Thank you @krst for sharing your valuable comments and acknowledging the importance of having a grants program for Arbitrum. Please find below our response.
Questbook helped Polygon structure their grants program from ground up. We collaborated closely with their grants team to facilitate the sourcing, review, and distribution of funds to high quality proposals. Throughout the duration of the program, Polygon received 1000+ proposals, with over $700k disbursed to grantees.
However, Polygon’s grants team sunsetted the grants program in December 2022, and as a result to avoid any confusion, the information related to that program is no longer available on the Questbook’s product. We have shared a detailed case study highlighting our learnings and contributions to Polygon’s grants program. Please find below the case study and Polygon grants’ lead comment available publicly for reference:
Grendel (Polygon DAO Lead): https://twitter.com/GrendelMarco/status/1583568394309148673?s=20
Polygon grants program case study:
It Takes a Village — Questbook
Thank you Krst for your analysis and comments. At the start of CGP 2.0, the total budget was spread equally across 4 domains. However, as the program progressed, adjustments were made to the budget allocation for each domain. These adjustments were based on factors such as the number of proposals received and the remaining funds available for each domain at the end of the first quarter. This approach allowed for a more efficient capital allocation across different domains while considering the overall grants budget. Compound community was informed about these adjustment after the first quarter by the Program Manager.
The allocated funds specified in your comment above are the available funds in each domain level safe taking into consideration the readjustment and COMP’s price as on July 26th, 2023. A detailed breakdown of all the funds committed to the projects domain-wise can be found here
- To further emphasise, all domains and respective allocators were elected from the community by the community. Interested community members were required to fill out a form to submit their nomination who were further interviewed by Compound Labs team and voted upon by the Compound community.
The announcement for community members to submit their nomination is referenced here -
For KYC and all contractual agreement, we used Synapse and Docusign respectively.
CGP 2.0 went live in Jan, 2023 with a grants budget of $800k spread across four domains. Over the past two quarters, CGP 2.0 domain allocators approved proposals requesting ~ $670,000 in grants (84% of the total budget) and disbursed a total of $252,000 to accepted proposals from a pool of 117 proposals. A detailed funding breakdown for each proposal can be found here and the same is publicly available here. As the grants program was conducted on-chain and with full transparency, Questbook does not possess any data that is not accessible to the community. The data for each domain is specified below for your reference.
| Domain | Grant Amount Paid Out | Grant Amount Allocated |
|---|---|---|
| Dapps and protocol ideas | $160,000 | $384,000 |
| Multi - chain and Cross Chain | $50,001 | $89,003 |
| Developer Tooling | $16,000 | $90,877 |
| Compound III Security Tooling | $26,000 | $105,800 |
| Total | $252,000 | $678,031 |
In total, CGP 2.0 received 117 proposals spanning all four domains, and there were two proposals that needed to be resubmitted under different names. Of these 117 proposals, 46 proposals were accepted with a 40% acceptance rate. The details of these proposals along with their benefits to Compound, grant amount allocated, paid out can be found here.
Indeed, it is accurate that Dapps and protocol ideas accounted for 80% of the total proposals. To ensure effective capital allocation across all domains, adjustments were made to the budget allocation for each domain accordingly at the end of the first quarter. We would like to emphasise that as the grants program was conducted on-chain and with full transparency, Questbook does not possess any data that is not accessible to the community.
As specified in our proposal, CGP 2.0 has maintained an average TAT of less than 48 hours and a funding TAT of less than 2 weeks. I would love to connect you with CGP 2.0 proposers, grantees and domain allocators to gather comprehensive feedback on the overall communication and funding TAT.
Thank you for your thoughtful questions and comments. Really appreciate it! Please find below our response.
These are some of the key learnings and insights we gained while running CGP 2.0.
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Insights and Key Learnings
1.Specific domains made it easier for builders to understand the scope and structure their grants proposal
In case of CGP 2.0, we took a fundamentally different approach by ensuring that each focus area (domain) is communicated clearly. We streamlined the program to four specific domains, providing builders with a more focused and structured framework.
There were multiple verticals that we are able to decide from in terms of what we wanted to build.
2.Knowing the allocator’s name for their domain helped builders with a significantly faster query resolution and TAT
The public availability and accessibility of the domain allocator played a crucial role in maintaining a very low turnaround time (TAT) for CGP 2.0. Builders who applied to a specific domain could directly connect with the respective domain allocator, enabling them to ask additional questions/seek clarifications.
3.A transparent and objective review process significantly benefitted builders, enabling them to incorporate actionable feedback into their resubmissions
In addition to maintaining a communication TAT of less than 48 hours, domain allocators assessed proposals using a domain-specific rubric in a transparent manner. This objective feedback provided builders with a clear understanding of the areas that needed improvement, allowing them to revise and resubmit their proposals based on actionable feedback.
