Delegated Domain Allocation by Questbook - Arbitrum DAO Grants

[Saurabh]

Thank you @krst for sharing your comments and concerns with us. Really appreciate it! Please find below our response:

1. After careful consideration and extensive discussions with more than 25 active community members and delegates, we decided to propose a grants program through Delegated Domain Capital Allocation Model with a budget of $1M across two quarters. By funding proposals through this model, domain allocators can set maximum thresholds for accepting a wide variety of proposals that align with their respective domains. Proposals that fall below the set threshold can be approved directly by domain allocators, reducing the burden on the community while reserving the community voting process for proposals that exceed the threshold and require broader community input.

   Upon the election of domain allocators, we will collaborate with them to establish funding caps that optimize the utilization of funds, taking into consideration the duration of the grants program. For example, in the case of CGP 2.0, domain allocators implemented a soft cap of $25k per proposal for their respective domains. Proposals exceeding this maximum threshold were encouraged to seek broader community input. We anticipate a similar approach to be followed in the proposed grants program structure.

   We believe that the success of the grants program should not be solely measured by the number of funded proposals. Instead, the primary focus of the proposed grants program should be to ensure domain allocators fund high-quality proposals that align with the Arbitrum DAO’s ethos and have a significant impact. In the event that our budget runs low after funding multiple high quality proposals, we will request additional funds from the Arbitrum DAO after seeking community’s inputs. In case the budget is underutilised, the unallocated budget will be returned back to the treasury. Considering the proposed grants program will be the first ever for the Arbitrum DAO, we want to be doubly careful on the amount of funding requested, especially in a bear market and these uncertain market conditions. We aim to ensure that the allocated funds are deployed in an efficient, responsible and prudent manner. [As also suggested by other delegates, community members,](https://forum.arbitrum.foundation/t/delegated-domain-allocation-by-questbook-arbitrum-dao-grants/14688/40#:~:text=that the proposal will function as a great trial for potentially a bigger grants program in the future.)) we will request a larger budget if the proposed model of the grants program is successful based on the key metrics specified in our proposal and community inputs.

2. We believe that the proposed grants program design successfully strikes a balance between speed and decentralization. This ensures that the work load is naturally split among domains and subsequently, domain allocators. Domain allocators for each domain will be elected by the community from the community. These elected domain allocators will run their domains in a transparent manner on Questbook. Giving domain allocators the capital and decision-making powers will increase the efficiency of the grants program, without compromising on accountability, which may not be feasible with a committee based approach. For instance, CGP 2.0’s communication TAT was less than 48 hours, showcasing the effectiveness of the proposed model. In contrast, a committee-based design introduces diffusion of responsibilities and consensus-based decision-making, potentially leading to a less optimal experience for proposers and a loss of valuable contributors to the ecosystem. Moreover, having a single committee comprising of four experts compared to those four experts actively running the frontline show themselves ensures both efficiency and diversity within the grants program. Feedback from a few CGP 2.0’s proposers is referenced below:

Unlike closed and non transparent grants program design, the proposed model ensures a transparent review process and decision-making with greater insight into the performance of these domain allocators to the Arbitrum community. This will empower the Arbitrum community to publicly audit the decisions, rationale of domain allocators, based on which the community will re-elect/replace the domain allocators through a community vote. The program design also includes provision for community members or delegates to raise a no-confidence motion to replace/remove any domain allocator if their performance falls below expectations.

CGP 2.0 team reviewed 100+ proposals through Delegated Domain Capital Allocation Model with a proposer NPS of ~9/10. The expertise and experience of domain allocators, coupled with the dedicated Program Manager, greatly contributed to the efficient management of the grants program and the low TAT. This can be considered similar to liquidity mining of intellectual capital within the community. I would love to connect you with the active domain allocators from the CGP 2.0 to gather their detailed feedback on workload, the Delegated Domain Capital Allocation model, and Questbook.

3. Really appreciate you bringing this up. Once a proposal has been accepted by the domain allocator, each grantee will be required to undergo a KYC process. We suggest using Synapse for KYC services and Docusign for all contractual agreements, as we have been using these services for CGP 2.0. However, we are open to alternative suggestions from the domain allocators once they are elected. The Program Manager will work closely with the domain allocators to ensure that the KYC and contractual agreements are completed before making grant payouts to the proposers. To ensure accountability, grantees will be required to include milestones as part of their proposals. Payouts will only be triggered once these milestones have been successfully completed. Additionally, all milestones, along with their respective funding requests, will be publicly visible to the Arbitrum community. This transparency will allow the domain allocators and the Arbitrum community to monitor the progress of grantees and hold them accountable for delivering on their milestones.

CGP 2.0 grantee’s milestones

4. Before sharing our proposal with the community, we have proactively incorporated the feedback from the members of the Arbitrum core team, foundation, delegates and important community members. As specified in our proposal, the elected domain allocators will run their domains independently in a transparent manner on Questbook. They will take independent decisions for their respective domains based on their evaluation rubric. If deemed necessary, they may choose to consult the Arbitrum core team and members of the foundation to ensure alignment with the with the Arbitrum’s roadmap and gain additional insight into the considered proposal.

   The Program Manager will be responsible to facilitate the communication between the Arbitrum core team, foundation, and the domain allocators. For instance, in case of CGP 2.0, Program Manger, domain allocators, and proposers all participate in a shared Discord group for quick query resolution, seek clarifications and general discussion.

5. We acknowledge the importance of referencing relevant sources and apologize for not doing so as part of this proposal. We have presented a broad range of data points to provide a comprehensive overview of the best practices, review patterns and rubrics used across different ecosystems including that of Optimism. Our goal is to provide the Arbitrum community members with all the relevant data points to help them make an informed decision on our proposal. The mention of Optimism’s review rubric in our proposal serves as an example. As outlined in our proposal, “each domain allocator is required to collaborate with the program manager to develop domain-specific rubrics, similar to the provided example”

   We have specified the proposed domains and the rest of the details stated in the proposals after incorporating valuable feedback from several Arbitrum delegates, community members and members of the foundation. At Questbook, we have successfully facilitated the setup and operations of grants programs for multiple reputed ecosystems such as Compound, Polygon, TON etc. I am happy to connect you with the active domain allocators from the CGP 2.0 to gather their detailed feedback. Sharing their comment on this particular proposal for easier access here.