ArbitrumDAO's 'Biggest Minigrants Program Ever' Fiasco Summary

Grants Discussions
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I am sharing here on this forum as one of the contest winners in the ArbitrumDAO/ThankARB Jokerace contest initiated in late January of 2024.

For those that are not familiar, this was an 8-week series with four winners each week. It was coined ‘Arbitrum’s Biggest Mini-Grant Series Ever’ with 32 winners, each winning 2500 ARB (equivalent of roughly $5k USD at the time).

Each week, contest applicants and winners were highlighted on social media, and winners were excited about their winnings and added to a TG group with the other winners. We were told by the program manager that this is where we would stay in touch for our payouts.

Timeline and Sequence of Events
Here is what I could find on X about the contest on JokeRace (week 4): arbitrumdao minigrants round 4

February 7th
Looking back through dates in the Telegram group, as a week 3 winner I was added to the TG group as a winner on February 7th. On this same date, we were told that Diana, the program manager, had initiated the request for payouts to Arbitrum for all four of us week 3 winners.

February 14th
Diana shares in the TG group that she has requested payouts from Arbitrum Foundation for week 1-4 winners.

February 27th
Diana messages that 7 projects have been KYC approved and will receive their payouts.** to note: KYC statuses of people are being shared openly within a TG group of over 30 people. If they are failing and have not passed, this is also publicly shared.

March 2nd
Winners inquire about their payout status, and Diana mentions that payouts from a week of winners can’t be paid out until all 4 winners KYC checks have been approved from the week. It is not clear the logic from Arbitrum why this would be.

Diana mentions not to DM her as she has hundreds of DMs waiting for her to respond and asks us to message the whole group with our questions, and that she will respond after ETHDenver. I saw that one winner from my same week was paid out, but I wasnt, so I inquired about that because it wasnt clear based on the message she had shared, and then Diana responds she is not sure why either.

Winners noticed that payouts were sent in this first batch to some winners within the grant council and/or Arbitrum partners.

March 12th
A winner shares he is concerned about the upcoming ARB 70% token unlock, and delays in payout timing affecting the value of what he receives with likely impending ARB value drop.

March 19th
Confusion and concern begin, with winners seeing daily messages about the status updates of all rounds, KYC checks, payout timings, needing the funds for development, and suggestions to post on the Arbitrum Forum for answers. Concerns arise about this being a scam contest, and people share they have been now waiting for over two months for payouts. Projects now begin sharing they wont be able to execute due to the large drop in ARB value.

March 20th
Multiple winners including myself share we received 625 ARB, but not the full 2500 ARB. This is a one-time payout with no milestones, so there is no reason why winners should receive partial payouts, especially as other winners received 2500. Two people received 1875.

March 28th
A winner asks for a status update from Diana on why they (and others) received 625 instead of 2500. Diana said she asked Arbitrum but it is not clear why.

April 1st
Winners start trying to track down who the parties are involved in this grant, trying to message Plurality Labs on X but DMs are off. One winner posts (along with others questions about Arbitrum’s integrity and credibility):

“With each passing day, I believe less and less in the Arbitrum project. Bureaucrats.” $ARBGhost

Another message from a winner:

“It’s common knowledge that Arbitrum’s dispersal times are slow, but this is on another level.”

April 9th
Diana shares that by EOW, KYC checks for all winners should be done so then payouts can continue/complete.

April 16th
More winners receive payouts, but some share they received none or partial. One winner received 168 ARB.

April 24th
One winner inquires about her KYC check issue.

May 14th
Diana shares Arbitrum has approved KYC checks for 8 more projects, but there are still 11 projects still waiting for approval. I was one of these, which is confusing as I also received a 625 ARB payout, but I guess even without KYC approval.

May 17th
8 projects receive their payouts.

