Proposal: DAO DeFi Grant Program

Proposals
1

Proposal Title: DAO DeFi Grant Program

This proposal is for the first DAO grant program focused on DeFi. This proposal is a culmination of a few months of conversations and most recently building off of this co-design document.

Huge thanks to everyone who has helped shape this proposal - @Areta, @mexi, @ACI, @Luiscede, @Sinkas, @kaereste, @Pagoda, @ZER8, @gov.borderless.eth, @SEEDGov, @HumbertoBesso and everyone else who partook in the discussions or gave feedback on the docs

Proposal Type: Growth

Summary

This proposal puts forth a grant program focused on growing the number of builders working on DeFi applications on Scroll.

Focus: DeFi (with a particular focus on payments and stablecoins)

Desired outcomes: the growth of builders working on DeFi applications built on Scroll, particularly those who have some kind of proof of concept and are looking to for funding for developing an MVP

Budget: 3,527,742.24 SCR ($2,206,250 USD value as of Feb 29, see this sheet for more details). There will be an assessment of the budget prior to fund issuance to address potential fluctuations in prices.

Review and funding decisions will be made by the DAO while operations will be managed by the Foundation. If this proposal passes, there will need to be elections for a Review Committee as outlined below,

Why you are submitting the proposal

I’m submitting this proposal after many discussions with delegates. Given the co-design process and that the Foundation will be playing an operational role, I am submitting this proposal.

There are no conflicts of interest from the perspective of the Foundation running operations. If this proposal passes, Review Committee applicants will have to clarify any potential conflicts on their end.

This would be the first funding program from the DAO aimed at directly supporting Ecosystem Growth. Delegates should support this proposal as it aligns with the interest of the DAO and ecosystem overall, as discussed throughout the Co-Creation Cycle and subsequent design.

Execution

Operational

In the first iteration, this will be a prospective granting program (aka issuing grants for work to be done) with a Review Committee structure to assess the applications and make funding decisions.

There will be two funding tiers:

  • Tier 1 is for builders with early stage PoC’s who want to build a proper MVP on Scroll.
    • This track is for grants under $15k
  • Tier 2 is for those who have a more advanced stage project (already have an MVP or beyond) and want to reach more users and build a more refined product.
    • This track is for grants between $15k-$75k

The grant program will have a 6 month budget to start, with equal portions of the budget distributed each quarter. Any budget unused in one quarter rolls over to the next quarter. Any remaining of the budget at the end of the year remains in the DAO treasury.

Grant Process

Marketing

Marketing will be supported by the Scroll communication team, local nodes, and requests to delegates to amplify on socials.

Review Stages

The review will take place on a rolling basis, with a clear deadline. It will be at the discretion of the Review Committee as to whether they want to do some reviews as applications are coming in, or if they want to do all of the review once the application window has closed and before the review window concludes.

  1. Initial screen will happen automatically as grants are submitted

  • A basic check for completeness of the application

  • This process will be completed automatically via CharmVerse (ensuring all relevant information is shared)

  1. Review Committee assessment will be two fold:

  • First, they will ensure that projects fit into the scope of the program requirements

  • Second, they will assess the quality of the applications and whether or not they would recommend funding the application

If necessary, the reviewers will be able to follow up with grantees to clarify information or adjust milestones as appropriate via CharmVerse.

Once the deadline has arrived and all grants are reviewed, the review phase will officially conclude and the funding decision phase will commence.

Funding Decision

At the funding decision stage, the Review Committee will meet and will review grants and budget.

If there is enough budget to fund all favored projects, those projects shall proceed to the next stage of notifying grantees and conducting KYC/KYB

  • If there is any budget remaining at the end of the first cycle, funds shall roll over to the second cycle. If there are funds left after both cycles, funds will be returned to the DAO treasury

If there is not enough funds to award grants to all favored projects, then the review committee shall proceed as follows:

  • Review the unanimous favorites and see if there is enough budget to fund those projects. If yes, fund. If no, review budget adjustments and reach out to grantees to notify them (the Foundation team can support the outreach)

  • If there is budget left over after funding the unanimously favored projects, then the committee shall review contested grants (grants where at least one of the reviewers thought the application should be rejected) to see which of those projects to fund.

KYC/KYB

Once the decisions are made on all outstanding applications, then the grant ops manager will send notifications to all grantees of the decisions.

