The current total budget of the Service Provider program is 4.5 Million per year, and of that, 1.5 million/y is for the two year stream. I have been asked by a candidate what happens if there’s a remainder in the 2y budget that isn’t used which could be used to fund more projects on the 1y budget. It’s a good question which hasn’t been covered before and after some deliberation with the metagov group I’d like to share my interpretation. There are three interpretations of the rule:
- Since there’s no explicit mention of that, any unused budget for the 2y stream should remain unused.
To clarify, the DAO never moves the full budget, rather it sets a total allowance and then slowly wraps USDC into SuperUSDC which is used for the stream. This is a conservative approach, but considering the real amounts being asked, it can be quite possible that there would be 300-500k USDC remaining in the 2y stream and that could accommodate at least one more project funded for a whole year.
- Since the DAO voted a budget, the algorithm should do it’s best to allocate the total budget, so any unused funds in a bucket should be used for the other streams.
This would mean adding a simple clause to the algorithm saying: as soon as there are no more eligible candidates for the 2y stream, then that money is transferred to the 1y stream budget.
There’s an edge case here, which could be exploited by one of the current service providers. If theoretically a current service provider made a very small ask, there’s a chance they might be selected to the 2y stream extended budget even if they were ranked very poorly, just because they matched the remaining budget. This doesn’t seem to be the case with the current proposals.
We could avoid that by adding explicit rules (like also requiring a 2y stream project to be in the top5 projects) but I wouldn’t feel comfortable doing it without a proper vote and it seems an unlikely edge case – unlike the very probable fact that there might be a substantial remainder in the 2y stream.
TLDR: We are adding the interpretation that since the DAO has set a total budget, then as soon as no one can qualify to the 2y stream the money reverts to the 1y stream. If money still remains on the 1y stream budget after that, these funds will remain unspent.