[Non-Constitutional] Introducing AREA GrantsDAO

[Non-Constitutional] Introducing AREA GrantsDAO

The proposal below describes a potential GrantsDAO, AREA, focused on supporting the development of an open source software ecosystem on Arbiturm. AREA aims to fund projects that facilitate businesses to operate on-chain. Next steps to implementing the proposal are covered in the request for bootstrap funds, here.


The motivation of this proposal is to fulfill the request for GrantsDAOs here.

This proposal aligns with the mission of growing the Arbitrum userbase and builders and is a response to the specific RFP by the foundation.

Please Note: Timeline, Cost, and Next Steps are included in the associated AIP, HERE.


                   Arbitrum Real Economy Accelerator (AREA)


Despite significant progress in recent years, the transition to on-chain operations for most real economy businesses remains firmly out of reach.

The AREA GrantsDAO (Arbitrum Real Economy Accelerator) aims to narrow this gap by funding open-source software projects that facilitate businesses to start operating on-chain in a number of key operational areas:

  1. Finance: Developing solutions for accounting, payments, asset management, and practical investment tracking tailored to business needs.
  2. People Management: Crafting tools for managing contributor agreements, payroll, expense tracking, and workforce analytics.
  3. Legal Tech: Creation of smart contract-based legal templates for legal entity formation, compliance management, and dispute resolution.
  4. E-Commerce: Building integrations for online sales, Arbitrum-enabled payment processing, and order management.
  5. Corporate IT: Creating Arbitrum-enabled alternatives to intranet IT infrastructure for user account management, knowledge sharing, and document management and storage.

Eligibility Criteria

  • Arbitrum-enabled: Projects must directly or indirectly enable integration with or operation on the Arbitrum blockchain.

  • Enterprise facing: Projects must be targeted at corporate or business applications.

  • Permissive open-source: Public goods funding for software and legal templates that are useful in a corporate or business environment.

  • $10k - $500k range: AREA is focused on funding small to medium sized projects that are substantial enough to justify the oversight cost.

Legal Entity Setup

Caymans Foundation SPV

AREA Grants DAO will utilize a Caymans Foundation Special Purpose Vehicle (SPV) to ensure compliance and facilitate the allocation of resources with legal clarity and in an efficient manner.

To achieve this, we will be working with Daimon Legal and a leading full service law firm in the Cayman Islands. They have already demonstrated a deep understanding of digital assets, Web3 governance and Foundations and have worked with some of the biggest DeFi protocols in the industry.

For ongoing compliance, our chosen corporate service provider in the Caymans currently supports the Arbitrum Foundation. They are intimately aware of both ArbitrumDAO’s operations and the requirements to keep the SPV operating and compliant.

AREA SPV Will Utilize Code Deference

The SPV will utilize appropriate code deference in order to provide the ArbitrumDAO governance oversight over GrantsDAO funding. So long as GrantsDAO complies with the requirements defined by ArbitrumDAO, it will retain independent discretion regarding operations and disbursement of funds via the Caymans Foundation.

However, the Arbitrum Foundation retains the ability to clawback funds if any activity by the AREA Grants DAO poses a risk to ArbitrumDAO or the Arbitrum Foundation. This will be enabled by designing and drafting the SPV’s inter-company agreements in a manner that captures governance choices made by ArbitrumDAO or the Arbitrum Foundation regarding the establishment of the grants program and feeds them into off-chain actions associated with the launch of the SPV.

AREA Operations will use Powerhouse Open-Source Software

AREA requires software platforms to enable streamlined transparency and operations. Powerhouse has extensive experience working with DAOs and now scales DAO operations through customized software and business analysis & planning. Powerhouse is an Ecosystem Actor for MakerDAO and one of the original core units for the DAO, where it built and established the operational infrastructure and business processes to enable the DAO to take over the core operations of Maker from the foundation. Now, Powerhouse is building a software platform for transparent and scalable DAO operations that maintains decentralization and DAO sovereignty.

Powerhouse Provides Storage, Workflows, and Authentication Native to Web3

At the base layer is a new document storage system and decentralized synchronization protocol that uses an Ethereum address for authentication. On top of this, Powerhouse has built several open-source applications and developer tools for DAOs to run their entire operational stack on. Powerhouse is both an optimization tool to make your DAO run more efficiently and a transparency / accountability tool to ensure that the community can track the progress of the DAO.

