Hello there @SunBear and @pianoman.
It has been our understanding that the Grants program is going through one more process redesign. After discussing this with several applicants, we thought we’d take the initiative to assist and participate in the new redesign.
We hope that with our input all the concerns and considerations are heard and incorporated into the new redesign.
Goal of the Grants Program
I am quoting from SunBear’s post on the program:
Kingdom Building Program Scope
- Enhance the overall DFK experience
- Create utility for DFK NFTs and tokens
- Improve overall blockchain and multichain experience
- Innovate the DeFi, P2E, or NFT space
- Focus on empowering individuals and groups within the DFK community
This is important to always keep in mind. These are our goals, we now need to design a process, that serves these goals.
The Grants Committee
For the transparency, fairness, and impartiality of the Grants review process, it makes sense to have a “Grants Committee”. That is how all the major DeFi Protocols operate their grants program.
That way, not only do we get to have a more cohesive, robust and faster processing of applications. But also, KS, builders and the community know who the people responsible for the Grants are, bringing accountability and oversight into the process.
The Committee should be empowered and with fully delegated power to be autonomous and independent. Free of interference both from the KS team as well as the community. They need to remain independent and impartial in their decision making process.
How other DAOs do Grants Committees
The way is has been done on other major DAOs is that the Committee is comprised of elected members of the DAO. With rotation or a more permanent position. The DAO also remunerates the committee members for their work and significant contributions to the DAO as well as satisfying impartiality and integrity as the committee members handle large sums of funds.
For KS, a dedicated team of 3 or 5 team members would make more sense. Game mechanics, Engineers, Marketing and Growth are the specialties that would make sense to staff the Committee.
The critical factor is to ensure those members have, both the time allocated to perform their Committee duties and it is abundantly clear that they operate independently.
A bold suggestion would be to allow 2 or more elected community members to participate in this committee so as to ensure the transparency and integrity of the operation. As well as making the first meaningful step towards having some DAO structure for DFK.
I took the liberty to ask some of my Grant Committee contacts on their processes and organization, here are their responses:
Uniswap Grants Team on Organization
The grant committee was introduced in a proposal and they were accepted by governance. So you can say they’ve been elected. Grants are a lot of work so it is good that some people focus only on this
AAVE Grants Team on Organization
The grant committee is dedicated personnel - you can see we did a call for new reviewers in our latest gov post
Speed of Processing
One of the challenges of the web3 space is the expectation of the speed of development. Compounding that with the current “crypto winter”, building is the only way out.
We ask that the speed of processing is accelerated, as this will ultimately unleash an army of eager and willing 3rd party developers.
With a dedicated and committed committee, you can have a faster turnaround and decision-making.
Teams Need Help More than Funds
We are going through some very tough times. Liquidity is in short supply. We’d like to make the point, that at this stage, the most important thing for the teams that have proposed is help and guidance rather than funds.
Most proposals depend on KS approval so they know they have established a partnership with KS and they know the framework they can operate on.
Proposals like Bless’s and DFK Arena’s, are waiting for months to get the “go ahead”. What they primarily need, is KS’ team assistance, so they can proceed with their integrations and implementation of their products.
All the other proposals are counting on approval so they can be allowed to suggest their services to DFK community members that need them without running the risk of moderator hostilities or even a permanent ban from the server.
Very few of the proposals today, depend on the funds in order to proceed. Fund payment can be deferred, all the Grantees have absolute faith in the goodwill of the KS team and there is no question that KS will make good on their commitments.
And if at the end of the day KS doesn’t make it, well GG, all of the proposals won’t make it with it, so there is no liability or “debt raised” by approving proposals, working with the teams but deferring payment.
Ask for Revisions and Additions Not a Redo
Redoing an entire proposal is very counter-productive for all parties. The Grants team, the builders’ team, and the community.
Whatever additional change is needed and requested by the Grants team, should happen as an amendment or an addition to the existing proposal.
Sending the team back to redo their proposal, is very dispiriting, discouraging and time-consuming. We are demonstrating a lack of respect for the team’s time and effort by asking that.
At the end of the day, it’s more fair to say “your proposal has not been approved, you may resubmit it in 2 weeks, here is why …”.
Grants Risks and Mitigation
We’ve heard this argument a lot from KS Team on why the current Grants process is the way it is:
There is a big risk in approving a grant that then rugs, we are responsible for that and liable for litigation.
In their efforts to find a way to mitigate the risk, and save themselves from community backslash in case something went wrong, the KS team decided to pass on the responsibility to the community at large. So “the community vote” was introduced in the process. That not only is problematic in many ways, but it’s also not feasible. We’ll explain bellow why that is.
