Sia v1.5.4 was released today, marking an important chapter in Sia’s history. This release incorporates the Foundation subsidy hardfork, which is scheduled to activate around midnight, February 3rd, at block height 298,000. The hardfork introduces a subsidy that will fund the Sia Foundation, a new non-profit entity charged with supporting, developing, and promoting the Sia network.

The Sia Foundation was first proposed in the /r/siacoin subreddit, back in September 2020. In that post, I described who would comprise the Foundation, how it would operate, and what responsibilities it would assume. The proposal was accepted by the community without significant dissent, and work began on implementing the hardfork code.

Since then, things have been fairly quiet. With the hardfork due to activate next month, I wanted to provide an update and a refresher on what to expect from the Foundation in 2021.

First Steps

All hardforks require community approval. Although the hardfork code has been released, we cannot compel anyone to run it. So that’s the first hurdle to clear; even though the Foundation already exists as a legal entity, it won’t really exist until the network has upgraded to v1.5.4 and mined beyond the hardfork height.

In addition to the ongoing block subsidy, the hardfork includes an initial subsidy of approximately 1.57 GS. Thus, our first order of business will be to confirm the receipt of these funds in our multisig wallet, and to begin distributing them in accordance with the Foundation’s budget. For example, we will need to convert a fair number of SC to USD in order to pay for salaries, benefits, fees, equipment, and other startup costs. We will also begin the process of acquiring key IP, such as the Sia trademark and the domain name, from Skynet Labs. Excess funds will be retained in cold storage.

At this point, the Foundation will have sufficient funding to operate, but it still needs another resource in order to pursue its objectives: manpower. And unfortunately, manpower isn’t something you can just allocate to yourself via hardfork. So our next order of business will be to start making key hires, especially for developer roles. Then we can start pursuing our objectives in earnest.

Ongoing Operation

As we slowly sort everything out, the Foundation will settle into a groove. Each month, we will transfer the latest subsidy to our wallet, convert some of it to pay our various expenses, and leave the rest in cold storage. Once we have enough funds in our treasury to cover a few years’ worth of expenses, we will begin burning the excess.

As discussed in the original proposal, the Foundation will hear proposals submitted by the community. After a discussion period, the Foundation’s board will vote whether to accept or reject the proposal. The decision will depend on a number of factors, including the proposal’s cost, its projected benefit to the ecosystem, and the various risks involved. We intend to honor all serious proposals with a timely response, including an explanation with our reasoning in the event of rejection.

Proposals must be submitted on the official forum. The forum is also the preferred venue for discussing “meta-level” topics relating to the Foundation, such as its budget allocations, priorities, policies, roadmap, etc.

Alongside the community proposals, the Foundation will have plenty of less glamorous work relating to the maintenance of core Sia software. To ensure transparency, we will publish regular reports on our development progress and budget.

Division of Labor

I want to take this opportunity to discuss the relationship between the Sia Foundation and Skynet Labs. This is a nuanced issue, and historically it has been the source of most of the drama and controversy surrounding the Foundation.

For the past 6 years, I have worked alongside the rest of the Sia team at Nebulous. Now, Nebulous is splitting into two entities. I am heading up the Foundation, joined by Eddie Wang; everyone else is going to Skynet Labs.

All parties involved agree that this split is ultimately beneficial to the ecosystem. In the short term, however, things are going to be a little messy. The reason for the mess is simple: the Foundation is inheriting a significant portion of Nebulous’ responsibilities, while inheriting very few of its personnel.

For example, consider the website. Who should be responsible for its maintenance and operation? The Foundation, clearly — but the people who currently maintain and operate the site are all at Skynet Labs. Likewise, what about all the support articles, the API documentation, the social media presence? What about organizing hackathons, managing the subreddit and Discord, forming partnerships with other projects? Again, these are all tasks that should be the responsibility of the Foundation — but to reassign all those tasks today would be like dumping a gallon jug into a shot glass. We simply don’t have the capacity to handle them yet.

This is especially true when it comes to the development work assigned to the Foundation. The features that the community wants the Foundation to tackle — implementing Utreexo, supporting smaller sectors, overhauling the host — are tasks that very few people in the world have the expertise to accomplish in a reasonable timeframe and with the requisite attention to security, performance, and robustness. I myself am one of those people, but there is a limit to how much one man can do.

Faced with all these responsibilities, and weighing them against the available resources, there is only one pragmatic solution: to maintain the status quo until the Foundation has built up a capable in-house team. But since this arrangement deprives Skynet Labs of valuable engineering time, it is only fair that they are compensated, as we would compensate any outside contractor.

In short, 2021 is going to be a transition period, during which the Foundation and Skynet Labs carefully disentangle from each other. This hardfork marks the beginning of a shift towards a healthier, more mature Sia ecosystem. If you have thoughts, concerns, or suggestions regarding the transition, I encourage you to join the forum and share your ideas.

Closing Thoughts

These are tumultuous times for the Sia project. The split of Nebulous into two distinct organizations has generated as much tension and unease as it has excitement and optimism. At the same time, the project has made huge gains over the past year, making it more important than ever that we sustain our development momentum.

The Foundation represents our best shot at securing the ongoing development of core Sia software. There will undoubtedly be mistakes and missteps, but as long as we all remain committed to a common vision, the future is bright. I ask that the community do their best to engage in good faith, to bear in mind that everything has a tradeoff, and to be patient with us — and with each other — as we collectively undertake this pivotal step in Sia’s evolution. What happens next depends as much on you as it does us.

This article was originally published on the Sia Blog.