While CGP 2.0 team has received great feedback from the builder community, we have identified areas of further improvement. For instance, Questbook is working with Synapse and Docusign to integrate their service and enable KYC and agreement signing directly from Questbook. This will significantly improve the operational efficiency and funding TAT going forward.
In total, CGP 2.0 received 117 proposals spanning all four domains, and there were two proposals that needed to be resubmitted under different names. Of these 117 proposals, 46 proposals were accepted with a 40% acceptance rate. The details of these proposals along with their benefits to Compound, grant amount allocated, paid out can be found here. The data for each domain is specified below for your reference.
| Domain | Grant Amount Paid Out | Grant Amount Allocated |
|---|---|---|
| Dapps and protocol ideas | $160,000 | $384,000 |
| Multi - chain and Cross Chain | $50,001 | $89,003 |
| Developer Tooling | $16,000 | $90,877 |
| Compound III Security Tooling | $26,000 | $105,800 |
| Total | $252,000 | $678,031 |
The status and comments on proposals under review, accepted, and rejected, along with their respective reasoning can be seen here. The allocated grant amounts ranged from $1,000 to $50,000 as can be seen here. The domain allocators implemented a soft cap for their respective domains. Proposals exceeding this threshold were encouraged to seek broader community input.
We believe that the success of the grants program should not be solely determined by the number of funded proposals or the amount allocated per proposal. It is essential to consider data points such as the impact of the funded projects and their alignment with the ecosystem’s roadmap when evaluating the grants program’s effectiveness.
~ 50% of the funded proposals have been demoed and/or are currently live, playing a key role towards developing new interfaces for supply, borrowing, and governance interactions on the Compound . These proposals also facilitate supply and borrowing activities on Compound. We expect this figure to increase as we have excluded the proposals that have not yet completed their first/initial milestones. The majority of the accepted proposals are actively progressing towards accomplishing their milestones, and we will keep the community informed about the progress of proposals in each bucket.
The details of several such projects can be found here - Comet extension for supporting Real world assets on Compound, Governance Delegation dashboard for Compound Finance DAO, 1Delta DAO - The decentralized margin broker on top of Compound V3, Flexible Voting — Compound V3 Support, Alcancía - Be your own bank for Latin Americans.
Furthermore, the CGP 2.0 team organised a demo day where all grantees had the opportunity to showcase and discuss their projects and experiences with the Compound community. The community was encourage to actively participate, ask follow-up questions. For your reference, a recording of the demo day can be accessed through this link - CGP 2.0 Demo Day
Over the past two quarters, CGP 2.0 domain allocators approved proposals requesting ~ $670,000 in grants which is 84% of the total grants budget. We believe that the objective of the grants program should not be to allocate its entire budget, but to source and fund high quality proposals while investing quality efforts in sourcing such proposals. Furthermore, CGP 2.0 had an acceptance rate of 40%. This acceptance rate indicates high quality of proposal submissions and proposal pipeline.
To boost the number of proposals, the CGP 2.0 team and Questbook made substantial efforts to engage with high-quality builders and source projects. Additionally, Compound Labs sponsored hackathons at various events to increase awareness about the CGP 2.0. Various initiatives, including guided sessions, workshops, and sourcing activities, were implemented to attract talent and attention to CGP 2.0. These efforts resulted in a threefold increase in the number of builders and users visiting Questbook.app within a one-month period.
Considering that the proposed grants program will be the first-ever for Arbitrum and taking into account the developer growth on Arbitrum and its versatile nature compared to more specialized use cases like DeFi and NFTs, we expect a significant number of organic proposals for the proposed grants program. In addition to this, Domain allocators, and the Program Manager will invest significant efforts in sourcing proposals and promoting Arbitrum grants program across different hackathons, events etc. Notably, Questbook is a frequent participant, speaker in all major Web 3 events and served as one of the lead sponsors for Eth India.
CGP 2.0 in close collaboration with Compound Labs took several initiatives such as guided sessions, workshops, and sourcing activities, to attract high quality proposals to CGP 2.0. Moreover, Questbook.app is home to 20,000+ builders each month. To further support these builders in submitting relevant and high quality proposals, the CGP 2.0 team created domain-specific RFPs, which can be accessed below:
Over the past two quarters, CGP 2.0 domain allocators approved proposals requesting ~ $670,000 in grants which is 84% of the total grants budget. As specified above, ~ 50% of the funded proposals have been demoed and/or are currently live, playing a key role towards developing new interfaces for supply, borrowing, and governance interactions on the Compound . These proposals also facilitate supply and borrowing activities on Compound. We expect this figure to increase as we have excluded the proposals that have not yet completed their first/initial milestones.
Taking into consideration the retained allocated budget, the newly elected/ retained domain allocators will oversee the milestone completion of the accepted proposals once CGP 2.0 is renewed, subject to community voting. We anticipate a similar approach for the proposed grants program. Furthermore, we want to emphasise that term elections for capital allocators is a well-established norm in various reputed ecosystems such as Aave, Optimism, Safe etc . When comparing the proposed model with these existing grant programs, the proposed approach doesn’t introduce any significant innovations except for the inclusion of community-elected domain allocators and improved transparency, accountability.