But first, let’s see if that risk being perceived has any merits…
Merits of the Risk Perception
Let’s first address the underlying point of this whole premise: “KS is liable for the grantees’ actions”.
So, how do grants and foundations operate across all industries and countries of the world? Surely they have addressed this issue, somehow.
KS has legal, they can consult with their legal team and instruct them, to produce a solution, that removes any liability that may exist.
Second, there is the risk of the grantee running away with the money. That’s where milestones come into play and why they are useful, so they restrict the impact this can have.
Problems by Engaging the Entire Community on Each Grant Proposal
It is highly impractical to ask all of the stakeholders to review, opine and then vote on each Grant Proposal. Here is why:
- As we’ve seen from experience on this very forum, you only get a tiny portion of members to engage in meaningful debate and review. Cannot even be expressed in a percentage, we’re talking 10-20 members compared to the tens of thousands.
- The people who review a Grant Proposal and ultimately decide on its approval or not, need to be highly informed and educated on both the topic the proposal is about and the KS’s vision, operations, and game mechanics. That is simply not the case for the biggest portion of the voting body.
- You are burning out the voting body of stakeholders and risking low participation. Calling for the entire body of stakeholders to hold a vote every other week or more often, is going to have adverse and unforeseen effects in terms of participation, engagement, and how the vote can easily be swung towards one or the other side with a single whale casting their vote.
- Community vote on Grant proposals does not happen on any DAO that has achieved scale. DAO votes are limited to DAO Governance proposals and decisions that need to be made. KS is not a DAO, so it both doesn’t make sense and is not fair, to engage topics as a DAO “a-la-carte”.
Grants Risk Suggestions
At the end of the day, mistakes will happen. As long as there is a transparent process and accountability, these will be understood and forgiven by the community at large. Especially if there is community representation within the Grants Committee.
I asked big DAOs Grants Teams on this particular topic, the question was:
What is your perception of Risk when it comes to scenarios where a grantee might rug. Do you believe you are liable, and if so, how do you mitigate that risk?
Uniswap Grants Team on Risk
we split every grant into milestones, and we release funds as they reach milestones. In so worst-case scenario you get rugged for 20% of the whole grant. Or if they can work without money and reach milestones without any funding then there is no risk
AAVE Grants Team on Risk
Not fully sure i understand. To reduce execution risk for larger grants we will split the pmt into 2 or 3 tranches based on milestones
Consultation and Confidentiality
As we’ve established that it is impractical to expect the entire community to review, opine and vote on grant proposals, the question that arises now is: What should the Grant Proposal submission process be?
There is also, the consideration of confidentiality. As a builder that works on a new venture, I might have sensitive information on my proposal that would not make sense for my competition to have available.
That consideration, however, is against transparency. Can we find a common ground solution though? One suggestion for the builders is to not have to include the “trade secrets” / privileged information on the proposals. And should that be required by the Grants Committee, that they find a way of sharing that discreetly.
Submission of Grant Proposals
What most Grant Teams do is simply have a google form for proposal submissions. I’ve also seen more elaborate forms, like ones produced by notion or even more specialized form creation products.
The bottom line here is that proposals are submitted in confidence to the Committee.
The proposals that do get approved, are the ones that then become public and available to public scrutiny.
Find bellow the responses of big DAOs on the question:
Do you keep the Grants proposals private or you share them publicly - and why?
Uniswap Grants Team on Proposal Publication
We only share grants that are accepted. There is too much spam and out-of-scope projects applying so it is not worth sharing every application
AAVE Grants Team on Proposal Publication
Awarded grants are shown on the website - not all the applications though (mainly privacy concerns with rejected grantees).
Engagement with Grant Proposals Candidates
We’ve seen all sorts and ways of the Grants Committees engaging with the candidates, like employing telegram or slack. But the most successful model we’ve seen is how Synthetix handles applicants:
Synthetix has a dedicated discord server, where the applicants join and get invited on a dedicated channel that is created with them and the Grant Committee.
That way, there is direct communication and collaboration between the two parties and they can iterate as many times to reach to a satisfactory conclusion.
Conclusions
Builders are the most engaged, committed, and invested parties in the DeFi Kingdoms ecosystem. We should take that to heart and empower them so we can achieve all the rest of the goals the Grants Program aims to achieve.
In that spirit, we hope these suggestions and considerations help KS design a new, successful process for their Grants Program.
All the builders stand by KS side and want to assist, participate and help in making DFK a thriving success, in a safe and rewarding ecosystem.
As a final note, I want to extend an invitation to any member from KS responsible for deciding on the Grants Program process, to introduce them to Grants Committee members from the largest DAOs (Uniswap, AAVE, Balancer) who have probably, at this point, dispersed a total of 8-figure USD amounts on grants.