[Non-Constitutional] Invest in Builders & Ignite ARB Demand with q/acc

Proposals
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Abstract

The Quadratic Accelerator (q/acc) is the next evolution of web3 grant programs. Instead of distributing ARB to projects, often leading to immediate liquidation and subsequent repeated funding requests, q/acc creates a self-sustaining token economies for builders.

q/acc transforms how tokens enter the market with combined competitive application processes, ABCs, quadratic funding (QF), token lock-ups, and fair-launch mechanisms. This unique approach ensures alignment between protocols, projects, and communities in a manner that no other grant program has achieved before.

Arbitrum is the leader in defi among L2s, so it’s fitting and inevitable that q/acc, a defi powered grant program, should be added to its orbit. We can predictably grow TVL, create demand for ARB and improve other onchain metrics for the ecosystem. For builders, we create revenue streams through mint and burn fees, give a subsidized path for tokenization and create DEEP liquidity. And for the Arbitrum community, we enable early access and ownership, fulfilling the dream of web3.

We have had great success working out the kinks of this novel program with Polygon, running our first season on zkEVM, then migrating to POS. We are finishing up the second season over the next few weeks, and expect to run many more seasons with them. The early results of the first season though are impressive already, especially considering it was done on zkEVM.

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We are actively following SOS discussions and will ensure our cohorts focus on builders that directly support Arbitrum and advance the priorities established through that process. We could not be more excited to start this program with a clear direction established for the DAO.

Motivation

The Problem with Traditional Web3 Grant Programs

Grant programs are essential to ecosystem growth, but many fail to create sustainable, lasting impact. Key issues include:

  • Sell Pressure on ARB: Teams sell granted tokens to cover expenses, driving down ARB’s price and reducing ecosystem stability.
  • Misaligned Incentives: Grants provide one-time funding, with no mechanisms to provide revenue, market validation or adoption.
  • Dependency & Unsustainability: Some projects become experts at writing grant proposals rather than building great products.
  • Lack of Community Engagement: Grants rarely create viral marketing effects or drive sustained community involvement beyond the initial funding, QF being a notable exception.

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The q/acc Solution

q/acc flips the script on grants with a mechanism-driven, on-chain approach that allows for investment into small and medium-sized enterprises while creating lasting alignment between Arbitrum DAO, projects, and the community. It can’t replace all grant programs, as many teams should not tokenize; however for the ones that want to, this is an incredible opportunity for them.

Here’s how it works:

  • Applicants chosen: Taking referrals from other grant programs and ecosystem leaders as well as hosting an open application round, our team will filter for the best builders. We would love AAE’s support in choosing the best candidates.
  • Initialization: ARB is used to initialize the token economy for each chosen team, giving the team 90% of the tokens generated, while Arbitrum DAO and q/acc split the other 10% equally. All tokens are locked.
  • ABCs: The ARB is locked in these bancor-style bonding curves which include tributes on mint and burns, creating recurring revenue for the builders, while locking up ARB as collateral, generating demand for ARB if there is demand for the builder’s tokens.
  • q/acc rounds: These are fair launch token purchasing events where all participants get the same price for the locked tokens they buy (an actual fair launch) and they are run like a QF round where the matching pool is used to create secondary market liquidity.
  • Liquid token listings: When the liquidity pool hits the open market, it is listed at a higher price than the locked tokens purchased in the q/acc round, but these are the only liquid tokens that exist so a price floor is guaranteed for several months, creating the ideal conditions that speculators crave to ape into.
  • Graduation: If the builders succeed, and outgrow their bonding curve, achieving a reasonably sized market cap, as well as other KPIs, the minting of tokens is turned off, and the underlying collateral in the bonding curve is given to builders.

q/acc fundamentally changes how projects can be funded. By subsidizing the launch of projects’ token economies, Arbitrum DAO and the supporting community get to share in the upside of the project’s success.

