii. If malicious behavior is suspected the process is frozen, and Parliament must create an investigation and act accordingly. In this case it is within Parliament’s power to move funding voting to the Parliament and dismiss bad actors or entire entities themselves (must be voted for by the Parliament).

6. KPIs are set for each project in discussion between the team and The Auditing Commision.

7. Admitted projects are funded equally from the corresponding topic pools.

Round 2

After assessing the KPIs, the Auditing Commission provides a report to the Sovereign and the Excelsior.
The Excelsior votes in a quadratic manner to distribute the funds across different topics (1 person = 1 vote).
Same procedure is followed across projects within every topic.
The Sovereign & The Auditing Commission hold discussions with every project regarding project-specific, KPI-vested, funding:

a) A percent of IP royalties are bound by a contract between the project and The Sovereign and are in The Sovereign’s possession;

b) KPI-vested schedule for each project tokens is determined and finalized by The Sovereign;

5. Project tokens are deposited in the UBI pool.

6. The Parliament assesses The Sovereign’s performance and determines if they have met their KPIs in order to release more Galactica network tokens for further funding.

Overview

Appendix I — Council Definition

Has N members (to be defined);
Voting Power = 1 person 1 vote;
Every vote is up to council vote;
Minimum attendance is set to >50%+1 member;
Successful vote is set to >50%+1 vote;
All of them have an equal vote, however, they vote in a quadratic manner with an equal number of points. Let us assume each has 100 points, they split this in a quadratic manner across different proposals.
Mandate duration of X months (to be defined);
The following conditions must be met before someone can be voted-out of a Council:

a) Full attendance;

b) >⅔ of the votes are “for”;

c) The person in question is unable to cast a vote.

9. New members can be added in the following ways:

a) Via referrals:

i. After a member has R (of the Council at hand) referrals (to be defined) in their possession, he/she is eligible for admission (by vote) to the Council;

ii. Attendance of >⅔ (voters which referred the candidate are excluded);

iii. >⅔ of the votes are “for” (voters which referred candidate excluded).

b) Through an application:

i. Handled by the Foundation;

ii. Requirements:

a) Had a mandate in the Governance (Parliament or High Council);

b) Had a mandate in the AoS.

10. Council members earn Reputation by (among other things) attending, voting and creating proposals.

11. Not participating decreases council member’s Reputation, after a certain time of misbehaving they can be (automatically) Voted-out since their performance is public. Publicly Verifiable Secret Sharing proves the possibility of implementing a vote in advance that will be revealed when the vote comes.

12. They are economically incentivized through UBI, that is directly correlated with the amount of Reputation they have. They also receive a fixed salary in Galactica network tokens.

Appendix II — Consensus Definition

AoS votes in a 1 person 1 vote manner (with X points each).
Auditing Commission representatives in discussion with the Parliament representatives specify the number (to be defined) of projects that are allowed to pass.
Top N projects (to be defined) are automatically picked (if some are equal it is up to the AoS representatives internal vote to decide (if the vote ends in a 50/50 split the proposal is dismissed)).
The AoS picks necessary projects, thunless consent to by Excelsior. Excelsior is able to blacklist certain number (to be defined) of projects from the shortlist before the investment and Excelsior is also able to ask the Parliament to veto the projects from the shortlist. After the initial investment, the Auditing Commission is able to blacklist projects and Parliament can revert this decision.e ones that the Auditing Commision should not veto in their opinion.
Auditing Commission vetoes:

a) If no contradiction has arisen the vote is final;

b) If contradiction has arisen whole council votes (with ⅓ VP from each entity, then rescaled to VP of a single user);

c) If a stalemate has arisen the option with more Auditing Commission’s VP delegated is chosen;

d) If it is still a stalemate the same rule applies for Parliament members;

e) If it is still a stalemate that would mean that AoS members are perfectly distributed also and the decision is moved to The Parliamen.

Share Galactica’s Substack