Stellar Community Fund v7.0 Upgrade: Ecosystem Incentive Optimization from "One-time Payout" to "Milestone-based Payments"

2026-01-17 08:47:28

Stellar announces the upgrade of the Community Fund to version 7.0, introducing a new funding disbursement mechanism. This upgrade shifts the payment rhythm from an initial one-time lump sum to a phased payment based on development milestones, aiming to accelerate ecosystem growth and help developers achieve scaling more quickly. This is a significant optimization after operating the fund for six and a half years, reflecting the maturity of the Stellar network and deep thinking on developer incentive mechanisms.

From “Equal Distribution” to “On-Demand Supply”: The New Disbursement Mechanism Design

Core change in the funding payment rhythm

The core of the SCF v7.0 upgrade lies in changing the timing distribution of fund disbursements. The new mechanism transforms what was previously a one-time or broad disbursement into strict milestone-based phased payments:

Payment Stage	Proportion	Trigger Condition
Initial Grant	10%	Upon project approval
Mid-term Payment	20%	Completion of mid-term development milestones
Testnet Payment	30%	Readiness of advanced product (testnet validation)
Mainnet Payment	40%	Mainnet launch verification and user experience readiness

The logic behind this design

This phased approach has several clear intentions:

Encourage execution: Only 10% of initial funds, forcing teams to act quickly rather than waiting for full disbursement
Reduce risk: The funders can assess project progress at each stage; projects that do not meet standards cannot receive subsequent funding
Incentivize real delivery: The largest 40% is reserved for mainnet launch, ensuring developers truly complete the product rather than abandoning it halfway
Improve efficiency: Linking funds to progress gives teams clear goals and pressure to accelerate development

Signs of Ecosystem Maturity

Why upgrade now

This upgrade follows the successful SCF Pilot vote via Soroban Governor. What does this signify?

Soroban is Stellar’s smart contract platform. The community governance vote demonstrates two important signals:

Network is sufficiently mature: capable of on-chain governance to implement complex funding policy adjustments
Community participation is full: the fund upgrade is not a top-down decision but a result of community voting

This reflects that Stellar has moved from early exploration to a mature stage requiring refined management.

Resonance with Market Dynamics

The timing is also interesting. The good news is CME Group will launch XLM futures contracts (micro and standard sizes) on February 9, signaling institutional interest. Against this backdrop, launching SCF v7.0 is like Stellar simultaneously sending two signals:

To the outside: institutional-grade derivative products are coming online, increasing XLM liquidity and recognition
To the inside: community fund upgrade, making ecosystem development more refined and efficient

The combination of these signals may attract more high-quality developers into the Stellar ecosystem.

Practical Impact on Developers

Higher requirements for project teams

The new mechanism means project teams need to:

Have clearer development roadmaps (to meet milestones)
Execute faster (funds linked to progress)
Make more genuine product commitments (the bulk of 40% funds are only available after mainnet launch)

This will filter out less capable teams and may increase some projects’ fundraising difficulty.

Enhancement of ecosystem quality

On the other hand, this mechanism will automatically screen for higher-quality projects. “Air projects” that only seek quick funding will give up due to high requirements, leaving behind teams truly committed to building.

In the long run, this is beneficial for improving the overall quality of the Stellar ecosystem.

Summary

The core of Stellar Community Fund v7.0 upgrade is shifting from broad to milestone-based disbursements, encouraging execution, speed, and delivery through a “start small, then grow” strategy. This reflects the network’s maturity and a rational optimization of developer incentives. Coupled with the upcoming CME futures launch, Stellar is advancing ecosystem development on multiple fronts—seeking institutional recognition externally and optimizing internal incentives. This combined approach may attract more high-quality developers and accelerate the growth of the Stellar ecosystem.

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