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Proven Success: Polygon zkEVM Season 1 Results

Our recent Season 1 cohort on Polygon has demonstrated the powerful impact of the q/acc model. Selected from over 200 applications (most having no prior plans to launch on Polygon), our first eight projects drove significant ecosystem value:

  • Total Raised: 342,262 POL
  • Unique contributors: 1,253
  • First-time zkEVM users: ~97%
  • Protocol Sponsorship: 1.76M POL
  • Protocol Locked POL: 2.15M POL
  • Onchain Growth: Total market cap of ~$4.5M (≈ 17M POL), representing a 10x grant multiplier

Spotlight: Top Projects from Polygon’s First Cohort

1. x23.ai

Official website: https://www.x23.ai/

X23 is automating the future of decentralized organizations by integrating AI tools to streamline the operation and governance of DAOs. Their platform brings together over 50,000 sources of data to provide a comprehensive overview of DAO activities, making governance more efficient and accessible.

Their AI Gov Assistant (available 24/7 via Telegram) has become a vital tool for DAO delegates, providing detailed and accurate answers to specific governance questions within seconds. By applying state-of-the-art machine learning and LLMs, x23 is solving critical information and decision-making challenges in the web3 space.

X23’s participation in q/acc has accelerated their development and provided the tokenomic structure to align their service with the communities they serve. Their token economy now directly benefits from Polygon’s growth.

2. Prismo Technology

Official website: https://prismo.technology/

Prismo is a layer-2 hybrid public-private blockchain platform already making significant real-world impact. Their solution addresses a critical need: allowing enterprises and governments to maintain data confidentiality while leveraging blockchain’s transparency benefits.

Even before completing the q/acc program, Prismo had implemented a functioning MVP within the Department of Budget and Management (DBM) of the Philippines, where it’s securing critical budget documents. This real government adoption demonstrates Prismo’s product-market fit and utility.

In December 2024, they launched their gas token $PRSM through q/acc, with a testnet planned for early 2025 and mainnet launch expected by Q2 2025. Prismo exemplifies how q/acc can support projects that bring blockchain solutions to traditional institutions, creating substantial ecosystem value.

3. Xade Finance

Official website: http://www.xade.finance/

Xade Finance, led by 18 yr old whiz kid Harshal Madnani, is building the AI-powered “Robinhood of DeFi” - a decentralized platform that makes sophisticated trading accessible through AI insights and tools. Their platform allows users to easily launch, interact with, and invest in no-code AI agents that can trade, tweet, and leverage over a thousand integrations.

Originally conceived as a “super decentralized bank” providing on-chain banking services through in-house DeFi protocols, Xade has evolved into a powerful gateway for AI-powered trading. Through q/acc, they’ve created a token for the first AI Agent on their platform, Alpha Chad. Holding the $ACHAD token gives you access to the AI trading tools they are developing..

Xade demonstrates how q/acc can help sophisticated DeFi protocols build token economies that drive adoption while creating lasting ecosystem value, while also demonstrating the AI Agent use case.

4. The Grand Timeline

Official website: https://grandtimeline.org/

The Grand Timeline is creating the first comprehensive, interactive visualization of blockchain and Web3 history. This historical research project has been developed over three years and will result in collectible NFTs and wearables that document the evolution of our industry.

This project exemplifies how q/acc can support public goods that serve the broader ecosystem. By tokenizing this historical archive, The Grand Timeline can sustain ongoing research and documentation while offering collectors ownership in this valuable historical record.

The creator, a product designer named Igor, considers this work a public good born from his fascination with Web3 history. Through q/acc, this labor of love has become a sustainable initiative with its own token economy.

5. Citizen Wallet

Official website: https://citizenwallet.xyz/

Citizen Wallet is bridging the gap between digital tokens and physical community engagement. Their mobile app and NFC wallet solution empowers communities and events to easily launch, use, and manage community tokens, bringing blockchain utility to everyday situations.

By focusing on accessible tools for real-world adoption, Citizen Wallet exemplifies how q/acc can support projects that extend blockchain’s reach beyond crypto-native audiences. Their token economy now benefits from every new community and event that adopts their platform.