AREA will use an implementation of the Powerhouse platform for the GrantsDAO, which will be built and managed by the Powerhouse team. This involves both customization of software as well as translating the overall goals of the GrantsDAO into processes, budgets and roadmaps that the DAO will need to function.

This initial customization will consist of:

  1. A Homepage to track the progress of all GrantsDAO grant recipients (Powerhouse Fusion);
  2. A GraphQL API that makes available and easily accessible all operational data, enabling future integrations and AI automation (Powerhouse Switchboard);
  3. A web & desktop application for contributors to collaborate on documents and files while maintaining decentralization (Powerhouse Connect).

Below, we review the core Powerhouse products and provide example screenshots of both the appearance and functionality of the software:

  • Renown is a decentralized identity and reputation solution, providing authorization and authentication to the Powerhouse platform.
  • Connect upgrades DAO operations from the reliance on Google Docs. The decentralized synchronization protocol allows local storage or centralized cloud providers, while enabling much more expressive document types tailored to the needs of the organization.
  • Switchboard is an API that makes all operational data and document operations available for analysis, integration, and AI automation.
  • Fusion is the ultimate dashboard for a DAO. The place to get financial insights on where funds are being spent and the teams, projects and milestones that each grantee will have to meet.

Figure 1. An Overview of the Powerhouse Toolkit

AREA Operations Examples

Figure 2. An overview page provides at a glance information about grantee teams.

Figure 3. All grant recipients will have their own page for the community to monitor.

Figure 4. Recipients have dashboards that monitor progress and project financials.

Figure 5. Each grant will develop a roadmap for completing the grant as part of submission. This information will be clearly communicated in a common format for easier community accountability. The dashboard updates as teams complete milestones.

Budget Transparency

Figure 6. Grantee overview shares AREA financial information at a glance

Figure 7. Community members can dig into the AREA financials, which Powerhouse aggregates from on-chain data.

Figure 8. Historical overviews will show the inflows and outflows from the AREA treasury.

Figure 9. Real-time overviews will provide easy insights into past and current financial health

Figure 10. A Connect screenshot and workflow.

AREA Grants Program Standard Operating Procedures (SOPs)

Next, we outline the high-level processes and standard operating procedures (SOPs) for managing a grants program, specifically for AREA. The program’s process includes six sequential steps: Ideation, Budgeting, Proposal Solicitation, Allocation, Grant Disbursement, and Evaluation. As part of the live operations budget, Powerhouse will develop these workflows into open source software modules. This approach allows for high ROI on the development time, enabling other GrantsDAO to freely adopt, use, and customize these workflow modules according to their specific needs.

Step 1. Ideation

1.1 Submit RFP Ideas

Community Members provide ideas for ecosystem needs and the requirements for proposal submissions.

1.2 Council RFP Review and Feedback

The Council reviews RFPs. They may also create any RFPs they determine are required to address potential gaps. They provide feedback to the community who may then update their RFPs.

1.3 RFP Council Vote

The committee votes to determine which RFPs will proceed to a DAO budget request vote. Successful RFP submissions may be eligible for a modest stipend to support community engagement.

Step 2. Budget Request

2.1 DAO Budget Request Vote

The committee submits a non-constitutional vote to request funds to cover the RFPs selected by the committee. Based on the DAO vote, certain RFPs may be funded while others are deprecated.

Figure 11. Funding of budget request to AREA Treasury Wallet

Figure 12. Distribution of funds from AREA Treasury to the Grants Oversight Wallet

Step 3. Proposal Submission

3.1 Submit Proposals

After the DAO vote, RFPs with budget become active for submission. During the submission window, proposals may be submitted. The program manager ensures submissions contain all the requisite information prior to submission. Proposals must include evaluation metrics, milestones, and deliverables to mitigate execution risk and titrate the distribution of funds.

3.2 Feedback

One council member is assigned to provide feedback on each proposal.

3.3 Selection through committee vote
Each member will review each application and score them using the agreed upon rubric as per the specific RFP. Consistency may be measured and rescore considered for low interrater reliability, which may be measured using Cohen’s Kappa for inclusion/exclusion or a similar measure.

