Community Development Fund Overview

The Community Development Fund is a crucial accelerator in realizing Reef’s vision, as it lays the foundation for the development of amazing dApps for users and fuels the drive towards making Web3 accessible to everyone.

What is the Community Development Fund?#

Community Development Fund is Reef’s new way to financially incentivise developers to build decentralized applications (dApps) on Reef Chain. By engaging in the Community Development Fund, developers can receive development and marketing funds to port existing dApps to Reef Chain, or build new dApps and market them to the Reef community. Moreover, it allows to build a strong relationship between developers, nominators, validators and users of dApps, where everyone is rewarded.

The Community Development Fund (CDF) on Reef operates similarly to staking on validators. However, individuals and other entities bond their tokens to the Community Development Fund validator, where 90% of the validation rewards go to an account controlled by a small cadre of core team members and community members. Eventually, this will open up to the top CDF nominators, allowing them to have a vote in how the funds are allocated.

In this way, at every block on the network, a portion of the inflation is allocated to the Community Development Fund. This reward is then distributed to the greatest needs of the day.

Benefits of the Community Development Fund on Reef#

For Web3 to flourish, there needs to be a symbiotic relationship between dApp developers and dApp users. On Reef, the CDF is the mechanism that enables this mutually beneficial relationship to occur.

• Developer Compensation: Unlike traditional approaches where dApp developers need to rely on grant programs, token issuance, and fundraising efforts to generate income, the Community Development Fund allows for funds to be dispersed in a highly targeted way. It’s easier to engage with full-time developers, project-based developers, or even issue requests for proposals to fulfill specific needs for Reef Chain.

• Increased Popularity, Increased Reward: As the CDF validator gains popularity and attracts more nominators from the community, we pull more circulating supply out of exchanges. As this occurs, the inflation rewards are worth more in USD terms, and therefore we can spend additional funds on designers, developers, and dApp usage incentives. This incentivizes developers to create high-quality dApps that resonate with users and foster community engagement.

Benefits for Nominators: Increase in Token Value & Earn Tokens#

Reef nominators want the value of their tokens to increase. But for the value of their tokens to increase, the underlying value of the asset needs to increase.

This increase in value can happen when the blockchain grows or when there are fewer tokens in circulation. This way, nominators can not only make their tokens more valuable over time but also earn high returns (APRs) by nominating validators and using the dApps built, leaving fewer tokens available.

This market dynamic enables Reef nominators and validators to get more long-term value from their tokens while earning high APRs from staking their tokens.

:::tip

Please refer to this section, or the tutorials for staking via Reef Console or Fearless Wallet, to learn more about participating as a Nominator.

:::

Benefits for Builders: Rewards and Additional Support#

For great dApps to be built, developers need to build them. For developers to build great dApps, they need financial incentives.

Ultimately, the most precious human resource in the Web3 ecosystem are developers. Before the Community Development Fund, there were little to no financial incentives for developers to make dApps or to build infrastructure on Reef chain besides the potential to gain more users.

With the Community Development Fund, developers can earn incentives while building dApps on Reef. Having financial incentives entices more developers to build and improve their dApps. The more developers build on our ecosystem, the greater the benefits for the whole ecosystem.

That is why Reef considers it essential to provide developers with financial motivation and to ensure they are able to build and earn simultaneously, focusing on development without other worries coming to mind.

:::tip

Please refer to the Community Development Fund FAQ to learn more about participating as a dApp builder.

:::

Benefits for dApp Users: Increase in dApp & Network Utility#

The Community Development Fund is going to play an essential role in improving the quality of the Reef ecosystem as it facilitates the growth and improvement of dApps. This gives developers the opportunity to generate revenue while building high-quality dApps.

The presence of more high-quality dApps not only attracts and retains more users, but also initiates a network effect. This phenomenon encourages ecosystem expansion and increases the intrinsic value of the network in the long term.

In short, the importance of the Community Development Fund lies in its contribution to the ongoing improvement and greater utility of the Reef ecosystem. The addition of high-quality dApps, combined with a growing number of users, results in a network effect that increases the overall value of the Reef ecosystem in the long term.

Understand the terminology and parameters of the Community Development Fund#

To understand how the Community Development Fund, it’s essential to grasp the following basics:

Era#

Eras is a basic time unit in Community Development Fund. The length of an Era is 7200 blocks, equivalent to roughly 1 day.

Other Incentives#

As an user or a dApp owner, you need to take the following parameters into consideration before supporting the Community Development Fund.

For the first six month period of the Community Development Fund, we are incentivizing nominators to bond a significant amount of REEF to the CDF Validator in order to ensure it stays part of the active validator set, limited to 23 validators.

Reward Eligibility#

Example:

• If Participant A stakes 2 million Reef, they receive 1 ticket per day.
• If Participant B stakes 4 million Reef, they receive 3 tickets per day.
• If Participant C stakes 6 million Reef, they receive 5 tickets per day.

Daily Snapshot of Nominators:#

To ensure that participants consistently meet the requirements throughout the staking period, a daily snapshot of the nominators will be taken. This snapshot will verify that each nominator continues to stake the required amount of Reef on the node, ensuring that they maintain their eligibility in the contest.

Random Draw#

A random draw tool/method will be used to draw 3 winners from the pool of tickets. The more tickets a participant has in the pool, the higher their chances of winning, but each ticket has the same probability of being selected.

Rewards#

The rewards available for this initiative include:

• First place: an iPhone 16 or equivalent Android flagship smartphone; winner’s choice
• Second place: $500 of SOON tokens
• Third place: $250 of SOON tokens

For the full list of parameters, please check the Community Development Fund parameters page.

What should I do next#

The concept of the Community Development Fund is simple:

Users support the Reef ecosystem’s growth in the ecosystem by staking REEF tokens with the CDF validator, and the inflation rewards collected are used to fund additional developers to build dApps on Reef.

As a result, nominators are rewarded for their commitment and staking efforts, and additional funds flow directly to dApp builders, designers, and dApp usage incentives.

:::tip

• If you are REEF token holder interested in staking, refer to this section to learn more about participating as a staker.

• If you are a dApp developer building on Reef, refer to this section to learn more about participating as a dApp builder.

• For detailed technical overview of how staking works on Reef, visit this page.

• Check the FAQ section, especially covering topics around new version of Community Development Fund (V3) planned to go live on Reef in Q1 2024.