A common misconception about Impact Alpha is that our goal is solely to drive more funding toward impactful content on Farcaster. While it’s true that we want to achieve that, there’s much more to it.

Impact Alpha is built on the thesis that if you create incentives within a network to encourage impactful actions, you can establish a positive feedback loop between the impact created and the currency used to incentivize it. In other words, the goal isn’t simply to distribute 10M (or 100M) $degen to creators through Impact Alpha. Instead, the process itself is intended to increase the token's value, so that 100M $degen could eventually be worth 100M dollars—or more. This principle can then be applied to any network economy and its native currencies.

To achieve this, Impact Alpha must become a "household name" within the Farcaster Ecosystem. That’s when the positive feedback loop the system is designed to create will have its strongest effect.

Impact Fund

So this is where Impact Fund comes in. The Fund currently has three sub-funds: a Creator Fund, Development Fund and Growth Fund.

Creator Fund

The purpose of the Creator Fund is to reward builders and creators on Farcaster based on their contribution to the ecosystem (impact = profit). Many users hesitate to multi-tip or auto-tip $degen because of the tip-for-tip rule. There is no such risk with Impact Fund because @impactfund only distributes funding onchain and doesn’t tip. The Creator Fund also reduces the amount of "spammy" micro-tips on FC.

Development Fund

The purpose of the Development Fund is to help offset some of the costs of full-time work on Impact Alpha, and the broader vision of creating a new economic paradigm. Since the project is open source those who contribute to its development can also be rewarded through the Development Fund.

Growth Fund

The purpose of the Growth Fund is to add incentives and rewards to those who curate, contribute and spread the word about Impact Alpha while the system gets to the scale where it can operate self-sustainably. This Fund is meant to replace the Raffle and Rewards program we currently have and allow contributors to support the system’s growth.

How it works?

Impact Fund will have a somewhat similar mechanism to @degenpad - contributors will be able to choose a portion of their daily $degen allowance to go toward the Impact Fund and decide on how to split it between the sub-funds. Impact Fund contribution would then go toward the user’s Contributor Score.

More on the Contributor Score and how it will be used in Impact Alpha in future posts.