Special thanks to Carl Cervone(Open Source Observer), Jonas(Optimism Foundation), Federico(Reverie), Jon(Spark and Solar Foundation), Scott(Public Works), Luciano(Kismet Casa) and Naoki Akazawa(Fracton Ventures).
I showed why public goods funding is crucial for achieving a positive-sum state in a previous publishing post, “Positive Sum Design with Crypto” [1]. In the crypto space, there are many projects providing funding. Particularly, protocols that launch as DAOs by issuing native tokens often run grant programs. However, in April 2024, MetaCartel, which had dominated the grant DAOs scene, distributed their final grants and concluded its activities [2]. Similarly, MetaGammaDelta, another grants DAO of the same type as MetaCartel, also ended its activities in 2023 [3]. As a result, the momentum of grants programs in the crypto space appears to have weakened compared to before.
This report aims to discover and characterize differences among various grants programs based on quantitative data of grants programs. While each grants program is reviewed individually, quantitative comparisons among different grants programs are not usual. Indeed, surveys of past grants programs sometimes find differences in the types of decision-making bodies or methods, but there are little detailed comparisons [4] [5]. In particular, this paper will arbitrarily select protocols that run grants programs, and conduct a cross-comparative quantitative analysis of different grants programs, focusing especially on the decision-making bodies.
Why Grants Matter
As mentioned in the previous article "Positive Sum Design with Crypto", grants are typically provided for two main purposes. The first is to sustainably provide and maintain public goods. For this purpose, the incentive for an individual to act proactively is relatively low, so governments usually fulfill this function, while sometimes supplemented by other private sectors such as NPOs. Since crypto protocols are often built as Open Source Software (OSS), to develop OSS induces the free-rider problem, so solutions are needed, one of which is grant funding. The second purpose is related to the growth of specific ecosystems. When a protocol issues native tokens, it makes its treasury, and a portion of its funds may be allocated to projects that expand the protocol’s ecosystem further, such as creating new use cases, developing user-friendly products, and enhancing community engagement aimed at acquiring new users. In this case, granters have a clear incentive for proliferating and expanding their protocols, so it’s easier to work on. While, providing grants to OSS developers can be challenging due to weaker incentives on the side of granters. Regardless, providing grants to projects outside the market principles is essential for the sustainable provision and maintenance of public goods, leading to a positive-sum world.
Grants Program History
Next, I will outline the history of grants programs in the context of crypto.
2015: DEVgrants as a Precursor to Grants
The Ethereum Foundation (EF) launched the DEVgrants program in 2015 to support the Ethereum ecosystem [6]. This program was a precursor to the grants program and aims to provide funding to the Ethereum platform and Ethereum-based projects, helping developers allocate significant time to their projects and enhance the Ethereum codebase with valuable components.
2017: Gitcoin as a Bounties Program
Gitcoin was first launched as a bounties program in 2017 [7]. This bounties program aims to promote the growth of an open source movement and enable developers to monetize their skills. This bounties program was similar to gig work and overly transactional without offering recurring stability, so didn’t effectively support the work styles of many open-source contributors [8].
2019: Big Wave of Grants Program - ESP / Gitcoin Grants / Moloch DAO
2019 was a year of significant developments in the crypto grants program, primarily involving three major initiatives.
Ecosystem Support Program
The first is a grant program by EF. EF launched DEVgrants in 2015, but in 2018, they began a grant program focused on scalability, known as Ethereum Foundation Grants, which was implemented until 2019 [9]. Subsequently, EF aimed to increase the impact of their grant programs and started the Ecosystem Support Program (ESP) [10]. ESP aims to expand the ways applicants can receive support, introduce more experts into the evaluation process, enhance the applicant experience, and ensure the EF can actively establish collaborations with people, projects, and areas where meaningful support can be provided.
Gitcoin Grants
In 2019, Gitcoin pivoted and launched Gitcoin Grants Round 1, which leverages Quadratic Funding (QF) [11][12]. As of 2024, 20 rounds have been run. In this inaugural round, there was a $25,000 matching pool, establishing it as a QF platform. Gitcoin was the first QF platform though other QF platforms like clr.fund which launched in 2020, have since gained traction as well [13]. More details on Gitcoin Grants and QF will be discussed later.