May 31st
After 4 months of chaos, confusion, lack of communication, and disjointed/haphazard distribution of funds, I decided that I would try to take action by bringing together all the parties I was aware of involved in this grant process, from Arbitrum, to Plurality Labs/Thrive Protocol, to Fractal. I emailed and contacted the Arbitrum team, and wasn’t familiar with Plurality/Thrive Protocol, but found contacts there as well as the Fractal team I had messaged on Telegram. I initiated a TG group with these parties, and a few of the winners that were open to sharing their voices and experiences (multiple shared they were nervous about sharing their voices if it would cause problems with them receiving grants from the parties involved in the future).

June 5th
Thrive Protocol hosts JokeRace intervention calls with winners so we can voice our issues and finally be heard. We and others receive our payments, after a total or a four month delay.

June 19th
The remaining 11 winners are confirmed now paid (four months post-contest).

In summary, these are the major points of concern:

  • Due to major delays on payout timings and resulting ARB value drop, multiple projects were not able to be executed and many half-executed, yet our X handles were leveraged as a part of ArbitrumDAO’s ‘Biggest Minigrants Round Ever’:

  • Our KYC statuses were shared publicly in a TG group with 35 people. It was fully known by all whether we successfully completed or not.

  • There was no communication from the ArbitrumDAO or Thrive Protocol team in this TG group until the very end, and Diana was the only point of contact and clearly overwhelmed with the myriad of issues.

Along the way, I collected feedback from winners that included these responses:

“Have had a horrible experience”

“My team morale is way down and no one believes me we are going to receive the funds”

“I feel like this could easily have been resolved months ago, they could have reissued links to redo KYC, and maybe given an explanation how to do it”

“Also, the projects that were by voting council members, have been paid out in full”

“Anyone else feel like half of us are just never going to see the grant money?” :frowning:

Many of us are understanding that there are learnings in the grant processes. Yet, this has been an experience where grantees found themselves powerless.

In general, grant receivers are grateful for the opportunity to receive grants. However, when the struggle to actually receive funds clouds the experience with chaos, stress over many months waiting, confusion amongst teams and community members - questions arise whether the process was worth it.

The ask here is for financial restitution for the winners that did not receive their payouts on a timely basis, which resulted in more negative than positive for these winners - beyond just the large drop in ARB value.

I am requesting response to this post, specifically about the financial restitution request, from the ArbitrumDAO.

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Gosh, I can imagine how incredibly frustrating and soul destroying this must have been, Kara. As a founder, I fully relate, and totally support your claim. It is very important that the funds do not diminish with time, and the same way we as builders are bound to fulfill our milestones, grant givers must adhere to a code of conduct and a roadmap.

I want to commend Kara’s bravery here talking about this issue and making it visible, rather than complaining about it under wraps. Her concers should be addressed so that all parties involved are able to buidl together and fulfill their dreams on our ecosystem. Respect!

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“The same way we as builders are bound to fulfill our milestones, grant givers must adhere to a code of conduct and a roadmap.”

  • this is spot on, Paloma!!

Thank you for hearing us.

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Thank you for writing this up and sharing about your experience. As you know, once we at Thrive Protocol were brought back into the mix, we were able to

The process had been that we, Thrive delivered the program manager’s winner lists to the Arbitrum Foundation and had the program manager themselves send the fractal kyc link. They then corresponded with the grantees.

While a few of the 11 other programs had some slow timing, especially from the first rounds hosted in August - October 2023, none had delay issues like this one. Here are a few reasons we found around why this program was delayed extra:

  • We hadn’t processed payments before through the smart contracts on jokerace nor gone through the difficulty that layer added to the foundation compliance process.
  • Our management of the program manager didn’t check in to the process - we were reactive.
  • For some reason weeks with all 4 completing compliance got paid quickly, but instead of paying 2/4 or 3/4 who completed compliance, the foundation was waiting for the full 4/4 before paying any. This was a bureaucratic issue where Thrive submitted the pm list of winners so the foundation considered it one process and couldn’t split the process.

Overall, there is no excuse for the timing for the few grantees who did need to wait an exceptional amount of time.

