Delegated Domain Allocation by Questbook - Arbitrum DAO Grants

[Saurabh]

Your welcome. Thanks for the support and voting in favour of the proposal

[BlockworksResearch]

Blockworks Research is voting in favor of Questbook’s grants program. A community led grants program is a great initiative and we believe that Questbook is qualified to create this program, that there is sufficient detail as to the processes the program will employ, and that the proposal will function as a great trial for potentially a bigger grants program in the future. We hope to fund a third party to evaluate the efficacy of the grants program trial prior to the request for future funding.

[ITUblockchain]

As the ITU Blockchain delegation team, we have carefully inspected the proposal and after our detailed and careful discussions we decided to give “for” in this proposal. Here are our inferences:

• Accountability is highly crucial for a grant program, and therefore, we appreciate your decision to consider the community’s ideas and separate the proposal with Plurality Labs. Accountability serves as a fundamental element for the success and transparency of a project, and every step taken in this process supports this goal. Moreover, the principle of accountability enhances trust between the participants of the grant program and the community. Transparency regarding how projects are selected and how funds are utilized is vital for the healthy functioning of a grant program. Hence, separating the proposal with Plurality Labs demonstrates that the decision-making process is fair, transparent, and accountable, thereby helping you gain the community’s trust.

• We believe that utilizing Questbook, a previously used and satisfactory platform, in the grant distribution process would bring numerous benefits to the ecosystem. Questbook enables the management of a transparent and fair process through its provided features. The on-chain information flow offered by the platform enhances transparency by allowing the tracking of every step in the grant distribution process. Additionally, Questbook’s ability to track each step of the process contributes to reliability and accuracy, providing a significant advantage.

• One of the advantages of Questbook is its ability to facilitate effective communication and collaboration in an ecosystem where different stakeholders come together. The platform simplifies interactions between grant applicants, evaluators, and other relevant stakeholders. This creates an environment of open and transparent communication among all stakeholders, fostering mutual understanding and cooperation.

• Taking into account the expectations of the community, we eagerly await feedback from the manager to keep us up to date. We believe that the detailed reports prepared will contribute to both transparency and increasing community awareness. The fact that Allocators carry out all their activities on-chain and provide detailed information about the process instills confidence in our accountability. In this way, we believe we will achieve our goal of gaining the community’s trust and creating a participatory environment.

• Firstly, the selection of Allocators by the community encourages community members’ participation in the decision-making process and ensures that decisions reflect the interests of the community. This reflects a democratic process where community members have the opportunity to express their opinions and participate in project management.

• Additionally, the ability to change Allocators if necessary provides flexibility and adaptability in the process. As the project’s needs or community expectations change, the ability to replace Allocators with individuals who have new skills or expertise becomes important for the project’s success.

• Using a multisig wallet for the grant ensures the secure management of funds. This method enables the effective and responsible distribution of grant funds, thereby gaining the trust of the community.

• These compelling points aim to enhance project sustainability and interaction with the community. It is important for these elements to come together to create an ecosystem that supports both individuals and projects. Considering all these factors, we are voting in favor of this proposal.

[maxlomu]

I have also voted in favor of the proposal.

I appreciate a couple of elements in particular:

• It’s a relatively small grant program that will encourage more programs to be set up (aligned with Joe’s pluralistic grants vision), further promoting decentralization.

• For the first 6 months, people that will be able to apply to some key areas of the program need to be core contributors to the protocol. This approach ensures the continuity of Arbitrum’s vision as conceived by the founding team and minimizes potential conflicts of interest. However, I’m hopeful that this prerequisite will be relaxed in the future to invite fresh perspectives into the program’s direction.

• Accountability. The proposal outlines a structure that ensures a high degree of accountability, with the performance of each domain allocator being publicly viewable and auditable.
  We will need to continuously evaluate results, understand how to improve them, and reiterate.

[Camelot]

Camelot will be voting FOR Questbook’s grant proposal.

Simply put, we strongly believe that Arbitrum requires a diverse variety of well-managed grant programmes in order to support a broad range of ecosystem growth, development, and most importantly decentralization. Questbook’s proposal provides confidence that they can facilitate this.

Questbook has provided a thorough breakdown of their approach, with a clear and well-defined methodology and milestones. Their experience from managing other large-scale grant programmes provides confidence in their ability to deliver, and we feel that a programme like this will provide important diversification in parallel to other types of DAO grants.

The use of domain allocators is an effective way to leverage the existing expertise and knowledge within the ecosystem, and we think that this is a key part of any grant programme to ensure that the allocations are distributed in a way that is aligned and coherent with the native builders and community.

[krst]

We are voting AGAINST this proposal in the temperature check.