Moloch DAO Family
The third is the launch of Moloch DAO. Moloch was established with the purpose of "funding and facilitating the development of public infrastructure related to Eth 2.0" [14]. The impact of Moloch as a DAO in servitude to Ethereum is expected to accelerate by funding a synergistic portfolio of projects and nurturing an ecosystem of builders and thinkers who collaboratively support the success of the projects they fund. This capability provided by the DAO model, in contrast to traditional VC and foundation models, has become an experiment in DAOs for funding public goods. Furthermore, MetaCartel, a working group focused on research around meta transactions, was launched with the goal of utilizing the Moloch framework for a grant program [15], and later at ETH Berlin 2019, a platform called DAOhaus based on Moloch DAO was announced, which allows for the no-code launch of DAOs [16], contributing to the development of the Moloch DAO ecosystem aimed at fund management and grant provision.
Image of Moloch [17]
2020-2021: Protocol-based Grants Program - Retro Funding / Nouns DAO
Between 2020 and 2021, a movement emerged for initiating grants programs centered around DeFi protocols. This movement was spurred by token airdrop by protocols. Airdrops, that is, the issuance of proprietary tokens, allowed protocols to have their own treasuries. Consequently, these funds were utilized to expand their own protocol ecosystems through grants. For example, proposals to start grant programs which Uniswap made and implemented in 2020 [18] and Compound did in 2021 [19]. These initiatives became a catalyst for making it mainstream for DeFi protocols to run their own grants programs.
Nouns DAO Family
At the same time, Nouns DAO was launched [20]. In Nouns DAO, an NFT is minted and auctioned off once a day. The winner of the auction acquires the NFT, and the funds spent for buying the NFT are collected into the Nouns DAO treasury. The sales from these NFTs serve as a funding source for grants within Nouns DAO. Remarkably, in just about two months, they were able to collect 10,000 ETH, employing a different method from issuing proprietary tokens as seen with Uniswap and Compound. Additionally, Nouns DAO offers several grant programs [21] and has fostered various forked projects, thus expanding its ecosystem similarly to Moloch DAO. Nouns DAO not only funds community activities such as the production of Nouns goods and sponsorship of meetups, but also engages in public goods funding, such as contributing to a matching pool for Gitcoin Grants [22] and funding the Protocol Guild, which aims to support contributors to Ethereum [23].
Retroactive Public Goods Funding
During the same period, Optimism, known as a Layer 2 solution for Ethereum, announced a grand experiment called Retroactive Public Goods Funding [24]. This mechanism uses its own sequencer fees as a funding source to support projects that have proven beneficial in the past, unlike conventional models that fund future projects. At the time of writing, the fourth round of Retro Funding had been announced, indicating that the experiment is actively progressing. More detailed information about Retro Funding will be discussed later.
Fig2. A Cycle of Retro Funding [25]
2022-2024: More Effective and More Democratic - Impact Evaluation / Community-led Grants Programs
Impact Evaluation As initiatives like Retro Funding gain momentum—these provide financial support to projects that have proven beneficial in the past—determining what qualifies as 'beneficial' becomes crucial. So, Hypercerts were proposed as certificates to prove the impact a project has had on society [26]. Hypercerts are created and sold as impact certificates when a project as a public good is created. The impact a project produces on society is observed and displayed as a signal, and funders make transactions of Hypercerts based on the anticipated future impact on society and the proven past impact. This mechanism is expected to be a new way of public goods funding because it allows projects to raise funds based on the expected future impact, and funders can profit by selling their Hypercerts when the project actually delivers that impact. Currently, there is active discussion about how to measure impact.
Fig3. A Diagram of Hypercerts [26]
Grants Stack / Allo Protocol
Gitcoin has also introduced a new development, unveiling the Gitcoin Grants Stack. This tool is designed to enable other communities to replicate the grants round mechanism same as Gitcoin leveraging QF. So, the release of the Gitcoin Grants Stack is expected to facilitate the horizontal expansion of Gitcoin, promoting the implementation of QF rounds by entities other than Gitcoin. More details on the Gitcoin Grants Stack will be discussed later. Also, Gitcoin Grants Stack is built by Allo Protocol, which is a set of smart contracts that enable the democratic allocation and distribution of capital. Anyone building custom tools for communities to allocate capital or for projects to receive capital should use Allo, while the Grants Stack offers everything you'd need to run your grants program without writing any code, so the Grants Stack is a good fit for you who want to run your grants program.
EasyRetroPGF
EasyRetroPGF is an open-source tool that enables the easy execution of Optimism's Retroactive Public Goods Funding rounds [27]. Supported by Gitcoin, it is configurable for a wide range of chains and settings. This tool facilitates the spread of a new model for public goods funding, thereby promoting community participation. Actually, Filecoin and POKT Network run grants programs supported by EasyRetroPGF [28] [29].