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And that’s just the beginning!

This next cohort is shaping up to be strong as well! We just launched Season 2 for To Da Moon, Web3 Packs, Gridlock & How To DAO. These 4 projects are launching their tokens on Polygon, because of our program, none of them have any requirements to launch on Polygon. If Arbitrum had q/acc, they could have launched here.

Rationale

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Scope & Objectives

q/acc will launch with the following key deliverables:

  1. Deploy q/acc smart contracts on Arbitrum One.
  2. Integrate with Camelot & other leading ecosystem partners.
  3. Run a campaign collecting applications from the most promising teams in the Arbitrum ecosystem (and beyond).
  4. Launch 10 projects in Season 1— carefully selected for product-market fit, utility and aligned with SOS strategy.
  5. Host the q/acc round for Season 1 projects on a new, optimized platform.
  6. List the projects on Camelot.
  7. Evaluate performance and propose expansion for Season 2 based on results.

Project Selection & Quality Assurance

Our selection process ensures we only support projects with real utility and potential—not speculative tokens:

  1. Rigorous Application Process: Only 8 out of 200+ applicants were accepted in our first Polygon cohort, maintaining a <4% acceptance rate to ensure quality.
  2. Product-First Evaluation: We prioritize projects that already have working products or compelling MVPs, ensuring tokens support existing utility rather than being the product themselves.
  3. Experienced Team Assessment: Our evaluation includes team background checks, code & legal assessments, and business model validation. We are open to actively engaging AAEs to ensure alignment and value creation with the broader Arbitrum Ecosystem goals.
  4. Diverse Vertical Selection: We select projects across various sectors (DeFi, AI, gaming, infrastructure) to maximize ecosystem coverage and minimize short term narrative risk. We will however consider the outcomes of the SOS process heavily when selecting builders.
  5. Community Validation: The quadratic funding mechanism ensures projects must attract genuine community support to succeed, providing market validation.

Life Cycle of a q/acc Project

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Marketing and Mindshare

The q/acc team are masters at driving narrative and mindshare. Our involvement in new ecosystems promotes broader interest and attention among token engineers, DAO operators, capital allocation designers, and crypto-native communities. This attention value is automatically included in new deployments. See:

  1. First Place in EthDenver’s Peoples Choice competition: “WTF is Protocol Sponsored Tokenization?!”
  2. Featured in the new “Onchain Capital Allocation” handbook: qacc | Allocation Mechanism
  3. VCs: Unlikely Heroes of Crypto Fundraising? Expert Says Current System Is Flawed, Better Models Exist
  4. Quadratic Accelerator Launches on Polygon zkEVM - Altcoin Buzz
  5. q/acc Goes Live on Polygon zkEVM to Support Sustainable Token Launches - Crypto Daily
  6. Quadratic Accelerator Launches on Polygon zkEVM, Redefining Token Launches - TheNewsCrypto
  7. Quadratic Accelerator: The New Launchpad for Fair and Sustainable Token Economies on Polygon zkEVM | Blockster
  8. q/acc Goes Live on Polygon zkEVM to Transform Token Launches | Currency News
  9. q/acc Goes Live on Polygon zkEVM to Transform Token Launches (12 Dec): Guest Post by Chainwire | CoinMarketCap
  10. q/acc Goes Live on Polygon zkEVM to Transform Token Launches - Benzinga
  11. https://www.binance.com/en/square/post/17471786358626
  12. q/acc Launches on Polygon zkEVM to Redefine Token Economies

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Funding Request

We request $1.05M in ARB ($1.3M to protect from volatility) to launch q/acc on Arbitrum, allocated as follows:

