So there has been a lot of discussion as to the allocation of funds in the chat rooms and I thought to clear up the clutter in can be centrally discussed here?
My personal opinion is that the community funds should not be paid back but if a project is successful they should give a percentage of the profits back into the fund to help fund other projects.
What are your thoughts?
Hi Peter.
Would this profit share they give back continue forever? My suggestion is that a profit share is paid back into the community fund and when the amount paid out is equal to that of the initial loan then the profit share stops being paid.
This is a great deal for these private companies, and we as a community have them building on the platform and have a sustainable community fund.
I’m not sure if many companies would want to pay back profits forever.
I agree. A no interest loan if project is successful and if unsuccessful then loan does not need to be paid back. Its really not much different from now except for the fact that you would refill the fund for future projects.
It’s been a touchy subject to say the least.
I feel that having the funds repaid would allow us as a community to fund more future projects. Whether the company pays the fund back with or without interest really depends on how much said company’s project has improved the NEM community.
I personally feel if a project is so successful it propels forward financially and as a community, we will all be better off and have the project to thank. I feel that taking interest would be unfair.
My question would be though, if the community gives 10 million XEM to fund a project, does the project return the 10 million XEM? Or does it return the fiat value they had originally borrowed?
Say for instance, Project X receives 1M XEM from the community fund then Project X proves to be successful and the price of XEM increases from, say $2.50 USD to $7.50 USD, does Project X return the 1M XEM, or only 333k XEM?
Am I getting ahead of myself here? Haha!
Realistically, in short. I feel the funds should be paid back to fund future projects, otherwise we could see the fund run dry.
@Peter_Uliano you say that the community funds shouldn’t be paid back, unless a project is successful, would you kindly elaborate on your reasoning as to why please?
Hey Corybee. You’re not getting ahead of yourself, we have had similar discussions in the Telegram group.
Most people seem to agree it makes sense to pay back the dollar value of the XEM at the time the loan was processed, if they borrowed 10million XEM when 1 XEM was worth $1 they pay back 5million XEM if the price rises to $2 for example.
Regarding not paying back the loan if the project is unsuccessful.
If a company fails to become profitable I’m not sure how they would pay the loan back. If they had the money to pay back the loan I would imagine they wouldn’t need the loan in the first place.
However if we don’t require private companies to repay the community fund loans then they may actually start applying for funding when they already have the available money themselves. Why risk theirs when they could risk someone elses?
Even if they only pay back the loan with no interest it may still be beneficial to get a risk free loan from the NEM community fund.
I agree with this concept a hundred percent.
Hello,
Sustainability of the fund is absolutely a concern, and we are trying to solve this issue among others with the Nem Ventures proposal. You can see more details on this here: https://forum.nem.io/t/nem-ventures-incorporation-proposal