Survey Methods
This survey quantitatively compares the grants programs offered by Uniswap, dYdX, Optimism, and Gitcoin. Particularly, the focus was on the methods of selection and attributes for the individuals who have been managing and making decisions in these four grants programs. For Uniswap and dYdX, the managers of the grants programs are composed of members who are arbitrarily selected and approved by token holders. Subsequently, the Uniswap Foundation was established, which now manages the grants program. The selection methods used by Uniswap and dYdX, where the grants programs are operated, are referred to as "top-down type". In Optimism, grants managers are selected by token holders, or meet certain objective criteria. This is called the "bottom-up type". As for Gitcoin, there are no specific managers who decide who received funding and how much; instead, the grants amount is determined by an algorithm known as QF, based on contributions from an unspecified number of donors. This is termed the "QF type (algorithmic type)”.
Fig4. Category of the way of selecting grants programs managers
In this survey, I have examined the overview of each grants program by analyzing data such as the grants amount, the number of grants, and the transition of grants amount per round. To clarify the differences among the "top-down type," "bottom-up type," and "QF type (algorithmic type)," I have compared the grants amount allocated to specific grantees across these grants programs. However, since each grants program operates with a different available budget, the comparison has not only been based on the absolute grants amount, but I have normalized the data by calculating the grants amount per project divided by the total disbursement for each program, allowing for a more equitable comparison.
To compare more specifically and quantitatively, I arbitrarily selected specific grantees and examined the amount of grants provided by each grants program, the differences in funding received by the grantees from various grant programs, and the proportion of grants amounts received by each grantee.
Grants Programs Focused on in This Survey
As seen, various grants programs are operated in the crypto space. This time, I have conducted a cross-comparative quantitative analysis focusing on Uniswap, dYdX, Optimism, and Gitcoin. These protocols were arbitrarily selected for their long history of running grants programs, and a quantitative comparison will be performed. I will now align the information about the grants programs by these protocols.
Uniswap
Uniswap, a decentralized exchange, issued its own token called UNI in September 2020 and established a treasury governed by token holders. In December 2020, Jesse Walden from Variant and Ken Ng from Ethereum Foundation proposed the Uniswap Grants Program (UGP) with the goal of helping the Uniswap ecosystem grow [18], and the UGP proposal is approved, the program will start accepting applications at the beginning of 2021, aiming to catalyze growth and innovation within the UNI ecosystem. The management of the program will be managed by a committee composed of one lead and five reviewers, which allows for the swift and efficient distribution of funds without the need for individual applications to be voted on.
UGP is a proposal designed to leverage grants from the UNI Community Treasury to support the development of the Uniswap ecosystem. The main objective of this program is to kickstart with funding for small-scale projects, such as sponsoring hackathons, with the aim to eventually expand the funding scope to include core protocol development. The purpose of the UGP is to foster growth within the Uniswap ecosystem by identifying and rewarding talent early on through developer incentives, bounties, and infrastructure support, thus maintaining Uniswap as a central hub for DeFi on Ethereum. The initial quarterly budget is set at a maximum of $750,000, with the budget ceiling and efficacy reviewed every six months. The committee structure is designed to efficiently allocate project funds, with only the lead receiving compensation for their role. The program begins with a relatively narrow focus, starting with initiatives such as hackathon sponsorships and specific bounties to bolster the Uniswap developer ecosystem. As the program demonstrates its effectiveness over time, it is anticipated that the scope of funding allocations will broaden to include enhancements to frontends, trading interfaces, and eventually core protocol development. The success of the program will be measured by the number of funded projects, an increase in applications per quarter, engagement in projects post-funding, and overall community involvement. Furthermore, in July 2021, UGP was extended and they changed members of the committee [30].
