Grants are an important growth point in the world of cryptocurrencies. They contribute to both the growth of the entire cryptocurrency space and of individuals and teams.
However, grants no longer hold promise. They were replaced by contests that make the participants put in more effort to win. Contests are the best way to stimulate the development of the cryptocurrency community.
Practice shows that there is no future in the grant system. And the primary reason is their inconsistency between the concept of cryptocurrencies and blockchain technology – decentralization.
What are cryptocurrency grants for?
Blockchain companies and foundations that provide grants to developers for different purposes help them expand and develop. Grants are a form of free money.
They are received by people and teams who can create a solution to any problem – it can be increasing the scalability and security of the blockchain, improving the basic infrastructure, and even PR activities in order to increase the popularity and public awareness of cryptocurrency or blockchain.
Depending on the organization and the success of the project, the amount of the grant can exceed $ 10,000. Teams and individual developers who want to change something in the project and receive a grant apply for funds.
The very concept of grants greatly burdens and slows down the process of obtaining funds, and, accordingly, the speed of developing solutions. The committee that issues grants also decides which projects should be implemented and which should not.
Grants are usually reserved for the development of infrastructure, applications, and other tools, but other important components of projects are ignored because of this. Competitions can be used for everything from validators and software development to marketing and social media strategies.
The centralized nature of grants does not match the decentralized nature of the crypto community. This negatively affects the development of projects that use grants.
What are the disadvantages of cryptocurrency grants?
Most of the grants are for community members only. Moreover, in some cases, the selection process for grant winners is not transparent. Why? Because the concept of centralization lies within the grant, therefore individual people can influence the choice of winners.
Despite the fact that all blockchains are based on the idea of decentralization, grants, on the contrary, are centralized. The management of the organization not only shapes the agenda for the development of the project/blockchain/cryptocurrency, but in many cases, the founders provide large grants to those people they already know.
Ethereum blockchain grants are a prime example. Everyone knows that several large grants have been allocated for projects led by close friends of Vitalik Buterin. In fact, the developers and teams that applied for those grants initially had no chance of getting them.
As practice shows, there is always tough competition in grants. On average, about 2,000 grant applications are filed per day. Fewer than 200 receive funding. Most grants are short-
term. When they end, you must reapply for funding. Also, before applying for a grant, it is often necessary to carry out a thorough investigation of the problems that can be solved. In fact, the biggest disadvantage of grants is that they can be donated to address non-primary issues.
Critical issues may be delayed due to the influence of individuals in the commission or management. This can negatively impact the community around the project. Due to irrational financing of projects, part of the community may go to other projects.
Why are cryptocurrency contests the best alternative to cryptocurrency grants?
In fact, competitions provide a meritocratic distribution of funds. If grants are money for promises, then most competitions are rewarded for the work done, so in the long run, they give much better results than grants. Contests are always a competitive environment, where developers compete for supremacy.
In this competitive environment, any member of the community can propose a change to a problem, and other members of the community will vote on the projects and ideas they like best.
Competitions also create discussions that help to analyze current deficiencies or problems more thoroughly and find an even better solution for them. Participants’ discussions generate interesting and promising ideas that can be implemented in the future.
Another advantage of contests is that anyone can take part in them – regardless of where they live, their origin and faith. Grants cannot provide this freedom.
Thus, contests provide the concept that is the foundation of the blockchain – decentralization. Contests help unite the cryptocurrency community around a specific project, increasing the level of engagement and attracting new users.
Among the advantages of contests are not only cash prizes, but also the ability to observe changes in the cryptocurrency / blockchain thanks to your own contribution. Moreover, competitions provide an opportunity for everyone to express their opinion or ideas, which has a positive effect on the project and allows you to form an active community, and not passive, as is the case with grants.
The concept of competitions itself functions faster than the concept of grants, which allows for much faster distribution of awards to winners. This is a huge advantage over grants, where awards can take months.
Benefits of cryptocurrency contests
Cryptocurrency contests for the development of blockchain projects have been invented for a long time, and many people have already taken part in them. It is very difficult to choose a winner, especially after you can see that the participants tried very hard.