In CGP 2.0, domain allocators created evaluation rubrics specific to their respective domains to evaluate proposals. The evaluation process was conducted transparently on-chain, complemented by well-defined domain-specific RFPs to provide clear guidance and support to builders. 70% of the total accepted or rejected proposals were evaluated using well defined evaluation rubrics. A proposal scoring rubric along with domain allocator’s comments is referenced below:
For proposals that lacked the use of evaluation rubrics, domain allocators provided detailed explanations for their acceptance or rejection decisions in the comments section. The use of evaluation rubrics, transparency of the evaluation process and the impact of accepted proposals on Compound will be taken into account when the community votes on the performance of CGP 2.0 domain allocators, determining whether to retain or replace them based on their performance.
In the case of the proposed model for Arbitrum, domain allocators will follow a similar approach by designing evaluation rubrics and assessing proposals transparently, while defining the acceptance and rejection criteria specific to their respective domains. The Arbitrum community can vote to replace, retain the domain allocators based on their performance using the publicly available data.
Really appreciate you bringing this up. To simplify builder experience and avoid confusion, all amounts are displayed in USD in real time on Questbook. The conversion from the native token to USDC is executed using the Coinmarketcap API, which allows us to show USDC-denominated values both on the platform and at the time of grant disbursement from the multi-sig safe.
CGP 2.0 will be able to honor all funding commitments to all the accepted proposals. We want to emphasise that making payouts to grantees in native token is a well-established norm in reputed ecosystems such as Optimism, Uniswap, Solana, TON etc. In the unlikely scenario of budget constraint solely due to ARB price fluctuations, we will request additional funds from the Arbitrum DAO after seeking community’s inputs.
At the end of the domain allocator’s tenure, the newly elected/ retained domain allocators from the previous cycle will oversee the funding of accepted proposals’ milestones once the milestones are successfully completed within their respective domains.
All unallocated funds will be returned back to the treasury.
Thank you for highlighting this Krst. The Program Manager will be held responsible and accountable for all outcomes outlined under the ‘Grants Program’ section of the roles and responsibilities. The Program Manager will collaborate with the elected domain allocators to achieve those specified objectives.
After extensive discussions with various community members and delegates, we have provided both objective and subjective metrics to allow the community to assess the grants program’s performance more effectively. Additionally, we have outlined specific metrics for each selected project in our proposal here. We are open to incorporating any additional metrics based on your valuable suggestions.
DDA is a community owned community run grants program and the participation of the community is essential to the success of the proposed model. At the end of two quarters, the adoption and effectiveness of the proposed model will be evident through community members’ involvement in proposing domains, self-nominating, and electing for different roles, preferably without our direct involvement.
Really appreciate you bringing this point up. As with CGP2.0, we’ll be working with BLG - Blockchain Lawyers Group for all legal compliances for the proposed grants program. BLG will provide their expertise in contractual drafting, application of KYC standards, and address any potential legal issues during the grant disbursement phase. Their services will be funded from the allocated operational budget (~$3k), and they will also be available to offer early-stage legal support to all accepted proposals. However, we are open to alternative suggestions from the domain allocators once they are elected.
We believe that the success of any grants program should not be solely measured its ability to exhaust its budget or 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 ecosystem’s ethos and have a significant impact. CGP 2.0 domain allocators committed 84% of the total budget to find and fund high quality proposals that benefit Compound and further its mission. A detailed breakdown of all the funds committed to the projects domain-wise can be found here. ~ 50% of the funded proposals have demoed and/or are currently live, playing a key role towards developing new interfaces for supply, borrowing, and governance interactions on the Compound . These proposals also facilitate supply and borrowing activities on Compound. We expect this figure to increase as we have excluded the proposals that have not yet completed their first/initial milestones. CGP 2.0 accepted proposals from a diverse pool of over 100 submissions with an acceptance rate of 40%. This acceptance rate indicates high quality of proposal submissions and proposal pipeline. Throughout the grants program, CGP 2.0 grants team consistently maintained a remarkable average communication turnaround time (TAT) of less than 48 hours and an average funding TAT of less than 2 weeks after the milestone has been completed.
Additionally, CGP 2.0 team has received exceptional feedback from the builder community. After conducting a survey to gather feedback from the proposers and grantees, CGP 2.0 received an impressive NPS score of 8.6/10 and experience score of 8.2/10. Below are some comments provided for reference.
Considering the hours dedicated by the Domain Allocators, Program Manager, and the total funds disbursed as of July 28th, 2023, the maximum realised committee compensation ($100k) represents 11% to 15% of the allocated funds ($670k) and 29% to 39% of the disbursed funds (~$252k). Additionally, the realised compensation represents 10% of the overall CGP 2.0 budget. It is anticipated that these proportions will decrease further as additional accepted proposals are funded upon successfully achieving their milestones.