Expense Category Amount Details
Initialize Projects ABCs $500k Launch up to 10 projects, each getting $50,000 of ARB locked in their ABC (Released to team upon graduation)
ABC Bots $50k $5000 for each team to bridge liquidity to DEX from ABCs (Released to team upon graduation)
Matching Pool $250k Used to create protocol-locked liquidity pools (Held in perpetuity by the protocol)
Development & Deployment $170k Deployment, infrastructure, initial marketing, BD, and partnerships (Overhead, one-time cost)
Operations & Scaling $80k 10% of the grants given to teams, used to run and operate the q/acc program (Overhead, recurring cost)
Volatility Buffer $250k Ensures total USD amount is available in ARB when needed (To be returned to the DAO if not impacted by ARB depreciation during the period)

KPIs & Success Metrics

To measure success, we will track:

:pushpin: Onchain Growth – 10x – Market cap growth (in ARB) compared to ARB granted to teams. E.g If we give the teams a total of 1M ARB, we will produce 10M ARB worth of market caps

:pushpin: ARB Demand Ratio – 25% – Ratio of ARB in protocol vs ARB granted to teams. E.g If we give the teams a total of 1M ARB, we will capture 1.25M worth of ARB in the protocol, creating 250k worth of ARB buying pressure.

:pushpin: Sustained Value – 1 year – Long-term market cap growth (in ARB) of tokens. E.g The 10x growth will last for at least a year.

:pushpin: First-time Arbitrum Users – 500 – Number of q/acc participants new to Arbitrum that buy more than $10 of tokens. E.g 500 users that pass our sybil filter will have never used Arbitrum before.

:pushpin: On-Chain Activity – Varied – Trading volume, user participation, and liquidity metrics. This will be tracked but it is so gameable, it’s not worth creating an exact metric, but we will create a lot of onchain activity.

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Risks & Mitigation Strategies

Risk Mitigation Strategy
Smart Contract Exploits Conduct rigorous security audits.
User Friction Create a UX similar to Polymarket
Market Volatility Hold treasury in stables, rebuy ARB right before it is needed
Regulatory Uncertainty Ensure compliance conforms with conservative norms (Geoblocking, low limits without KYC)

Governance & Execution

  • Multisig DAO Oversight – q/acc operations will be managed transparently via an AAE, likely the foundation.
  • Monthly Reports – Clear metrics and updates provided to Arbitrum DAO.
  • Performance-Based Scaling – Detailed evaluation after Season 1 to inform expansion plans.

Conclusion

The q/acc model has proven its ability to create sustainable token economies that drive lasting ecosystem value. By implementing q/acc on Arbitrum, we can attract quality projects, increase ARB demand, and position Arbitrum as the premier L2 for token launches.

Our focused 10-project first season allows us to demonstrate value while managing risk, and minimizing overhead due to deployment costs. We have clear metrics to evaluate performance and inform future scaling. We invite Arbitrum DAO to join us in pioneering this next evolution of ecosystem growth.

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Hey Griff, thanks for putting this together. q/acc feels like the first grant design I’ve seen in a while that treats “sell pressure” and “grant‑farmers” as problems to engineer around, not just accept. I’m leaning in favor of this proposal, but before we go into Snapshot I have few questions / recommendations.

First, kudos for anchoring the proposal in Arbitrum’s context, aligning project selection with the new SOS proposals and tapping native infra like Camelot is exactly the kind of home‑field advantage we should be playing.

My first recommendation would be to try and formalize a partnership with Questbook’s “New Ideas” and/or “Dev Tooling” tracks; graduates who meet preset KPIs could receive a fast‑track slot in the next q/acc cohort, turning isolated grants into a seamless pipeline from prototype to tokenized product.

Secondly, regarding the 250 k ARB volatility buffer, instead of letting it sit idle, we could convert a portion to a stable‑denominated, low‑risk yield strategy, say, parking half in an ARB‑stable vault on Aave or even a covered‑call product, so it earns while remaining instantly withdrawable; do you think this extra yield is worth the added complexity, or should we just keep the buffer in straight stables?