I’d like to signal our sympathy for the overall idea. We do believe that a Grant Framework for the DAO is needed and should be funded by the DAO. However, we have some serious doubts regarding this proposal. We have already raised most of those issues either in a direct discussion with Saurabh or in the public discussion regarding grants framework. We expect the proposer to provide further clarification before the vote goes on-chain, if it were to go for an on-chain vote unchanged, we will vote against it in current form.

Before I go into specific concerns, I need to disclose that I’m currently a reviewer in Optimism Grants Council and I’ve been reviewer in the Grants Council in the previous season and been involved in Grants Tooling Committee the season before. Apart from that I have experience in real-world grants programs (EU-based grants programmes and startup accelerators).

The main concerns we have are:

• the budget for this Grants program is rather small. It’s just 1M ARB tokens for a 6-month program spread out for 4 domains. However, the distributed amount is just 800k ARB which makes it 200k ARB for each domain, which translates to ~33k ARB per domain per month. How many grants do we expect to provide if the budget is so small? What kind of grants can we fund with such amounts? Compared to Optimism for example - the grants from Builders Grants (which are considered rather small) are max 50k OP each, the Growth Experiments grants are up to 250k OP.
• Individual domain managers who review all grants in their domain are not only prone to bias, but more importantly they can be overwhelmed with this job, given the expected time allocated only 15hrs / week by domain manager. I would prefer some diversity, for the sake of fairness but also for the sake of efficiency.
• the proposal lacks important details regarding how the process will look like from the operational perspective - who and how is going to KYC the grantees for example, who and how is going to keep the grantees accountable, what happens if grantees don’t deliver on their promises?
• the proposer mentions that " program manager will then coordinate with the Arbitrum team and the community to ensure that the proposal is aligned with Arbitrum’s roadmap before making the disbursal", this is an important point, but I don’t really understand it. What is the Arbitrum team mentioned? The Foundation? And how is the program manager going to coordinate with them and with the community? What is the roadmap that is mentioned here? Arbitrum team is mentioned several times here, if that is the Foundation then I would like to see the Foundation confirmation of their commitment to engage in that proposal. @stonecoldpat ?
• less important, but still serious concern - parts of this proposal seem to be inspired by other grants frameworks (like the rubric mentioned in the KPIs is literally copy-pasted from Optimism Grants Council framework that I’ve been working on - without the Grants Council knowledge and consent). I know that at least within Optimism Grants Council there are some concrete assumptions in place that drive such form of Grants Framework (like the direct support and oversight from the Foundation in several aspects). As no sources of inspiration are referenced, I don’t know if the other parts are not copy-pasted as well, so I am not really sure if the proposer ever tried running such a program before.

I believe that this proposal is a good foundation for a proper Grants Framework, but in my opinion it requires some more discussion and clarifications. I’m willing to engage in such discussion and I hope that before it goes for an on-chain vote, all doubts will be clarified and we will be able to vote for it.

[stonecoldpat]

• the proposer mentions that " program manager will then coordinate with the Arbitrum team and the community to ensure that the proposal is aligned with Arbitrum’s roadmap before making the disbursal", this is an important point, but I don’t really understand it. What is the Arbitrum team mentioned? The Foundation? And how is the program manager going to coordinate with them and with the community? What is the roadmap that is mentioned here? Arbitrum team is mentioned several times here, if that is the Foundation then I would like to see the Foundation confirmation of their commitment to engage in that proposal. @stonecoldpat ?

We can help in an operational role where it is required. I don’t think we should be influencing the type of grants issued or deciding the priority list for what should be tackled. The Foundation already has its own grant programme that will be announced soon, so grant programmes via the DAO should really be up to the proposer / community.

Maybe Questbook can appoint an individual who could represent their view on the Arbitrum ecosystem and run grant proposals past them first? I think that individual should be independent of the Foundation though.

[Saurabh]

Hey everyone, thank you so much for the support and for voting in favor of the proposal. Our Snapshot proposal has passed the temp-check.

[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.

[Saurabh]

Hey, @stonecoldpat, thanks for sharing your comments. As mentioned in the proposal, the domain allocators will run their domains independently in a transparent manner on Questbook. They will make independent decisions for their respective domains based on their evaluation rubric.

As you outlined, if deemed necessary, the program manager will facilitate communication between the Arbitrum foundation and the domain allocators for any operational details.

[Franklin]

Good morning, do you believe the Camelot proposal falls underneath this grant framework?

[Saurabh]

Hey @Franklin, thanks for the question. The Camelot proposal and this grant framework are different proposals, so the Camelot proposal doesn’t fall within this grant framework.

[Franklin]

Thanks for the clarification @Saurabh, much appreciated. So from my understanding, this AIP isn’t meant to be a comprehensive program for all Arbitrum grants, but only for the subset of grants that you’ll be responsible for administering.

