Polkadot — How To Submit A Tip

Whether you’re trying to receive a tip you’ve been proposed for, or trying to propose a tip for someone else, it’s important to understand the system Polkadot has in place for tipping.

To start off with, and without going into too much detail on how the whole treasury system works, Polkadot has a tipping mechanic that allows anyone to propose a tip to anyone with a Polkadot address. (This applies to Kusama as well, but we will be focusing on DOT for this article) Once a tip is proposed, the council then votes on if the tip should be authorized and if so then how much should be tipped? Since the funds would be coming directly out of the DOT treasury, it’s important to have some level of security that decides which tips go through and which ones get denied. That is exactly what the council does! A tip is approved if one council member over half accept the tip.

Where do the treasury funds come from?

It is important to note where the treasury funds come from and understand why the council actually wants tips to be accepted.

The funds that are inside of the Polkadot treasury are used for many different things. From proposals, to bounties, to tipping, the treasury is there to support the people that support Polkadot. So, where do these funds come from? They can come from four different places:

  1. Slashing: When a validator does something that is deemed unacceptable, they are slashed. Which means, DOT is taken away from them automatically. Part of the DOT that is taken away is sent to the reporter as a reward for reporting. The rest is sent to the treasury.
  2. Staking Inefficiency: The treasury gets funds from staking inefficiencies any time the staking ratio goes above 50%. This is because 50% is the ideal staking ratio. If the staking ratio goes above 50% it also means that validators will get less of a reward for staking, and the rest goes directly to the treasury. (This concept is confusing so click here if you’d like to read more about it)
  3. Transactions Fees: Each block has a transaction fee, part of this is sent to the treasury and the rest goes to the block author.
  4. Parathreads: Parathreads temporarily participate in a block after they win an auction to be included on that single block. Part of the bid that was paid for the inclusion is sent to the treasury, the rest is sent to the validator.

Now that we understand where the funds come from, why would the council be in favor of spending the DOT?

Why the council wants to accept tips-

The Polkadot treasury is set up in a way that if a set period ends without spending all of the funds then a percentage of the funds are burned. This kills two birds with one stone. Not only does it provide DOT a deflationary mechanic, but it also pressures the Polkadot council to accept more tips.

With all of that out of the way, how are tips submitted?

How to submit a tip-

Step 1. Head over to the Polkadot.js website

Step 2. Click “Treasury” under the “Governance” drop down

Step 3. Click “Tips”

Step 4. Click “Propose Tip”

Step 5. Choose an account to submit the tip with, this will be the account that initiates the tip. Next, the beneficiary, this will be the account that would receive the tip. Finally, tip reason, this is why you think the beneficiary should receive the tip. It is highly suggested to be clear, sound, and detailed, on your reasoning. Once you’re done with that hit “+ Propose Tip”

You’re all done! The next step is just waiting for the council to vote on the tip. If you’re interested in looking into active tips or even looking for your own, click here. You can practice this by nominating me for a tip on Kusama: Cp7SoJQwiVrHgchSFRZociSdNoyL3YmcW2tZ5uuwLcPCC6C

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Avid crypto investor; Bachelors of Finance

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Polkadot P4t

Polkadot P4t

Avid crypto investor; Bachelors of Finance

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