Figure 13. Grant application and procurement Workflow

Step 4: Grants allocation and Initial Disbursement

4.1 Project KYC

Projects submit the requisite KYC/AML documentation for verification as per the SPV KYC AML process.

4.2 Initial Distribution of Funds

Once approved, an initial distribution of funds are provided to initiate the project (Figure 10)

Figure 14. Distribution of funds to grantee with a two day timelock

Step 5: Project kick-off and Monitoring

5.1 Initiation

Project work begins and funds are utilized as per the terms and conditions in the RFP and proposal.

5.2 Progress Reporting
On regular monthly intervals, projects will report on their status and progress towards their predefined deliverables and milestones. The grant program manager will monitor compliance with the regular reporting cadence.

Step 6: Milestone Delivery, Evaluation and Budget Top-ups

6.1 Milestone Evaluation

As projects reach their agreed upon milestones established by the Grantee in 3.1, payments are made accordingly. Project performance will be evaluated as per the terms of the RFP and particular proposal funding.

6.2 Budget Top Ups

As milestones are reached, the Grant Program Manager queues the necessary transactions and the Grants Council Committee Approves and Executes the Transactions.

Figure 15. Budget top ups provided to grantee along validated milestones

6.3 Grant Conclusion

At the end of the grant term, the Grantee prepares a final overview and report for review by the Grant Program Manager, who submits the final report for grading by the Grants Committee.

6.4 Final Evaluation and Grantee Rating

The Grants Council Committee rates both the performance of the project and the performance of the grantee to establish a standing reputation score. Grantees and Projects performance are scored blindly and anonymously among the council. A second IRR check may be implemented to identify inconsistencies in council ratings.

GrantsDAO Wallet Overview

The wallet structure of AREA GrantsDAO is designed to accommodate the constraints dictated by the Arbitrum Foundation RFP. The DAO requested the unilateral ability to clawback funds from the AREA treasury. This is achieved by providing the appropriate Arbitrum representative as the beneficiary address on the gnosis, allowing for real time intervention if required. Arbitrum has also requested a two day time lock on released funds from the AREA Grants Oversight Wallet. Additionally, Powerhouse has provided a standard wallet structure with specific roles to provide best practices workflows which mitigate fat finger and other avoidable errors. The roles involve a finance administrator, who is responsible for queuing the appropriate transactions and an expert role, who is responsible for executing and confirming the validity of transactions.

Figure 16. AREA GrantsDAO flow of funds color coded by wallet structure

AREA GrantsDAO Wallet Roles

Finance Administrator Role

The finance administrator role cues transactions and performs the set up of all transactions into and out of a wallet. It is contemplated as a 1 of 2 Multisig with the Program Manager as the primary active signer. The second signer is a backup administrator assigned by the SPV.

Grants Council Role

The second role is the Grants Council whose job it is to verify that transactions are associated with approved projects and to then release the total project funds to the grants oversight wallet. The council also reviews validity of the transaction, double checks the accuracy, and bears responsibility for executing the related disbursement. The objective of this structure is to reduce certain operational risks to a de minimis level by assigning clear roles and responsibilities. The Exec Council consists of the grants council members and three of five are required to execute disbursements to Grantee wallets.

Expert Council Role

The second role is the Expert Council whose primary job it is to verify the validity of the transaction by confirming the release of the funds upon completion of the agreed Grantee Milestones. The Expert Council is also expected to double check the accuracy of the transaction, and bear responsibility for executing the related disbursement. The objective of this structure is to ensure compliance and performance by grantees while reducing certain operational risks to a de minimis level by assigning clear roles and responsibilities. The Expert Council consists of the grants council members and two of five are required to execute disbursements to Grantee wallets. There may be more than one Expert Council associated with particular verticals to enable a future scalable structure. It is expected that the initial Expert Council will be occupied by the initial members of the Grants Council to streamline operations.

AREA Wallet Structure

AREA Treasury Wallet (2/2)

The owner of the AREA Treasury wallet is the AREA SPV, with the Gnosis Safe “Beneficiary” Address assigned to the Arbitrum DAO and/or Security Council.