The UGP will run until summer 2022 and the establishment of the Uniswap Foundation (UF) was proposed in August 2022 [31]. The proposal to establish the UF aims to promote the decentralized growth and sustainability of the Uniswap protocol and its ecosystem. This proposal suggests that the UF will facilitate the use of the protocol, invigorate the governance process, and advocate for the community and protocol. To achieve this, a team of 12, led by Devin Walsh as the Executive Director and Ken Ng as the Operations Head, will be formed. The requested budget is $14 million for operational costs and $60 million for an expanded UGP budget, totaling $74 million. This funding is deemed necessary to support the initial activities of the UF. Additionally, the UF aims to acquire 2.5 million UNI to enhance its participation in the governance process, enabling delegation to community members, voting, and making proposals. The UF is an independent entity, incorporated in Delaware, with its primary goals being to support the growth of the Uniswap protocol and its ecosystem, energize the governance process, and advocate for the protocol and community. [32][33][34][35][36]
dYdX
dYdX, a decentralized exchange, issued its own token called DYDX in September 2021 and established a treasury governed by token holders. In November 2021, Reverie proposed the dYdX Grants Program (DGP) with the goal of supporting the growth of the dYdX ecosystem [37], and the proposal was approved in December 2021 [38]. The program began with a budget of $3 million per quarter, updated every six months. It is managed by the dYdX Grants Committee (DGC), which was established with Reverie as the grant leader and comprises eight reviewers. These reviewers manage the DGP through a multisignature system.
DGP v1.0 was executed in January 2022, and to launch a 12 month DGP v1.5 was proposed after the end of the six month grant program [39]. A proposal has been made for the launch of version 1.5 of the dYdX Grants Program. This initiative aims to support various efforts to increase dYdX's user base and trading volume. The rationale behind the proposal is to leverage the lessons learned from dYdX Grants Program v1.0 to build a more effective and focused grants program. The program is dedicated to promoting international growth and addressing upcoming challenges with the dYdX Chain through research initiatives. As part of this effort, grants will be provided to contribute to dYdX's growth where applicable. The proposal also includes personnel changes. Specifically, Su Zhu and Zhuoxun Yin will be removed as trustees of the dYdX Grants Trust, and Lily Liu and Alexios Valonasis will be appointed in their place. These changes are made through a regular rotation of trustees based on contributions and availability. Details of the proposal include setting aside $5.5M in funds, with a 6-month period leading up to the launch of V4. The funds are planned to be used for compensating grant recipients, paying the program lead, and covering other program costs. Projects to be funded will be selected based on milestones to be achieved, and a compensation structure will be established accordingly.
DGP v1.5 executed in August 2023. In July 2023, a proposal called the dYdX Grants Program v1.5 Extension was submitted by Reverie with the aim of supporting the continuous growth and evolution of the dYdX protocol [40], and it was extended for six months from September 2023 to March 2024. A proposal has been made to extend the DGP v1.5 with the goal of supporting the continuous growth and evolution of the dYdX protocol. This proposal suggests extending DGP v1.5 for up to an additional six months, focusing on infrastructure, Maximum Extractable Value (MEV), validators, and community initiatives during this period. The rationale behind the extension is the need to adjust funding policies in response to the rapid evolution of the dYdX protocol and to accommodate the development of dYdX v4. The proposal recommends restructuring DGP by establishing two funding buckets and an independent operations contributor. It also suggests changes to the Trustees and Enforcer of the dYdX Grants Trust. These changes aim to enhance the program's efficiency and introduce more distributed ownership and decision-making.
Over the past 18 months, DGP has approved a total of 120 grants with over $3.7 million in funding. This funding has supported critical projects aimed at the success of dYdX v4. However, with the open-sourcing of the dYdX v4 protocol expected in the fourth quarter of this year, it is proposed that the launch of a new version, DGP v2.0, be postponed. During this period, the remaining funds of DGP v1.5 will be utilized to fund direct priorities that will assist with the launch and potential transition to v4. The proposed extension period is up to six months, starting from the current end date of August 15, 2023. During this time, DGP will continue to provide funding for several critical areas, including protocol infrastructure, MEV research and mitigation, and validator and staking tools and resources. This proposal is being advanced through discussions and feedback from the dYdX community, with the final decision expected to reflect the community's views. It represents a commitment to new developments and improvements for dYdX's future, marking an important step in the evolution of the dYdX protocol.[41]
Optimism
Optimism, a Layer 2 on Ethereum, launched its own token named OP in June 2022, which led to the establishment of the Optimism Collective and its own treasury. The Optimism Collective is an assembly of companies, communities, and citizens collaborating to reward public goods and build a sustainable future for Ethereum [42]. Public goods often face underfunding when incentives are not properly aligned. The Optimism Collective adopts a new model, "Retroactive Public Goods Funding(RetroPGF)", to reward those who create or maintain public goods. This method has the advantage of making it easier to agree on what is useful and identify who built it. The governance of the Optimism Collective is experimental and agile, continually iterating towards a system that stands the test of time. Initially, this digital democratic governance model consists of two houses: the Token House and the Citizens' House. The Token House begins with the launch of the OP token, with OP holders responsible for submitting, deliberating, and voting on various governance proposals. In carrying out these functions, OP holders may either vote directly, or delegate their OP voting power to an eligible third party. And the governance of Token House is run on a seasonal basis. On the other hand, the Citizens' House is responsible for non-plutocratic governance and the RetroPGF.