For those whose grants were approved, they will receive a link to complete KYC/KYB. If there are any issues raised as part of the KYC/KYB, then grants will not proceed. There can be appeal in case the issues were raised in error.

For those who clear KYC/KYB, they will proceed to the contract stage.

Contract

Once KYC/KYB is cleared, then a contract will be issued and it will need to be signed by the grantee and someone from the Foundation. Once the contract is signed, then they will proceed to the fund issuance stage (if there is an upfront grant portion), otherwise the grantee will progress to Ecosystem onboarding and will be paid via the multisig upon completing the appropriate milestones.

Fund Issuance

The Foundation governance and/or ops team to transfer funds from the DAO DeFi Grant multi-sig. This will happen upon the agreed upon milestones.

Ecosystem Onboarding / Continuous Support

Grantees who receive a grant within a single season (quarter) will all be part of one cohort.

These cohorts will have:

  • Recurring calls every other week to provide project updates and asks, to hear about what kind of support might be needed in the group, and to generally explore how to best ensure the grantee success

  • Continuous non-financial support that may entail marketing support, legal support, business development support, tokenomics support, etc.

  • Connections to the relevant local node programs, as appropriate

The non-financial support will be developed by the Foundation team with input from the DAO as this program is in process.

Milestone Evaluation

Grantees will be expected to provide updates in GAP when milestones have been completed. Upon a check from the Foundation and/or Review Committee team, milestones will be issued.

Tooling

The application will be based in the Scroll CharmVerse, and all reviews will take place in CharmVerse.

Grantees will be required to provide updates via the Karma GAP tool.

The Foundation shall also manage a BigQuery instance to make the grant data more readily available. The grant programs shall conform with DAOIP-5 as well.

Timeline

Once this proposal is endorsed as required, it shall go up for vote in the voting cycle of the first of the month. If approved, that shall happen by the 10th of the month. At that point two things will happen:

  • Funds will be sent to a separate multi-sig for easier tracking (this multi-sig will be managed by the Foundation unless there is interest from the Review Committee to support that function)

  • The voting process for the Review Committee will commence.

The voting process will begin no more than 3 days after the vote (ideally will happen on the same day as approved by the DAO). The voting process will entail:

  • A 7 day period during which people will be able to submit their applications for being part of the review committee. These shall be submitted on the forum.

  • That will be followed by a 2 day period during which people will be able to review the applications. There may be one or two community calls or twitter spaces or similar style activities to help highlight applicants.

  • From there, a 5 day voting period will follow to select the 7 person review committee. Voting shall take place

Let’s say this proposal is ready for the Mar 1 voting cycle

  • Mar 1 - 3 day vote delay begins, followed by 7 day voting

  • Mar 10 - voting concludes

  • Mar 11 - reviewer application submission

  • Mar 18 - reviewer application submission concludes, review period starts

  • Mar 20 - review period concludes, voting starts

  • Mar 25 - voting ends

  • Mar 26 - review committee announced

  • Apr 5 - rubric and application review concludes

  • Apr 7 - applications go live for cycle 1

  • May 9 - application period closes

  • May 30 - review period ends

  • Jun 2 - grantees notified

  • Jun 9 - KYC/KYB completed, move on to contract stage

  • Jun 16 - contracts signed and grantees announced

  • Jun 30 - initial quick assessment of the program is conducted and adjustments are made * before starting v2

  • July 7 - cycle 2 begins

  • Aug 8 - cycle 2 applications close

  • Aug 29 - review period closes

  • Sep 1 - grantees notified (might be Sep 2 with holiday in the States)

  • Sep 8 - KYC/KYB completed, move on to contract stage

  • Sep 15 - contracts signed and grantees announced

  • Sep 29 - quick assessment of cycle 2 completed

Personnel & Resources

This proposal will mainly rely on two groups:

  • The Review Committee, to be elected by the DAO upon approval of this proposal, and

  • The Foundation’s governance team, that will manage all operational, financial, and legal aspects of the process

The overall roles and responsibilities will be as follows:

  • Program manager - leading design and overseeing execution of the grant process [Foundation]

  • Grant ops - Shepard people through the process, follow ups, confirm milestones, etc. [Foundation]

  • Marketing - sharing the grant program to make sure that we have a high-quality pipeline of applicants [Foundation, referral program]

  • Reviewers - supporting the review of project applications (and down the line, evaluation) [Review Committee]

  • Final decision maker(s) - making the ultimate funding decision [Review Committee]

  • Legal ops - kyc/kyb coordination [Foundation]

  • Financial ops - fund distribution [Foundation]

  • Ecosystem onboarding - bringing folks into the ecosystem, onboarding, connecting with other grantees [Foundation]

Review Committee

We will recruit a team of at least 7 people to act as compensated reviewers.