[JoakimEQ]

Does questbook take any Fees?

[Saurabh]

Thanks for your kind words. The identified domains, specifications and their relevance is specified here. I’ll also be attending all subsequent community calls and will be seeking suggestions/ answering any questions there.

[TempeTechie]

Hi, I support this proposal, but I have a suggestion on the grant request. Since the request is in ARB tokens (800k ARB tokens as visible in the executable code of the proposal - in wei), I suggest that you mention this amount in the text description, to avoid any ambiguity when it comes to the requested amount.

Also, please describe whether these ARB tokens will be converted to stablecoins (nothing wrong with that, but it needs to be clarified), or will they be distributed further to the program manager and domain allocators as ARB tokens.

Thanks!

[Saurabh]

@TempeTechie

Hi, I support this proposal, but I have a suggestion on the grant request. Since the request is in ARB tokens (800k ARB tokens as visible in the executable code of the proposal - in wei), I suggest that you mention this amount in the text description, to avoid any ambiguity when it comes to the requested amount.

Thank you for your support and recommendation. We appreciate your attention to detail. We have specified the requested budget for running the grants program in our proposal as follows.

@TempeTechie

Also, please describe whether these ARB tokens will be converted to stablecoins (nothing wrong with that, but it needs to be clarified), or will they be distributed further to the program manager and domain allocators as ARB tokens.

Thanks!

To clarify, the ARB tokens will not be converted to stablecoins. The grants will be distributed in ARB tokens. The program manager and all community elected domain allocators will be compensated in ARB.

[Saurabh]

Our proposal is live on Tally and we would appreciate the continued support from all the delegates and the Arbitrum community: Tally | Arbitrum Proposal

[krst]

Building on my prior post addressing concerns related to the suggested program, I have conducted research into Questbook’s DDA program’s success in the past and wish to share my discoveries with the community.

I’d like to begin by expressing my gratitude to @Saurabh and the Questbook team for supplying me with data and being willing to discuss the details. I also wish to clarify that my reason for delving into this program’s particulars is solely to foster potential improvements through dialogue. I harbor no ill will or hostility towards the Questbook team. In fact, I desire to see them administer this program to the highest possible standard.

I strongly believe that the opportunity cost of not doing any grants program is higher than the actual cost of this program. Thus I really want to vote in favor of this proposal. However, I have some concerns, whichI am raising in this post, so that we can address them early on and ensure that this program is more likely to succeed. I also raise these concerns to show that we may not want to rely solely on this grant framework and it should not be seen as an argument to dismiss any other grant program proposals submitted in the forum in the future.

I undertook an analysis of DDA’s performance across different ecosystems. Questbook highlighted two programs that they have been running, specifically in Polygon and Compound. From my conversations with Saurabh, it was evident that Polygon was only utilizing Questbook’s platform, without implementing DDA as a structured program. There is no available information on the efficacy of Polygon’s program, and it is no longer available for review on the Questbook platform.

That leaves us with the Compound’s program. Fortunately, its structure is very similar to the one proposed for Arbitrum, which allows us to draw some inferences.

Here is the link to the proposal introducing CGP 2.0: Compound | Proposal Detail #136

We can note that the structure mirrors the proposal for Arbitrum:

• Duration of 6 months, budget of $1M.
• $200k management fees, divided as follows: Program Manager: $60k, Domain Allocators $30k each (though one Domain Allocator, who happened to be Questbook’s CEO, worked pro-bono, so the actual distribution remains uncertain), $20k for miscellaneous expenses (presumably KYC and operational costs).
• $800k to be divided by 4 Domain Allocators.
• The $800k was allocated as follows:
  • $410k for Compound DApps and protocol ideas.
  • $179k for Compound Multichain & Cross-chain.
  • $83k for Compound III Dev Tooling.
  • $212k for Compound III Security Tooling.
• Each Domain Allocator published their unique vision for their domain and their assessment methodology for proposals.

There were a few differences to Arbitrum proposal, though:

• Domain Allocators were appointed by Questbook, not by the DAO.
• A specific KYC procedure and operator were mentioned in the proposal.

The program concluded recently (it was a six-month program, approved and started last December), thus enabling an analysis of the results. Of the planned $800k, only $255k has been paid out so far, as per data from Saurabh (this information is not available on the site), and a total of $451k was allocated throughout the program with the following breakdown:

• Protocol ideas and DApps: $247K out of budgeted $410k (with $163k paid out).
• Multichain Strategy: $82K out of budgeted $179k (with $50k paid out).
• Dev Tooling by Madhavan: $22K out of budgeted $83k (with $16k paid out).
• Security tooling: $100K out of budgeted $212k (with $26k paid out).