Fig5. The structure of Optimism Collective [43]
Governance Fund
When the initial token was distributed, 5.4% of the total initial token supply was allocated to the governance fund aiming to support the growth of the Optimism ecosystem. This fund is managed by the Token House, which consists of the token holders. The Governance Fund is established with a multifaceted purpose within the Optimism ecosystem. Its objectives are to foster the sustainable growth of projects and communities that align with the ecosystem's values, bootstrap the RetroPGF mechanism in the interim period of Citizens' House development, and enhance Token House governance by ensuring the widespread distribution of voting rights among ecosystem participants who share these values. By providing OP tokens to incentivize future work, the Governance Fund has effectively utilized grants to meet its objectives. The primary goals of these grants include expanding the community of builders who embody the ecosystem's shared values and supporting small-scale initiatives aimed at increasing unique user engagement on Optimism. These grants are delivered through various means, such as builder grants for new projects, sponsorships for hackathons and bootcamps, support for the creation of technical content, and incentives for small-scale liquidity mining experiments and future use. Through this comprehensive approach, the Governance Fund aims to cultivate a vibrant, growth-oriented environment within the Optimism ecosystem, ensuring the continued development and enrichment of its community.
In Season 1, the Governance Fund was managed primarily by token representatives, while in Season 2, Governance Committees were introduced. The proposal for Governance Committees aims to alleviate the overload on representatives by introducing the concept of committees focused on specific subsets of proposals [44]. This proposal will be executed for one season (about 3 months) and is considered an experiment, providing an opportunity to test and reflect on whether committees are beneficial to the governance process. The background for establishing this system includes two main issues faced by representatives: information overload and mismatch of expertise areas. With numerous proposals to process, it is unsustainable for all representatives to handle them, especially since not all are suited to vote on DeFi-related proposals. By introducing committees, the task of evaluating proposals can be divided among smaller, focused groups, reducing information overload and allowing representatives specialized in certain topics to rely on the recommendations of committees for topics outside their expertise. Proposals for forming committees can only be submitted by representatives with more than 0.5% of the voting power and will be experimented with as a new proposal type in Season 2. Committees primarily operate based on a social contract and, apart from governance-approved OP rewards for committee participation, do not directly manage tokens. Committee members will receive OP rewards to facilitate this work, and representatives are expected to delegate the majority of decision-making to the committees. However, if opposing a committee's proposal, representatives are expected to post their reasoning.
Furthermore, starting from Season 3, Grants Council has been introduced [45]. The establishment of the Grants Council aims to optimize and streamline the grant process from the Governance Fund. This is based on lessons learned from attempts made with multiple committees in Season 2, which led to issues such as the complexity of voting cycles, confusion among proposers, and conflicts between committees. To address these challenges, the establishment of the Grants Council, consisting of one leader and eight reviewers with final decision-making authority on grant distributions, has been proposed. The council aims to provide a more consistent process for proposers, set a pace for grant distributions, and define a clear scope, aiming to create accountability through smaller grants and milestone-based distributions. Additionally, the establishment of the Grants Council intends to reduce the number of representatives involved in the decision-making process for grants, allowing representatives more time to focus on other important proposal types, such as protocol upgrades. The operation of the Grants Council is expected to require a high level of transparency, enabling non-council token holders to effectively oversee it.