@karakrysthal It would help if you identified the specific grantees who had to wait and how much they missed out on by the price movement. While the grants were denominated in ARB at and susceptible to price fluxtuation, I think it is fair in this circumstance to ask for some amount.

Right now, we don’t have which grants waited an exceptional amount, how much they feel they lost, or what wallets to send compensation to.

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The records have been reviewed by the Thrive Protocol team for the dates and teams paid their grant distributions, and they are the following:

Contest started Jan 15th (running for 8 weeks through March 8th).

1 company (Feb 25th)
12 companies (April 16th)
8 companies (May 17th)
2 companies (June 4th)
4 companies (June 7th)
4 companies (June 19th)
1 company (Aug 1st)

These are more than just a few companies being paid very late, as @DisruptionJoe shared. Its important not to downplay the reality. There were 11 companies paid anywhere from 3-5 months later (August’s payout is not included in this as it is an outlier). 8 companies were paid 2-4 months later, and 12 companies were paid 1-3 months later.

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These is a sampling of testimonials given from winners:

Project:
"We at Everest Mobility received funds June 7th as well. And as similar to those of us affected, we lost nearly 4K.

For us at Everest Mobility, it was a major draw back that led to postponement of our deliverables which was suppose to help us meet the timeline partnering with 2 major events to drive initial usability of our product (mvp), by a few thiusands of people.Not only did this happen, but also lost resourceful engineer whom we were to make initial payment to, via the grant at the time.

We are kicking off our product in Africa, where the drop in value is a major challenge to get things done and payed for, if any delay sets in. So it was a near impossible situation for us with all the emotional/agility/moral down-trend that followed with the grant payment delay. By the time the grant got to us we could barely do anything, especially as the value had dropped significantly, and simultenously with rise in cost."

Project:
"We received funds June 7th. It was similar to you, we lost nearly 4K. For us, we had to put our whole project on hold until next year. We are in Canada and we’re building a growing system in a shipping container.

The grant money was going to help us buy supplies, by the time we got the money, it was too late to build and have a successful crop cycle before it got too cold so we decided to hold off until next year, also, the drop in value resulted in the grant not being enough to help cover the cost."

Project:
One person shared they didnt receive anything until June but it was sent to the wrong old wallet, even though he has asked to update his wallet on file. So he never received anything.

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I think this issue really needs to be brought to the attention of ArbitrumDAO. The delays and miscommunication encountered by the winners during the prize payout process not only affects the execution of the program, but also leads to the erosion of trust in the platform. Especially with the fluctuating value of ARBs, delays in prize money directly affects winners’ earnings and this situation should not be ignored.

My suggestion is that ArbitrumDAO should consider financially compensating winners who are not paid their prizes in a timely manner to make up for the losses caused by the drop in ARB value. In addition, similar events in the future should ensure that the process of awarding prizes is more transparent and timely, and that communication channels are more open to avoid similar problems!

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This situation highlights major issues in grant management and the importance of adherence to a clear, transparent process. The inconsistent payouts, communication failures, and public sharing of KYC status show a lack of operational oversight.
Moving forward, Arbitrum DAO must establish clear accountability protocols.

I heavily support the idea that any future grant program must include a clearly defined timeline and specific accountability for those managing the process as a precondition for approval. Furthermore, there should be potential penalties and compensations stipulated for any infringement on these terms.
A tantum compensation should be considered for this specific case as well.
These measures would help prevent similar issues and help Arbitrum regain greater trust and efficiency in managing DAO funds and grant programs going forward.

Regarding the privacy concerns, i think as long as no personal data is leaked through the process, keeping public accountability of winners failing or passing the checks as an update, should be okay: afterall, the victory is public.
As an alternative i’d propose that no winner is presented as such until it passed the relevant checks: you mention how Arbitrum DAO used your tags to present the winners, but at the same time it is undeniable that winners gained more attention thanks to this as well.

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Thank you for hearing us, @ggmatch. I agree with your points here about standards and terms for grant payout dates that are adhered to.

I am not familiar with the legalities around public sharing of organizations and individuals KYC passing or failure, but it seems this should be shared privately.