  • The Review Committee will apply via a thread in the forum.

  • The Foundation team will populate a voting tool with the candidates who apply during the application window.

  • A vote will take place to select the committee.

To be clear, not all 7 reviewers will be asked to review all proposals.

  • The review committee would ideally have 4 delegates and 3 external reviewers, though this is not a requirement.

For grants under $15k, there will need to be 3 reviewers for each grant. The approval threshold for a grant will be 2/3 reviewers.

For grants between $15k-$75k, there will need to be 5 reviewers for each grant. The approval threshold will be 3/5 reviewers.

In addition to the 7 formal review committee members, there will be at least 1 non-voting member from Foundation and/or Labs to provide input that the review committee members can choose to factor in as appropriate.

Referral Program

Once the grant program commences, there will be a referral program available to maximize the number of applications of quality builders.

In the first 6 months, this program will only be available to verified delegates. Review Committee members will not be eligible for the referral program to avoid conflicts of interest.

Applicants will be able to list a verified delegate who referred (the referrer) them to apply. If that applicant’s grant is approved and clears KYC/KYB, then the referrer will be paid out 1% of the approved grant size.

Financial

You can find the below in spreadsheet form here. The total requested budget for this is 3,527,742.24 SCR based on prices as of February 20.

668Ă—276 15.9 KB

808Ă—950 47.5 KB

One thing to note - this budget assumes we have 200 applications to review. As such, there is a chance that we will have less applications and not all of this budget will be used. Any unused funds will be returned to the DAO.

The amount of time listed for each project is meant to capture:

  • Time to review the application
  • Time for feedback and interacting with the grantee as needed
  • Time for milestone / budget assessment

Evaluation

There will be small scale retrospectives of the program itself performed on a quarterly basis, assessing the general progress and the clear need for adjustments.

There will be a more thorough evaluation of the program upon the conclusion of the first six months. The evaluation will entail elements such as:
Reviewing the GAP data

Gathering a dashboard highlighting usage metrics across all funded projects

Additionally, there may be further evaluation efforts commissioned by the DAO and/or Foundation.

The Review Committee and Foundation team will be tasked with providing feedback on the program and the Foundation team will lead with providing a public retrospective.

Conclusion

This proposal outlines the first potential DAO grant program. It will have a specific focus on DeFi projects getting built on Scroll, particularly targeting those looking to build their first MVP (if they have a proof of concept) or advancing from their first MVP.

The funding decisions of this program would be made by the Review Committee, which would be elected by the delegates following approval of this proposal.

Please let me know if any potential improvements or clarifications are needed.

11 Likes
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Great proposal. Grant program is useful for sustainable building public goods.

I have a opinion in Evaluation in this proposal. I think we should track grantee’s activities and collect grantee’s data with making logic model for grantee and grant programs and / or DAOs / Foundation’s mission. Grantees should define thier intent and define measurable data and something like subjective impression. Using GAP is better, but inputted data is not necessary useful since these data is not necessary based on intent of grant programs or their logic model. We will require applicants (grantees) for making logic model.

In background of this thought, some DAOs which are managing grant programs like Optimism are trying to measure impacts / outcomes, but there are less databases which are useful for evaluating impacts. Some projects don’t work on impact evaluation in earliest phase of grant program. Would like to work on impact evaluation in the earliest phase of Scroll DAO?

We should have plans (define measurable data, tracking data, regular interview for graetees, etc) for measure impacts / outcomes. If Scroll community is interested in my opinion, I will make a proposal. I would like to adapt these survey for all of future grant program.

Thanks.

5 Likes
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Thanks for this proposal, a couple clarification things and some feedback/suggestions:

does this refer to those with an MVP in Scroll or simply with an MVP anywhere?

can we avoid the use of acronyms? what’s GAP in this context?

I see the need for this proposal, however, I think we’re missing applying some key lessons here. We know that projects don’t only need financial support. Why not add some marketing support for grantees as the most low-hanging fruit here (e.g. a once-a-month Twitter thread and space) or maybe the foundation having a chat where grantees can ask for stuff (intros to investors, talent or advise, or something). Equally, I don’t understand why do grants instead of investments but anyhow.