And then, in Season 4, the focus is on rallying the community around "Collective Intents" and other fundamental concepts [46]. Collective Intents are directional goals that ensure the Collective is aligned and focused, and all work supported or executed by the Collective must pursue these intents. Each intent is allocated a dedicated budget for Season 4. To achieve these intents, specific initiatives known as Token House Missions are proposed. These missions are concrete efforts aimed at achieving an intent and can be completed within a set timeframe. Proposed missions are submitted under a specific intent and are ranked by the Token House within the budget allocated for each intent. Meanwhile, Foundation Missions are defined by the Foundation and take the form of public Requests for Proposals (RFPs). These missions are carried out by groups of contributors known as Alliances. Alliances are formed temporarily to collaborate and complete a mission. They submit proposals based on "Collective Trust Tiers," and Season 4 introduces the beginning of accumulating reputation on-chain through "Attestations".[47][48][49][50][51][52][53][54][55][56][57][58]
Retro Funding
The Citizens' House of Optimism Collective represents an ambitious experiment in non-plutocratic governance and Retro Funding. It aims to co-govern the Optimism Collective alongside the Token House, playing a crucial role in the initial phase by voting on the allocation of RetroPGF. During this phase, the Optimism Foundation oversees the scope, amount, and voting process of funding rounds, noting that holding a voting badge does not guarantee future participation. Funding sources may include allocations from token supply. The role of the Citizens' House is expanding beyond RetroPGF [59], involving surplus protocol revenue allocation, determining criteria for participation in the Citizens' House, and engaging in a checks and balances system to enforce the Collective's Codes of Conduct. During the initial token distribution, 20% was allocated to RetroPGF and managed by Citizen House, that is, by badgeholders who meet certain criteria. The number of badge holders has increased with each round: 24 members in Round 1, 71 members in Round 2, and 208 members in Round 3. In Round 1, 24 arbitrarily selected individuals participated in decision-making as badge holders. In Round 2, additional selections were made from the Optimism Foundation and Token House, and in Round 3, badge holders were chosen more broadly based on various criteria. The essence of RetroPGF is based on the philosophy that it is easier to agree on what was beneficial in the past than to predict future utility. This allows Citizens' House members to allocate surplus protocol revenue or parts of the RetroPGF token allocation to projects deemed to have had a positive impact on the Optimism Collective. This initiative embodies Optimism’s core value of "impact = profit," incentivizing the construction of public goods. Such a rewards system facilitates an ecosystem that is easier to build on, learn from, and connect to, thereby enhancing application usage and increasing demand for blockspace. RetroPGF also offers potential exit liquidity for public goods projects, opening up a market for early investment in these projects. This experiment by the Citizens' House of Optimism is a long-term bet on supporting public goods, building a richer ecosystem, and fostering a better economy. It is an evolving process that relies on community participation to grow and refine, with regular rounds of RetroPGF aimed at experimentally improving the scope of funding, evaluation criteria, and voting mechanisms.[60][61][62][63][64][65]
Gitcoin
Gitcoin is a project launched in 2017 that develops tools enabling communities to build and fund initiatives that are important to them. One of the key projects of Gitcoin is the Gitcoin Grants Program, which provides funding to various protocols and communities, starting with open-source software. The first Grant round of this program began in February 2019, and since then, about 20 rounds have been run. The grants program is famous for adopting a democratic funding allocation mechanism known as Quadratic Funding (QF). Gitcoin has become one of the prominent use cases implementing the QF mechanism, which was proposed by Vitalik Buterin, Zoe Hitzig, and Glen Weyl. The QF model operates under the principle that "the amount of funds a project receives is proportional to the square of the sum of the square roots of individual donations received."[66] QFproposes an innovative approach to funding public goods. This design is based on citizens contributing to projects they find valuable, where the funding a project receives is proportional to the square of the sum of the square roots of the amounts donated. This mechanism aims to optimally provide for a self-sufficient and self-organizing ecosystem of public goods, extending the concept of Quadratic Voting (QV). This funding model is particularly relevant in scenarios where traditional private contributions and government funding mechanisms fall short due to their inherent inefficiencies and the challenges in addressing collective action problems. QF can potentially align incentives better by subsidizing smaller contributions more heavily than larger ones, which could lead to a more equitable distribution of funding and an increased likelihood of achieving optimal public goods provision.
Fig6. A Diagram of QF [12]
Additionally, starting from 2023, Gitcoin launched a new initiative called Gitcoin 2.0. The transformation to Gitcoin 2.0 was driven by many changes in the market, including the expansion of the Ethereum ecosystem, the growth in open-source development, and increasing adoption of grant programs [67]. Gitcoin has transitioned from a centralized platform to a decentralized, modular suite of products and protocols that are accessible and buildable by anyone. This transformation encompasses a variety of capital allocation mechanisms, including Quadratic Funding, Direct Grants, and Retroactive Public Goods Funding, and extends beyond Ethereum to multiple EVM-based networks. As part of this transformation, "Grants Stack" and "Allo Protocol" were introduced. Grants Stack is a no-code platform for managing grant programs, enabling grant managers to easily create, manage, and execute grants such as Quadratic Funding, Direct Grants, and RetroPGF (Retroactive Public Goods Funding). It is an open-source DApp, allowing the community to customize their experiences or fork the application to create their versions. The Allo Protocol is a protocol designed for capital allocation, equipped with a strategy library that supports various methods of capital allocation (QF, RetroPGF, Conviction Voting, and more). Based on a stable, secure core protocol, it manages pools of funds and the permissions over those pools. Each pool is allocated according to specific strategies customized to the developer's needs, demonstrating the ability of Allo to deeply impact by precisely allocating capital on a large scale.
