Hi everyone! Glad to see so much activity again on r/ethereum!! Wanted to give everyone an update on Octant and where we are heading in 2025.

If you're unaware of Octant, its a project built by Golem Foundation, that facilitates sustainable, community-coordinated impact funding at scale. We’ve demonstrated the power of sustainable funding of impactful projects by staking 100,000 ETH (~$350 as of today) and using much of the yield to fund broad based public goods in the Ethereum ecosystem.

Over the past year, we’ve distributed millions of dollars to hundreds of open-source and impactful projects builders, supporting important projects such as Protocol Guild, Tor Browser, Funding the Commons, L2BEAT, BuidlGuidl, and many others.

Now we are ready to scale this far beyond our own means, to give Ethereum a massive competitive advantage.

TLDR: We are designing a system where ecosystems with a token AND sustainable value flows, or treasuries that can be deployed into yield bearing strategies can plug this tool into their community, and fund impactful ventures for ecosystem growth. Collectively each participating ecosystem will contribute a small portion of value flow to fund Ethereum wide public goods. The long version of this is explained below.

Octant Protocol (aka Octant v2)

The Octant Protocol is a next iteration of Octant project.

It is a capital-efficient mechanism that captures yield from revenue-generating strategies and other value streams. It then routes this capital to allocation mechanisms for distribution in alignment with community preferences.

User Personas & Key Terms

Dragons are Web3 projects or decentralized communities with substantial treasuries and/or native ERC-20 tokens. Regens (existing Dragon community members) are tech-savvy, values-driven individuals who are deeply engaged in the blockchain ecosystem. Degens are financially driven individuals who are highly engaged in the blockchain ecosystem. Dragon Vault – a DeFi Vault that allows Dragons to deploy their capital and point the yield to the protocol Dragon Pool – is a pool that receives a stream to fund the community ecosystem goods or other initiatives related to the Dragon community Pool Dragon Token – an ERC20 token of the Dragon community Regen (Community Members) Vault – is a DeFi Vault that allows Regens/Community Members stake the community token, receive rewards from the Dragons and use them to fund public and community goods Sustainability Pool – is a pool that every Dragon contributes to. You can think about it as a Sovereign Wealth Fund of Ethereum.

Octant V2 High-Level Design

https://preview.redd.it/rft0r98ppmae1.png?width=1370&format=png&auto=webp&s=f25ca45d46c9dd4575da5f56a1580e541d5076d2

The diagram above illustrates the workflow of a Dragon engaging with the system. The protocol allows multiple Dragons to join and deposit capital into their own Dragon Vaults, while all Dragons contribute a percentage of their yield to the Sustainability Pool.

You can think about the Sustainability Pool as a Sovereign Wealth Fund that is used to fund public goods and impactful projects.

The Dragon Vault deploys that capital into yield-generating strategies. These strategies may include ETH staking protocols, DeFi protocols, etc. The Vault then divides the funding stream between the Dragon Pool, Sustainability Pool, Regen Vault, and other pools/vaults the Dragon wants to utilize.

For instance, if Golem Foundation (GF) joins the protocol as a Dragon, it deposits its capital into the Dragon Vault. GF's main sustainable funding stream is solo-staking of 100K ETH on its own infrastructure. The staking rewards or other forms of yield are divided in the following way:

15% is deposited into the Sustainability Pool to support public goods that benefit everyone 35% forms Matched Funding and is deposited in the Dragon Pool, enabling the community to create funding rounds 25% goes into the Regen Vault to reward the community Another 25% is claimed by GF to cover the operational costs of running solo-staking infrastructure

The Dragon community creates funding rounds from the continuously flowing funds into the Dragon Pool. Regens (community members) then vote with the accumulated tokens using an allocation method, and these votes determine how the funds are distributed.

It's worth noting that this model may include a mechanism that swaps the yield into the Dragon Token. This creates buy pressure for the token and then rewards both regens and projects with it.

Alignment Token (Basket) & Sustainability Pool

https://preview.redd.it/jntbx9yqpmae1.png?width=1925&format=png&auto=webp&s=2ee930af6651e7af4b9940020a58ed1c2ecbc39b

The cornerstone of the Sustainability Pool design is the basket (alignment token). This token encapsulates ETH and all the Dragon Tokens, which are continuously converted and deposited into its contract, minting a single token (e.g., OCT) into the pool. Recipients of funding from that pool receive the basket tokens, which they can then sell on the market to finance their development efforts.

Users of the Regen Vault can continuously withdraw and/or vote with their attributed rewards in the rounds (or donate to continuous streams) created from the Dragon Pool or Sustainability Pool.

Impact Bonds

https://preview.redd.it/891ra8vrpmae1.png?width=1259&format=png&auto=webp&s=622e4427f555db33836d69945657de53a0f6a42e

When users vote for projects, they receive impact bonds for each project they support. The system automatically mints the bonds and distributes them to the funders. The projects themselves don't receive any bonds. This mechanism rewards users who participate in voting.

After a set period, the Sustainability Pool buys back the impact bonds of certain projects, effectively signaling which projects were most impactful. The Pool allocates a certain percentage of OCT tokens (for example, 10%) to buy back the bonds. The Dragons make the decisions of which projects have their bonds purchased, potentially informed by Impact Evaluators. This approach guarantees future purchase of the bonds. In essence, this functions as an impact prediction market, assuming the buybacks are based on proper impact evaluations.

Summary

https://preview.redd.it/5n4goouspmae1.png?width=1452&format=png&auto=webp&s=a793594af98640b74d5ec1ebed8296c859ce4cb3

The image above illustrates Octant's flywheel, which brings together diverse ecosystem participants and creates incentives for collaboration. Our goal is to align ecosystem players with varying motivations, fostering cooperation to achieve a balance between individual rewards and funding for impactful projects.

Please ask any questions you may have! We have our next public goods funding round beginning January 11th. To learn more about Octant, join our discord: https://discord.com/invite/octant