Multisig Role: Finance Admin (1/2)

  • Program Manager (Main Signer)
  • SPV Director or Legal Counsel (Backup)

Multisig Role: Grants Council (2/5)

  • Council Member 1
  • Council Member 2
  • Council Member 3
  • Council Member 4
  • Council Member 5

Figure 17. AREA GrantsDAO Treasury Wallet Structure

Grants Oversight Wallet (2/2)

The owner of the AREA Treasury wallet will be the AREA SPV, with the Gnosis Safe “Beneficiary” Address assigned to the AREA Treasury Wallet.

Multisig Role: Finance Admin (1/2)

  • Program Manager (Main Signer)
  • SPV Director or Legal Counsel (Backup)

Multisig Role: Expert Council (2/5)

  • Expert 1
  • Expert 2
  • Expert 3
  • Expert 4
  • Expert 5

Figure 18. AREA GrantsDAO Grants Oversight Wallet Structure

Grantee Operational Wallet (2 / N)

The owner of the Grantee wallet is the Grantee Team, who will be expected to have at least two signers on their multsig wallet.

GrantsDAO Roles and Responsibilities

The following section identifies the initial structure of the Grants Program, including Grants Council Members and the Program Manager.

Grants Council

Role Description

The Grants Council will comprise 5 members who are tasked with reviewing the appropriate grant applications. Grants Council members will be elected through a simple vote of ArbitrumDAO token holders or delegates. If Arbitrum desires, it will have the opportunity to deputize other voting systems or elections in the future.

Grants Council Tenure

The Grants Council will be elected by ArbitrumDAO token holders for terms of 6 months. There are no term limits for committee members. Grants Council members may be removed at any point in time pursuant to an ArbitrumDAO vote or will expire at the end of the term. Elections are expected to occur one month prior to the expiration of the existing Grants Council.

Grants Council Responsibilities

  • Contribute to the development of RFP requirements, means tests and evaluation criteria (as applicable)
  • Evaluate and Score Grants.
  • Operate the Multisig and execute transactions to the Grants Oversight Wallet consistent with Grants Council Approvals.
    *Appointment to an Expert Council where appropriate.
  • Evaluate Project Performance and Milestones.
  • Oversee Performance and Compliance of Program Manager.

Council Member Compensation

A Council Role is a 0.5FTE role for 6 months. Compensation is paid monthly on the first of each month at a rate of 6,000.00, totalling 36,000.00 ARB during the grant term.

Program Manager

Role Description

The role of the Program Manager is to ensure the transparency and efficacy of the GrantsDAO to meet its mission. The Program Manager will oversee the end to end workflow from grant round initiation to conclusion. This work includes review applications for completion, monitoring disbursement of funds to grantees, compliance and completion of KYC, and performance reporting. The Program Manager will be the point of contact for the Foundation, DAO, community, grantees, and the Grants Council. The role will be responsible for coordinating new grant rounds and supporting the drafting of associated RFPs.


  • Oversee the operations of the grants committee and distribution of grants.
  • Ensure the grants program meets the strategic needs of ArbitrumDAO and GrantsDAO.
  • Work with the Grants Council in publishing RFPs as well as incorporating community feedback.
  • Streamline the application process, and manage KYC payments in collaboration with the Grants Council and the GrantsDAO SPV.
  • Prepare transactions to Grantees wallets to be confirmed and executed by the Grants Council .
  • Prepare Transactions to fund the Grants Oversight Wallet upon project approval to be confirmed and executed by the Grants Council.
  • Work on detailed reviews and perform interviews with grant applicants to improve processes.
  • Monitor progress towards milestones, prepare regular reports to communicate grant decisions at the end of the grants cycle.
  • Oversee and assist operation of the Grants Council.
  • Ensure transparency reporting complies with the goal of clear visibility into grant projects progress and budget status.

Program Manager Compensation

The Program Manager compensation covers 1 FTE for a 12 month term. Compensation has been calibrated to match the existing STIP and LTIPP programs at 120,000 - 200,000 ARB annually, distributed monthly, secured in advance quarterly. The Program Manager is expected to have a larger scope of work and responsibilities, including payments flow, when compared to existing incentive programs.

Program Manager Procurement
Powerhouse will commit to sourcing, identifying, and vetting. with the aim of retaining, a candidate at the above price point to operate as an independent Program Manager.

Next Steps: Launch The Initial Software and Bootstrap the AREA GrantsDAO Entity

We have posted a proposal HERE, which identifies the first steps, including a vote to access the bootstrap funds and execute the necessary legal and miscellaneous set up work.