# Speculation grants x hypercerts ## V1: Current speculation grants process w/ hypercerts ```sequence participant grantee participant speculation grantor participant SFF Note left of grantee: Step 1 grantee->speculation grantor: application speculation grantor->SFF: approved application SFF->grantee: speculation_grant Note over SFF: mints hypercert_grantmaking SFF->speculation grantor: hypercert_grantmaking Note left of grantee: Step 2 SFF->grantee: G - speculation_grant Note left of grantee: Step 3 SFF->speculation grantor: settlement_value speculation grantor->SFF: hypercert_grantmaking ``` **Step 1:** SFF award hypercert to speculation grantor covering their grantmaking decision (*hypercert_grantmaking*). Grantee is not a party to the transaction, nor a contributor in the contributor axis, but their name appears in the scope-of-impact axis **Step 2:** SFF later assesses the grant, in the S-Process, and pays full grant, minus speculation grant already paid **Step 3:** SFF runs the S-process simulator in "evaluation mode" and offers to repurchase the hypercert from the grantor’s personal “fund” within SFF at a price computed from that assessment ## V2: Tracking contribution of funding ```sequence participant grantee participant speculation grantor participant SFF Note left of grantee: Step 1 grantee->speculation grantor: application speculation grantor->SFF: approved application Note over grantee: mints hypercert_funding SFF->grantee: speculation_grant grantee->SFF: x% of hypercert_funding SFF->speculation grantor: x% of hypercert_funding Note left of grantee: Step 2 SFF->grantee: G - speculation_grant grantee->SFF: y% of hypercert_funding Note left of grantee: Step 3 SFF->speculation grantor: settlement_value speculation grantor->SFF: x% of hypercert_funding ``` **Step 1:** Grantee issues fractional hypercert to SFF in acknowledgment of the funding received in the speculation grant (*hypercert_funding*), and SFF delegates/transfers this to the speculation grantor. **Step 2:** When the S-Process awards further funding to this grantee, the grantee issues (proportionally?) “more” of that hypercert to SFF. **Step 3:** SFF offers to buy back the hypercert resulting from the speculation grant from the speculation grantor’s fund Questions and notes: * How do we determine x and y? * x + y = 1? If not the grantee could sell 1 - x - y of the hypercer_funding to other funders. * Alternatively, we could have two different hypercerts that each time are fully sold. They could be merged later on. * Could the speculation grantor sell less than x% to SFF, if she wants to keep some of the hypercert? ## V3: Tracking contribution of funding and grantmaking ```sequence participant grantee participant speculation grantor participant SFF Note left of grantee: Step 1 grantee->speculation grantor: application speculation grantor->SFF: approved application Note over grantee: mints hypercert_funding SFF->grantee: speculation_grant grantee->SFF: x% of hypercert_funding Note left of grantee: Step 2 Note over speculation grantor: mints hypercert_grantmaking Note left of grantee: Step 3 SFF->grantee: G - speculation_grant grantee->SFF: y% of hypercert_funding Note left of grantee: Step 4 SFF->speculation grantor: settlement_value speculation grantor->SFF: hypercert_grantmaking Note over SFF: merge hypercerts ``` **Step 1:** Grantee mints a fractional hypercert to SFF in acknowledgment of the funding received in the speculation grant. This would list the grantee(s) as both contributor and in the scope-of-impact (or possibly just naming their project in scope-of-work). **Step 2 (could be part of step 1):** Speculation grantor mints a hypercert which copies all of the details from the grantee’s hypercert but substitutes them as the contributor and adds “grantmaking decision” to the scope-of-work conjunction. **Step 3:** SFF assesses the grant, in the S-Process, and pays full grant, minus speculation grant already paid. SFF receives additional y% of the hypercert_funding. **Step 4:** SFF offers to buy the “grantmaking decision” certificate from the speculation grantor, as in V2, but now instead of combining fractionally, the two distinct hypercerts combine on the contributor axis and the scope-of-work axis into a certificate that includes both the research and the grantmaking decision. ## Alternative version ```sequence participant grantee participant speculation grantor participant SFF Note left of grantee: Step 1 grantee->speculation grantor: application speculation grantor->SFF: approved application grantee->speculation grantor: z% of hypercert_grantee SFF->grantee: speculation_grant grantee->SFF: x% of hypercert_grantee Note left of grantee: Step 2 SFF->grantee: G - speculation_grant grantee->SFF: y% of hypercert_grantee Note left of grantee: Step 3 SFF->speculation grantor: settlement_value speculation grantor->SFF: z% of hypercert_grantee ``` **Step 1:** Grantee mints a fractional hypercert to the speculation grantor in acknowledgment of the grantmaking (z%) as well as to SFF in acknowledgment of the funding (z%). The hypercert_grantee represents the impact the grantee's work had or will have. **Step 2:** SFF assesses the grant, in the S-Process, and pays full grant, minus speculation grant already paid. SFF receives additional y% of the hypercert_grantee. **Step 3:** SFF offers to buy z% of hypercert_grantee from the speculation grantor Pros * There is only one type of hypercert --> simpler * Logic: Funding and grantmaking are only valuable as they enable the impact of the grantee. Cons * The payment in step 2 "G - speculation_grant" for y% of hypercert_grantee and the payment in step 3 "settlement_value" for z% of hypercert_grantee won't be proportional to each other. Logically they should if they really only represent a fungible fraction of the hypercert. * The work of grantmaking isn't explicitly accounted for. ## Generalized speculation grants ```sequence participant grantee participant speculation grantor participant fund Note left of grantee: Step 1 Note over fund: commits to settlement process Note left of grantee: Step 2 Note over grantee: mints hypercert_1 speculation grantor-->grantee: initial_funding grantee->speculation grantor: hypercert_1 Note left of grantee: Step 3 fund-->speculation grantor: settlement_value speculation grantor->fund: hypercert_1 Note left of grantee: Step 4 Note over grantee: mints hypercert_2 fund-->grantee: additional_funding grantee->fund: hypercert_2 Note over fund: merges hypercerts ``` **Step 1:** The fund commits to a settlement process to create reliable expectations for speculation grantors. **Step 2:** A grantee mints a first hypercert and sells it to a speculation grantor to receive initial funding. **Step 3:** At the next evaluation round the fund offers to buy this first hypercert for a settlement value from the speculation grantor. The settlement value depends on the value created by the grantee. **Step 4:** At the same evaluation round the fund can offer additional funding to the grantee, who would mint a second hypercert and sell it to the fund. The fund can merge the two hypercerts.