# Grant Allocation

Server Protocol introduces a community-driven grant system that allows open-source projects to receive funding in $SERVER tokens based on their merit and public support. The goal is to eliminate centralized decision-making and enable a transparent and decentralized funding flow.

## 🧾 Eligibility & Approval

To become eligible for a grant, a project must:

* Be submitted through the **Proposal System**, which requires burning 1M of $BYTES and paying a fixed fee of 100 $SERVER.
* Achieve a **positive net voting score**, meaning it must receive **more upvotes than downvotes** from users.

Once the proposal meets these conditions, a predefined amount of $SERVER tokens is allocated to the project as a grant.

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## 💼 Allocation & Management

Upon approval:

* The granted tokens are **reserved by the protocol** and **locked to the project**, meaning they cannot be reallocated or claimed by other initiatives.
* These funds are meant to be distributed to developers contributing to the project — typically in alignment with the goals or **milestones** outlined by the project owner.
* Developers can **request payouts** from the allocated grant as they deliver tangible contributions (e.g., commits, code reviews, new features). These claims are **off-chain agreements**, not enforced by smart contracts at this stage.

This mechanism allows each project team to define its own internal workflow and compensations, while the protocol ensures that **funding only goes to community-approved projects**.

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## 🔁 Recurring Grants & Milestone Progression

The grant process is **cyclical**, meaning:

* A project can **reapply for a new grant** once the previously awarded amount has been spent or the initial milestone (e.g., MVP, beta release) is completed.
* The community will vote again based on the project's progress and relevance.
* This system ensures that funding is not continuous or unconditional — each new phase must be **validated again by the DAO**.

Rather than releasing one large sum all at once, the project must **earn continued support** through results.

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## 🔒 Grant Supply Limit

To maintain sustainability:

* A **strict on-chain cap** enforces that **no more than 50% of the total $SERVER supply** can ever be allocated through grants.
* This cap is **hardcoded in the smart contract** to prevent inflationary risk and preserve long-term balance.

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## ✅ Why This Matters

This approach:

* Ensures **accountability** from projects and developers.
* Avoids risks associated with large upfront funding or inactive grantees.
* Keeps the **community in control** of how capital is allocated — phase by phase.