2 Likes
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Keen to hear what you’re thinking for this. Don’t worry about making it a proper proposal but definitely want to learn more.

100% agreed. That part isn’t written out yet and it’d be great to get input from you and others on what that could look like

Theoretically if someone has an MVP elsewhere and wants to focus on building on Scroll instead, I think that should be worth considering. Happy to hear what others think about this.

Karma’s Grantee Accountability Protocol, we are going to use them for Foundation and DAO grant programs

The goal is to add these things. See the below as part of what we’re calling Ecosystem Onboarding. The goal is to use regular calls to understand their needs, to highlight their work via socials (likely through the Foundation twitter that’s going to launch soon), etc. If you have advice on how to formalize the processes for now, please let me know!

2 Likes
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Gm GM GM @eugene, thanks for bringing this proposal for the community. I have one suggestions.

While referral incentives can increase engagement, restricting it to verified delegates may limit organic ecosystem expansion. A hybrid model allowing select ecosystem contributors beyond delegates could be more effective.

Thanks :pray:

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gm

Thanks for moving forward with this more general proposal for DeFi applications. I think it makes sense.

I served as an advisor (proposal reviewer) in two of the incentive programs conducted by Arbitrum DAO to date.

Here are some recommendations based on my experience.

I recommend defining this very clearly and not leaving it to the discretion of either the applicants or the reviewers. If there will be multiple review stages, the deadlines should also be well-defined.

Applicants tend to submit at the last minute (which makes sense if they’re focused on building), leading to a sudden influx of proposals. This, in turn, lowers the quality of the reviews.

I suggest setting clear and staggered deadlines to mitigate this issue.

I also recommend being strict about this—something like: If the application is incomplete, it will not be reviewed or receive feedback.

Otherwise, you might encourage laziness or incomplete submissions. It may seem like a minor issue, but when a large number of applications come in, wasting time reviewing incomplete ones becomes frustrating.

I also recommend refining the criteria for projects applying to the two tiers. When is something considered a PoC, and when is it already an MVP?

The answer may seem obvious, but in practice, many gray areas arise. At the very least, providing a clear definition of what is meant to be incentivized will help.

The quality will depend on the program’s objectives. Is the goal to onboard new applications or new teams? To incentivize those already building on Scroll? Both?

And how do you define DeFi applications? That’s another one that may seem obvious but often leads to gray areas—like a social app with some integrated DeFi features.

Will this be in charge of the evaluation committee?

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Thanks for putting up the proposal, happy to see the first co-creation project ready! I agree with the general need for a grants program and support the DeFi focus. The draft seems well-thought-out, indicates a good cooperation between foundation and the DAOs, and has a reasonable budget / time plan.

I especially concur with the section about continuous support, or as @danielo was pointing out, extend the part about non-financial support. Charmverse is a good grant application management tool as well.

Do I understand correctly, that the payouts will be milestone-based, and these will be agreed on during the application process? I do think that’s a good balance between proactive and retroactive rewards. As @Shinya_Mori mentioned, we should have a focus on following up with the grantees and measuring impact though.

As for the operational cost, the 200k (~ 10%) are allocated for the review committee, and the part covered by the foundation is not funded extra? The hours that go in there speak to a rather high review standard.

2 Likes
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Thanks for the detailed response!

Agreed, this should be made explicit on the proposal to avoid confusion.

I’d also invite the program management team to provide an assessment framework for grant amounts that takes this into consideration or at least to answer the question of how to value protocols/dapps based on them being scroll first, fully multi-chain, or scroll exclusive. For clarity, I don’t think this is something the proposal should define but something for the program management team to define (and evolve as needed)

from personal experience, the tool is quite bureocratic, UX poor, and the output data feels not very on point but I guess it’s the best option at the moment. So in support of this. I’d just request we avoid acronyms in the DAO generally and in proposals specifically.

Great to hear.
It sounds like you already have planned the setup. I’d suggest organising it slightly different with a dedicated point of contact person for Grantees (already included) but that’s part of a (separate) orchestration program (i.e. interface) for Builder Support where the different programs available for builders are connected. So essentially I’m suggesting to make support more granular and modular, e.g.

  • the DeFi grant program itself where people get cash
  • the recurring calls
  • Foundation marketing support (starting with super basic retweet of a grant-start, grant-completion, and/or product-launch using the foundation’s Twitter)
  • ad-hoc legal, biz dev, tokenomics support, etc.
  • other programs to be created in the future by the foundation, labs, or DAO based on insights collected by this point of contact person and research initatives.

