Instead of government grants, we should have government X prizes for solving various problems. Solar for under $x/watt, fuel efficient vehicles, etc etc.
For me it does raise a few questions: What happens to teams who lose a competition? If their only monetary incentive is the govt prize, are they then in the hole financially? Can non winning projects incentivized by govt xprizes always be repurposed to still have value? Will individuals burn out or be emotionally drained and forfeit future competitions?
This is not to say that the idea isn’t interesting; clearly x prizes are still ongoing and there’s never a shortage of interest to participate.
In a way, the startup scene is a type of X Prize contest for capitalism. How many millions would this chest potentially hold? With the amount of time and effort needed to find it, the endeavor arguably provides worse ROI than attempting to start your own business. The level of effort and probability of success might be better for entrepreneurship as well.