# How Octant works

This article describes Octant's rationale and mechanics, if you want to know how to use the app, clik here.

With the recent Ethereum switch from Proof-of-Work to Proof-of-Stake (opens new window) consensus mechanism, the Golem Foundation (opens new window), which is developing Octant, has decided to become a validator in the network (opens new window). The Foundation has staked 100,000 ETH to secure the network and assist in reaching consensus.

In exchange for staking its Ether and serving as a validator, the Foundation receives a steady stream of rewards directly from the protocol (opens new window). A portion of these staking rewards is transferred to the Octant community every 90 days. Community members then decide, through individual actions and polls, how to allocate these funds. They can choose to either claim a portion of the reward for themselves or donate it to qualifying public goods causes.

Through this initiative, the Golem Foundation aims to gather empirical evidence on user participation in decentralized governance. This information will guide our search for effective decentralized governance solutions (opens new window) and further the development of the User-Defined Organization (opens new window) project.

Anyone holding GLM tokens (opens new window) (an ERC-20 token from the Golem Network (opens new window)) can participate in the Octant community, as long as they lock a certain minimum of their tokens in the Octant contract. While it's possible to lock as little as 1 GLM, an effective locked balance of at least 100 GLM is required to qualify for user rewards.

The GLM-locking mechanism is non-custodial: tokens locked by Octant users aren't pooled with other users' funds, and users can withdraw their tokens at any time. However, if the effective locked balance drops below 100 GLM, they will no longer receive rewards.

The amount of staking rewards the Golem Foundation transfers to Octant is determined by the percentage of the total GLM supply locked by Octant users. The more GLM locked in the Octant contract, the larger the share of the Foundation’s staking rewards allocated to the Octant community.

The distribution of ETH rewards transferred from the foundation to Octant is determined through an iterative process over periods termed 'epochs'. At present, the duration of an Octant epoch is 90 days, though this may be subject to change in the future.

During the early weeks of an epoch, members of the Octant community discuss and vote on potential donation recipients, chosen from a list of eligible public goods projects curated by the Golem Foundation. (For information on the eligibility criteria and how to submit a project, refer to the Propose a project section.)

Throughout the epoch, users with an effective locked balance of at least 100 GLM earn ETH rewards. The more GLM a user locks and the longer they maintain the lock, the greater their user reward, and the more funds they can allocate to their favorite projects.

Each epoch concludes with a two-week allocation window. During this period, users with eligible lock-ins decide how to use their ETH rewards: by claiming them, donating fully, or contributing partially to pre-selected public goods causes.

When a user opts to donate a portion of their User Rewards to a community-shortlisted project, the impact of their contribution is amplified by Octant’s Matching Rewards (MR). The MR is determined using a formula that takes into account both the amount of GLM a user has locked and the proportion of their User Rewards donated to eligible projects.

Once the allocation window closes, community members who chose to keep their rewards can transfer their share of the ETH rewards to their wallets. Concurrently, matched donations are distributed among projects that met a predefined community contribution threshold. In the MVP stage, this threshold is tentatively set at 1/2n (where n represents the number of projects).

Rewards that users neither claim nor allocate, as well as donations that don't meet the threshold, are redirected to the Golem Foundation.

To find out more about how this mechanism is implemented in the Octant App, and how you can participate in the project, read the Using the App section.

For insights into our methodology for calculating rewards and matched funds, check Octant’s Technical Outline.