Each program requires applying (so modular), but getting access to one program (e.g. DeFi grant) can automatically give access to other programs like the Foundation marketing support or the legal, biz dev, tokenomics support, etc.

For now, all this can be very basic and managed through adding people to telegram groups. We did have a venture working on a whole system with AI to automatically assess the needs of each project (300+ data points assessed), help them identity what support to apply to, and then manage those relationships and track performance assessments across all the programs, but it’s too early to implement something like that. We’ll likely propose a more refined version based on the output framework of our research proposal.

Over time, the programs should be separated between universal programs and vertically focused programs. Where the point of contact is ideally managed vertically as Business Clusters/Swarms that can connect to super targetted support. (the roadmap and details of all this is still emerging but part of the framework I envision coming out of the research proposal)

1 Like
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Hello fellow delegates,

The Ethereum Tegucigalpa community is happy to see this first proposal for a DAO DeFi Grant Program.

We did an extensive review of the proposal and are pleased with the result. We acknowledge the importance of providing builders with the proper financial support so they can help with the growth of our protocol.

We believe that the program is well-structured and accurate in terms of timing and budget. At the same time, this is a great starting point for a grant program in terms of decentralized decision-making and execution.

We fully support moving the proposal to vote in the next cycle.

Luis Cedeño
Ethereum Tegucigalpa

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very happy to see the Foundation own and manage program data and infrastructure. Actually, I hope this will become the norm for future programs. Most DAOs lack comprehensive grants data, which significantly impairs the ability to conduct any real analysis or measure impact. The pros of decentralizing this function are far outweighed by the cons. It would be great to have data on grants program spending, milestone completion, grantees, misuse or loss of funds, etc., made publicly available to the Scroll community from the outset. As the Foundation takes responsibility for this, data integrity can be ensured, providing a single source of truth when it comes to capital allocation in DAOs. When the DAO eventually scales its operations and funding, it will be crucial that we are able to make data-driven decisions based on historical data and know how to allocate capital efficiently in the most high-impact way.

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Thanks for the proposal. We appreciate the detailed breakdown of timelines, roles and the transparency of where the Foundation will hold responsibilities.

Some questions:

Do we have a request for projects assembled from the Foundation? Or is the program open to all DeFi projects?

Will any minimum milestones be required for the applicants? Is funding conditional for these milestones? Would make this as clear as possible for applicants.

Will the election not be done through agora?

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Thanks to all who put this together. Something I’ll like to commend is that, the plan is not just to give financial support but also assist the projects in other ways like marketing, tokenomics etc. I strongly believe that when an ecosystem supports projects building on them, the ROI to the general ecosystem is great.

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Hey Eugene, thanks for putting together and sharing this proposal as well as incorporating feedback from the calls!

Getting straight to the point, we think that the two-tier funding structure looks really good to encourage diverse DeFi projects on Scroll. The review committee setup seems great to put into practice and should do its job evaluating the grantees. Also, the referral program is quite a new idea for us in Programs, and while a 1% commission might feel a bit low, it should help to avoid any referral farming issues. Excited to see how that part unfolds.

While we support the proposal as it is, we take the chance to drop a few suggestions:

Metrics : Being a DeFi-specific grant program, some of the metrics that could be leveraged are TVL impact vs. grant size, how deeply these projects integrate with the Scroll ecosystem as a whole, how sustainable their yield mechanisms are, and what the user acquisition costs are.

Funding: While the milestone-based approach can initially work, we may consider adding results-based tranches, where extra funding unlocks after hitting specific milestones. Also, an abbreviated cycle for smaller grants may be considered in the future.

Impact Reporting: It would be a good idea to set up some standardised impact tracking from the beginning. Therefore, we suggest implementing something along the lines of a real-time dashboard of active grant outcomes and even a comparative analysis with other token distribution methods, coupled with regular public updates to measure the impact of this programme. This will definitely help us to know how to iterate this programme.

Overall, we support this programme as we think it is quite well designed, and the focus on DeFi protocols makes perfect sense due to the actual Scroll state. Down the line we could experiment with other mechanism (Retro i.e) and iterate on governance management of the program but at this point time this should kick us off. We will vote in favour of launching this programme and will be happy to contribute to its execution!