Governance, the spell of growth

The School of Athens
The School of Athens



How does a team govern a cryptocurrency? Isn’t it all about decentralization? What about the miners? I thought miners control and secure a cryptocurrency? How can a certain entity in a distributed network have a guide on decision making?


Hold my mask.

Common lifecycles

Many cryptocurrencies out there have a pretty straight-forward lifecycle, which goes something like this:

  • Announce that the project is egalitarian without a premine or dev tax.
  • Release code to allow mining pools to plug in, and start mining this brand new coin.
  • Hashrate starts growing and word spreads about the project.
  • Developers work as hard as possible to create a stable infrastructure.
  • Not enough funding to pay full time developers to help.
  • Not enough funding to pay for the cost of the infrastructure.
  • Not enough funding for the developer to work full-time on the project
  • Developers lose interest as they cannot get listed on an exchange
  • Community loses faith because their ‘bags’ are becoming worthless
  • <insert tragic ending here>

A project without a dedicated and well funded team cannot thrive with the competition of the market.

Many projects get abandoned, either because interest was lost, or development has stopped. It is a risk for many enthusiasts to jump into a project that promises many things, yet might deliver so little. Some of these risks will reward you well, other not so much. But how can you tell if a project will succeed, and whether your efforts and finances are spent on the right team and ideas?

You can’t.

“There is no such uncertainty as a sure thing” – Robert Burns

Funding models

A funding model has to be introduced into a cryptocurrency project to allow for growth. The funding model will allocate some native currency to the development team, which will act as the fuel for the development of the project. Just as mining is fueled by the reward of the coin. Long term stability demands fuel and the only way to achieve this is to enable a way for the core team to be funded enough to carry out its plans and implementations.


So how do we go about creating such a fund?

For starters, there are a few methods, some perhaps not as appealing as the others in terms of the execution. Here are a few examples:

Reminder: premines and funds can vary between 1% and 90% of the native currency.

  • Premine (Instant access to funds or locked for e.g. 1 year)
  • Premine and ICO
  • Premine, ICO and Burn
  • Premine and Airdrops
  • Governance Fund (also known as a block reward tax)
  • Governance Fund with ICO
  • No premine or dev tax, expect community to fund your project
  • Personal finance
  • Crown funding (donation)
  • Loans (dangerous)

Listed above are some of the main ways a project can generate fuel for the project. The life of the project relies on many aspects, the main being the team building the infrastructure. All of the flavors above can be packaged beautifully and be used in the worst possible way.

The 40:60 Rule

The 40:60 rule is an active governance model used by the Mask project. This governance model simply defines a way for which a proof-of-work ecosystem rewards 60% of the block reward to the miners, whilst handing over 40% to the governance wallet.


This seems like much, but what is the governance wallet used for?

The governance wallet is the main wallet that is funded by the block rewards. The governance wallet funds itself can be categorized in a way to show the spending output and how it will be used to support the Mask project.

Funding target:

  • 5% to be used by the devs to maintain the project and pay for costs.
  • 5% reserved for bounties and external task management.
  • 30% reserved to create an incentive mechanism that allows anyone to earn Mask without mining.

Many crypto enthusiasts do not have mining rigs and/or the finance to run such an operation. However, we must create a way to attract users to the ecosystem that are not only speculating and/or mining, but also want to earn and learn. Cryptocurrencies are not only meant to be mined and bought, other avenues will be opened to allow for greater adoption and new incentive layers.

Generating incentives for (only examples):

  • Creators of art and media
  • Developers that integrate Mask into their native web/app.
  • Social awareness
  • Social gatherings
  • Media outlets
  • Physical product creation
  • Mask infrastructure maintained by external parties
  • Funding privacy tech
  • Support TOR applications (e.g. our first TOR mining pool)
  • <share your ideas with Mask here>

A project must survive to thrive. Fuel must be provided for the ecosystem to be maintained. Developers need to be well funded to grow the project. To move forward with a certain vision for a project takes time. Mask is a privacy project that wants to protect its users online. To grow the privacy infrastructure and bring awareness to its importance is a task that will remain with us throughout the lifetime of Mask.

If you are interested to know more about Mask, check out the following links:

Bitcointalk 🗝

Telegram 📜

Discord 🎁

Github ⚙️