Gitcoin has formed partnerships with both crypto-native organizations, such as Coinbase and Ethereum Foundation, and crypto-curious organizations, such as UNICEF and the American Cancer Society. These partnerships illustrate Gitcoin's wide-reaching impact and reinforce its innovative approach to funding public goods. Collaboration with international organizations like UNICEF offers insights into how blockchain technology can be utilized for social good, highlighting the importance of Gitcoin's push for open-source projects and grant programs on a global scale.[68][69][70][71][72][73][74][75]
Survey Results
Quantitative Comparison across All Grants Programs
So far, while the characteristics of each grants program have been seen, moving forward, I’ll quantitatively compare actual data from each grants program. Although the survey periods differ, the total amount of grants shows that Optimism has allocated the most funding to its grants programs, while Gitcoin has the highest number of total grants awarded. When focusing on grantees, both dYdX and Uniswap exhibit variability in funded grants amounts, with Optimism showing the most variability. Despite Gitcoin having the highest number of grants, the variability in grants amounts per grantee is the smallest, indicating that funding is distributed more evenly across many projects.
Fig7. Total number of grants for each grants program
Fig8. Total grants amount for each grants program
Fig9. Grants amount received by one grantee per grants program
Fig10. Grants amount received by one grantee per grants program (Scale-up)
Although being compared initially based on the pure value of grants amount, there are significant differences in the total grant amounts available, which means that comparing pure grant amounts alone doesn’t provide a fair comparison. Therefore, to normalize the comparison when quantitatively assessing grant amounts per grantee, the total grant amounts are used as a divisor to lead normalized values. Even after normalization, Gitcoin continues to show the smallest variability, which indicates that funding is distributed more evenly across its projects. The most significant difference, however, is observed in the results for Optimism. Initially, Optimism shows the greatest variability in grant amounts per grantee, but after normalization, the variability appears much smaller. This can be due to the larger total amount of funds Optimism dedicated to its grants program. The differences in the variability of grant amounts per grantee become more apparent when graphically represented with a scale-up. The variability in dYdX and Uniswap remains notable, and the small variability in Gitcoin remains unchanged, but Optimism’s variability has relatively decreased. Initially, the pure grant amounts show greater variability for Optimism because it allocates a larger total funding, but once normalized to compare fairly, this variability becomes significantly smaller. This analysis highlights how normalization can provide a more equitable basis for comparing grant programs with different funding levels.
Fig11. Normalized grants amount received by one grantee per grants program
Fig12. Normalized grants amount received by one grantee per grants program (Scale-up)
In this normalized comparison of grant amounts, categorizing them according to the previously defined classifications of "top-down type," "bottom-up type," and "QF type" may lead to clearer results. It can be observed that the "top-down type" exhibits greater variability in grant amounts, while the bottom-up type and QF type show less variability. This suggests that there may be a relationship between the amount of grants and the method of operation of the grant programs. For instance, top-down type programs, often characterized by a more centralized method of selecting managers, may lead to larger disparities in grant amounts due to decisions potentially being influenced by fewer people or a more subjective selection process. On the other hand, bottom-up type and QF type programs, which tend to involve broader community inputs or algorithmic methods in decision-making, can result in more uniform grant distributions. These methods may naturally limit extreme variations as they rely on wider participant involvement or set formulas for grant allocation. Understanding these relationships helps in assessing the effectiveness and fairness of different grant-making approaches, providing insights into how they can be optimized to achieve more equitable distributions of resources within communities or ecosystems.
Fig13. Grants amount received by one grantee per grants program in categorizing the method of selecting the managers
Fig14. Grants amount received by one grantee per grants program in categorizing the method of selecting the managers (Scale-up)
Fig15. Normalized grant amount received by one grantee per grants program in categorizing the method of selecting the managers
Fig16. Normalized grant amount received by one grantee per grants program in categorizing the method of selecting the managers (Scale-up)
Quantitative Comparison in Specific Grantees
Look at specific grantee projects that are arbitrarily chosen to understand the distribution of grants from various programs: "Week in Ethereum", "ETHGlobal", "FlipSide", "ScopeLift", "BuidlGuidl", and "RabbitHole".