There are many advantages to cryptocurrency contests, especially if they are conducted correctly and efficiently. They are a great way to kickstart a cryptocurrency project in terms of an informed and active audience.
Cryptocurrency contests form an interested community
Effective cryptocurrency contests are a great way to build a strong community around a project. Investors, developers and teams may not know about a certain project/cryptocurrency until someone tells them about it or a certain competition. Information about competitions spreads much faster than about grants, which has a positive effect on the number of participants.
Building a quality community is a very difficult job that the marketing department spends a lot of time on. When conducting cryptocurrency contests, participants are often asked to speak up or tell their friends about them on social networks. The most stable and valuable cryptocurrencies and blockchains are those projects that have received recognition from the cryptocurrency community. And contests are a great opportunity to gain recognition.
Cryptocurrency contests encourage people to participate in projects
A competition is a great way to attract new audiences to a project. People start to follow the contests, participate in them, discuss them on the forums and attract their friends.
The reward for winning competitions is a serious reason for participating in competitions, disseminating information, etc. A cryptocurrency competition is a great way to increase audience engagement in a project. When a project attracts new and old participants through competitions, it finds new solutions to old problems.
If a cryptocurrency competition is very interesting and promises a large reward, cryptocurrency media can start spreading information about it very actively. Thanks to this, a furor may arise around the competition and the project as a whole, which guarantees the replenishment of the community with new participants.
Cryptocurrency contests raise awareness of the project and cryptocurrency outside of the target audience
The competition is the perfect way to raise awareness about cryptocurrency or blockchain. They encourage participants to spread the word about the project.
For example, Free TON was launched in May 2020. Thanks to competitions, in less than a year around the project, it was possible to form an incredibly high-quality community of 15,000 people.
Now the TON Crystal token costs $ 0.45, and the platform’s capitalization has reached $ 200 million. The plans for 2021 to raise capitalization to $ 1 billion and significantly increase the number of users, in which contests will play a huge role.
Awareness of the project among a non-target audience also plays a big role in the development of any cryptocurrency, since it is she who can become the main basis of the project if she likes its values and prospects.
When Free TON management just launched the first contests, people began to actively share information about them with their friends. Many of those who were not fans of cryptocurrencies before Free TON are still active members of the community.
Are there projects that use competitions instead of grants?
Free TON is one project where competitions are a vital tool to achieve full decentralization. It was the contests that helped create an active community around the project and ensure the rapid distribution of TON Crystal rewards among a wide range of people.
Thanks to competitions, everyone can contribute to the development of the ecosystem. Free TON contests are more than just picking winners. Each member of the community has the right to vote, everyone can express their opinion about which competitions should be held and which should not, and even who should judge them.
For example, in January the FreeTON Dex Implementation Stage 1 Proposal competition began. The goal of this competition is to prove that the Free TON blockchain can perform fast, cheap and non-custodial transactions such as token swaps, IOUs and others. Free TON DEX should allow users to create an arbitrary number of book orders and liquidity pools, manage commissions, and support various types of referral programs.
A good reward was established for this competition, and several dozen developers proposed a solution to the problem. All members of the community vote in contests.
Voting is used to ensure that decisions are made by people who are not indifferent to the future of the project, and not for neutral and disinterested people to vote. An additional advantage of contests is that they allow members of the Free TON community to find what they like and make a meaningful contribution to the development of the project.
Conclusion
Cryptocurrency grants are the past of the cryptocurrency world. This way of developing projects and the community has long ceased to be relevant; a more perfect way has come to replace it – cryptocurrency contests. Competitions are fully consistent with the concept of decentralization, unlike grants.
They are more transparent and more attractive to the cryptocurrency community. With contests offering rewards for work already done, blockchains and cryptocurrencies are developing faster and smoother. A striking example of this is Free TON.
Grants are centralized, and therefore do not correspond to the original concept of the blockchain – decentralization. There are many examples when large grants were received by those developers and teams who were familiar with the jury or project management. Ethereum is a prime example.
There is no doubt that cryptocurrency contests are the future of the digital currency world.