It is worth mentioning that the program only received 75 proposals in total across all four domains (Saurabh’s data indicates this, although the website lists a higher number, 117 proposals, possibly due to duplicate counting). Of these 75 proposals, 29 were accepted and funded (again, as per Saurabh, although the website cites a higher number of 48 accepted proposals). Around 80% of these applications were submitted to Protocol ideas and DApps, with the remaining 20% spread amongst the other Domains.

Having reviewed several proposals, I question how Questbook calculates a Total Turnaround Time of less than 48 hours, as some applications suggest a TAT closer to a month. Despite this, I believe a TAT of 2-3 weeks is more than sufficient for both the proposer and reviewer to ensure that a proposal merits funding.

Before we consent to fund the Arbitrum program, certain aspects may require clarification:

1. I would appreciate a summary of lessons learned from the program from the Questbook team. As they have the most intimate knowledge of this program, it is crucial that we understand some key points, such as what has been funded and what was rejected, the minimum, average, median, and maximum grant amounts, the performance of funded projects, why some projects haven’t performed as expected, why the budget wasn’t fully distributed, and what measures were taken to increase the number of applications.

2. I recognize that GCP faced challenges with both building an applications pipeline and monitoring/managing the delivery of proposal outcomes. I want to understand Questbook’s mitigation strategy for these issues in the Arbitrum program.

3. Since the Domain Allocators’ tenure is theoretically over, who will oversee the projects to ensure they meet their milestones in the Arbitrum program?

4. I question the use of review metrics in the process, as many projects lack this assessment (especially those that were not funded). How are these scores factored into the grant approval process? How will they be used in the Arbitrum program?

5. The method of calculating payouts is unclear - Questbook’s platform counts everything in USD, but the program itself pays out in COMP (similar to how the Arbitrum program is intended to be paid out in ARB). How is the conversion performed? How is price fluctuation accounted for?

6. What happens with funds in the multisig wallet? Presumably, any unallocated tokens will revert to the treasury, but what about tokens that were allocated (grant accepted) but not distributed (milestones unfinished)? How will this work in the Arbitrum program?

7. In the “Domain Allocator Roles & Responsibilities” section, a ‘Grants program’ is mentioned, alongside certain key responsibilities. Who is specifically accountable for these?

8. The “What does success look like?” section contains items that I find confusing. For example, “Increase in the homegrown leadership to run grant programs (measured by the number of people running grant programs)” – how is this related to the grant program? How can it be a measure of success for this grant program? The other metrics also appear ambiguous and more subjective than objective.

9. Why isn’t legal compliance included in the proposal? It was explicitly mentioned in the Compound proposal with specific contractors (BLG) chosen for this purpose. There is no mention of legal coverage in Arbitrum.

In conclusion:

1. I believe that the DDA program in Compound did not perform satisfactorily. Although the aim is not to fund indiscriminately, the ultimate goal is to distribute all funds and support many promising projects. If there is a risk that not all funds will be distributed, I would expect the team to take action.

2. Due to that, the cost (management fees) of this program in Compound turned out to be somewhere between 50% to 100% of the distributed funds (depending on how many funds will be finally distributed).

3. It is not clear who will monitor the program’s effectiveness and collaborate with the Program Manager to address any issues that might arise. In the proposal it is mentioned that Program Manager will work “with the Arbitrum team”, but it’s not clear if that should be the Foundation (and if the Foundation is willing to do this) or if this is Arbitrum DAO (and in this case, I’m a little concerned about the diffusion of responsibility)

4. Although I believe it is worthwhile to test this program, we should not rely solely on it, but instead pursue several different grant program approaches.

5. This grant framework does not seem to fit recent proposals posted on the forum (such as Camelot, Rari Foundation, etc.), suggesting we need alternative solutions as well.

[EVevEV]

@krst, I have been a part of both Compound and Arbitrum for a very good time now. To my knowledge, this is the most diligently run grant program I have seen in the last few years. It’s completely transparent, all on-chain.

A few points from my quick look at your comment:

• I think management fees of 200,000 dollars, this is the maximum, right? It’s pro-rated, based on the number of hours and proposals that are received.

• All the allocators who have run Compound’s grants program, they have run a grants program for the first time. It also shows how the Compound community members’ responsibility scope is growing, yes?

• If the allocator is not doing their job well, there is provision to replace them with a new member from the community. The allocators, they are really chosen by the community.

If the price, this is the only contention, we can ask QuestBook to adjust it. Maybe we need a stronger mandatory provision to review and replace allocators mid way for more effectiveness if we all feel it’s necessary.

The reason why I personally like this proposal: it is one of the few proposals that empowers community members to spot and nurture innovation happening on the ground. I would not take away the chance for Arbitrum community members to contribute by running a such grants program.