Due to Optimism’s larger total grant amount, projects funded by Optimism generally receive a relatively larger proportion of grants from them. However, when comparing the normalized grant amounts, different insights emerge. For Week in Ethereum, FlipSide, ScopeLift, and RabbitHole, the relative proportion of grants from Uniswap is higher. For ETHGlobal, the relative proportion of grants from dYdX is more significant. These projects can be categorized into two groups based on the purpose behind their funding. As the first, Week in Ethereum, RabbitHole, and ETHGlobal receive grants as sponsorships or prizes, likely aimed at onboarding beginners or discovering talented developers. On the other hand, FlipSide and ScopeLift receive funding for specific tasks, such as analyzing Uniswap V3 for identifying talented data scientists [76] and upgrading Uniswap's governance [77]. Particularly, ScopeLift developed a new governance contract called Seatbelt [78] [79], contributing significantly to the Uniswap ecosystem.
These patterns suggest that projects extending the protocol’s functionalities or making direct contributions tend to receive more grants. The distribution of funds may also depend on whether the funding aims to advertise and expand awareness, increase user numbers, discover developers, or is given in a collaboration or outsourcing format to contribute directly to ecosystem enhancement. Projects like Uniswap and dYdX, which operate on a Top-down model, may have stronger incentives to fund projects that can expand their own protocols rather than funding neutral public goods.
Also, the largest grant amount from Gitcoin is seen with BuidlGuidl. As a QF type program, Gitcoin is known for distributing relatively smaller grants evenly across many projects, but it tends to favor projects contributing to neutral and public infrastructures, aligning intuitively with the QF’s democratic funding philosophy. Comparing the grants received by "BuidlGuidl" and ScopeLift, Gitcoin has allocated more funds to BuidlGuidl than ScopeLift, whereas Uniswap has funded ScopeLift more than BuidlGuidl. This may reflect that BuidlGuidl focuses on neutral, high-public-value educational infrastructure, whereas ScopeLift, which greatly contributes to the crypto ecosystem, has a more profit-oriented aspect. These insights demonstrate the differing funding approaches across grants programs, highlighting how funding priorities align with the objectives of the granters.
Fig17. Normalized grant amount received by arbitrarily selected grantees from grants program
Fig18. Normalized grant amount received by arbitrarily selected grantees from grants program
Conclusion
In this survey, I quantitatively compared grant amounts among the programs implemented by Uniswap, dYdX, Optimism, and Gitcoin to find the differences among them. This survey revealed trends based on the characteristics of the grants programs managers (decision-makers). In Uniswap and dYdX, the grants programs are operated by a few arbitrarily selected individuals (top-down type), Optimism is managed by individuals elected or selected based on objective criteria (bottom-up type), and Gitcoin uses a direct democratic method called Quadratic Funding (QF type) where decisions are made by a large number of people. The hypothesis that could be drawn from categorizing these operations is that there is a correlation with the amount of grants. The bottom-up and QF types tend to distribute funds more evenly with smaller variability and smaller grant amounts. Conversely, the top-down type shows greater variability in the amounts received by each grantee, and fewer recipients in general. This means that while bottom-up and QF types distribute grants more evenly, providing a sort of economic infrastructure, the top-down type shows a kind of bias with a greater variability in grant amounts, with fewer recipients receiving larger. This suggests that bottom-up and QF types tend to fund projects with high public utility, whereas top-down types are more likely to fund projects that benefit their own protocols, reflecting a fundamental difference in the underlying motivations of each grants program.
However, while the bias introduced by top-down grants may seem negative from a fairness perspective, I consider this bias important. This aligns with traditional economic theory, where governments intervene to provide goods that are difficult to manage in the market. Top-down granters can play a role similar to government intervention, providing funds for projects that fall outside the scope of QF, potentially introducing serendipity in the public goods market. Therefore, the bias in top-down grants programs may bring positive outcomes when viewed from the ecosystem as a whole. Grants DAO like MetaCartel has concluded, but there may be a need for environments that produce diverse grants programs aiming to provide public goods based on certain or biased values. At the same time, funding "outliers" needs feedback and accountability from the grantee to the grantor, or this means the importance of funding systems based on project outcomes, though general grants programs need too. In the future, measuring the outcomes of grantees can help grantors focus on the types of projects that are most beneficial. Organizations like Venture Grantor [80], as well as VCs and foundations focused on the provision and maintenance of public goods, will also value this role.
This analysis has focused on only four grants programs, and the small sample size limits the accuracy of the analysis. Moving forward, the goal is to expand the scope of the survey and analyze in more detail. Would like to research together if there are DAOs willing to collaborate with us!
Reference
Reference is available here.