Regarding our projects X handles being shared as winners, I believe this has more negative implications than positives when projects can’t actually execute and no progress is able to be shared publicly.

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As the founder of daospace, I want to express my gratitude to @karakrysthal for her tireless efforts in addressing the issues faced by many grant recipients. Her persistence in pushing for resolution was instrumental in getting things moving with the Arbitrum team.

Our project initially faced KYC challenges due to a team member’s location. However, thanks to Kara’s advocacy, we were given the opportunity to redo our KYC process, which ultimately led to the approval of our grant.

It’s worth noting that the public sharing of KYC statuses in the Telegram group was concerning from a privacy standpoint.

I’d also like to highlight the crucial role played by @katharina_thrive from Thrive Protocol. Her regular check-ins and support were highly appreciated, and was assuring to have support from someone affiliated with Arbitrum. Also, Katharina was the one who joyfully informed me when our payment was finally disbursed.

While the process was challenging, the combined efforts of Kara and Katharina were pivotal in ensuring that projects like ours received the grant that was promised to us by being selected as a winner for our respective Jokerace rounds.

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Thank you for sharing your feedback and perspective with us. I’d like to share this response on behalf of the Thrive team.
While we understand that your post is directed at Arbitrum, Plurality Labs (acquired by Thrive) did oversee this initiative in milestone 1a, and we want to provide our quick response to each of your issues as we understand them - both based on your feedback here, and on extensive conversations you’ve had with our team:

  1. We understand that you are frustrated that payout for your prizes from a JokeRace contest took longer than you desired. When we learned that payment of prize money was going slowly, we took over a process we technically weren’t supposed to own and ensured you were paid within weeks. We do want to be clear: there was no promised timeout for payment of winnings. Yes, it was slow, but everyone was paid. Yes, there was price movement of ARB/$$ during this time, but this is the reality of crypto we all deal with. Also, this was prize money, not payment for services, or milestone of value created
  2. We understand that you were upset that the status of KYC (e.g. pass / fail) was shared in the closed TG group of winners. To be clear: no private data from the KYC process was known or shared. The group asked about the status of KYCs and you were updated on the status. All people were eventually paid - and to be paid you need to be KYC’d - so that status is known to everyone. We understand that you were upset about slower than desired communication but there was no data privacy issue.
  3. We empathize with this. Five different parties were needed to facilitate a payment. It was the first time ever that something like this had been coordinated, and it was hard to get info from some of those parties. Still, we could have been better. The impact of the slowness, for us, was that we built a bunch of internal systems and capabilities to take in-house every part of the payment capability. As an example, Milestone 1b grantee recipients have generally experienced much faster, smoother payment times because of the learning.
  4. We understand that you were upset because we included your projects in tweets from a ThankARB twitter account. We want to assure you that we didn’t do that to improve our brand - but rather to give more visibility to smaller projects and builders in Arbitrum. In other words, we did it to improve your brands. Also, you won a contest, so we let people know you won, and then we ensured you were paid your contest winnings. We don’t see any issue here.

Finally, it’s important for us to contextualize all of this: the narrative that was painted in this forum post was pretty bleak. It also doesn’t include any of the many positive comments you’ve shared with our various team members. There is another narrative that you could have told, with the same set of facts, that would lead to a very different conclusion:

Arbitrum DAO cares about lifting up and supporting all projects that can potentially impact the future of Arbitrum, big and small. They care so much that they invested in Plurality Labs (acquired by Thrive) and other initiatives to experiment with different ways to find and fund small and medium sized projects. One of the experiments was conducted via JokeRace, where community members voted on which projects they’d like to allocate some prize money to. You won - and, unlike our requirements in a normal Thrive deployment, you technically didn’t even have to do anything for your ARB - it was prize money. There was some confusion and slowness getting you and others your funds, but eventually all of you received 2500 ARB and some additional positive visibility simply because the Arbitrum community wanted to support you. That’s pretty cool. It’s worth celebrating even!

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