Thirdly, I was thinking we could split the seed capital instead of handing over the full 50 k ARB on day one (release 25 k at deployment and the remaining 25 k only after the project demonstrates real traction, say 200 unique addresses that pass the Sybil filter) so incentives stay live without adding much overhead; do you think this would be wise, or would it slow grantees down?

Overall, I believe this is a promising proposal and I’m excited to see it rolled out on Arbitrum.

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I’ve been following q/acc since your first season with Polygon. There’s definitely something interesting in this fresh approach to supporting builders. I love it. Also, it’s clear builders like it (looking at how many applied for Season 1 and Season 2). I like the program because it brings together builders, investors, and chains in an active way. It also creates a competitive environment from the start, which is a good thing. Builders with strong marketing skills usually do much better in the long run.

I’d like to open up a few discussions around the following three points:

1. Competition with DAO programs and other grants (e.g., Foundation)

In my opinion, both the current D.A.O. program and q/acc will be competing for the same group of builders. That’s totally fine, builders should be able to choose, but it could get a bit messy for the people running the programs. I can imagine a scenario where the same project gets accepted by both, and then timelines clash or even double funding happens. In the final proposal, I’d love to see something on how this will be handled. What would coordination between different grant programs look like?

2. Low market cap concerns

Looking at the outcomes from Season 1 and 2 with Polygon, it seems like investors (donors) didn’t really get much return. Builders benefited the most, which is fine, but the tokens investors got ended up with very low market caps and little activity. For example, the top-funded project from Season 1 was x23, and its current market cap is around $800K. For this program to be sustainable long-term, I feel like this needs to be addressed. Investors should have a solid reason to take part. How are you thinking about solving this?

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DexScreener (x23 token): https://dexscreener.com/polygon/0x0de6da16d5181a9fe2543ce1eeb4bfd268d68838

3. Token launch push

Not every project needs (or is ready for) a token. One of my main concerns with this program is that it might be too complicated for serious web3 startups to join. For small projects, a token might work, but for bigger teams with bigger team, and maybe existing investors, launching a token isn’t easy. They need legal structure, proper distribution plans, etc. Is there a way for these kinds of projects to also be included in the program? I’d love to see this part addressed in the proposal, too.

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Hey @Griff, thanks for this proposal. It’s very well written. We’re still taking time to review it and will provide more comprehensive feedback on all points.

As an initial reaction - it would be helpful if you could share more insight into why you’ve requested $1.05M from ArbitrumDAO, rather than an amount closer to what you received to launch the pilot on Polygon (1.76M POL, which I assume was around $400–500k).

Given the results that were reportedly achieved on Polygon with a smaller budget (which seem impressive), I think ArbitrumDAO might be happy to see similar outcomes without pushing the budget too far.

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100% we have a referral program behind the scenes, which will give upside to Questbook and other allies in the Arbitrum Ecosystem in the teams they recommend to us if they make it into the round.

I don’t think it’s worth the complexity… The goal would be to not sell the ARB and just return it to the DAO if it is unused… in the end, we need stables, which we will convert to ARB at the last minute, so the volatility buffer is there for that, and i’t probably better to just sell less ARB. However, it could be worth the complexity… IF we are just converting it all to stables and then sending the excess stables to STEP to do with it what they will. In the end, I imagine it would all be handled by the AAE that manages us (probably the foundation).

We are discussing some potential changes to the system that rhymes with this, but in the current design, that $50k ARB is all locked in a bonding curve, not given to the team. So they don’t have it, it is collateralizing the initially minted locked tokens (Including Arbitrum DAO’s token allocation). While technically possible to mint the tokens without collateral… I would consider it bad practice.

These teams do not get free ARB, they get a liquid token economy that gives them revenue as they sell tokens, and a subsidized token launch. So the teams this works best for aren’t always the same ones that would apply for a questbook grant, they are likely to be looking for investment, something where maybe they have a good business model, and clear token utility, but they don’t have an obvious path to becoming billion dollar unicorns so VC’s are not really interested.

This is great feed back though! Thanks @0xDonPepe!

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We absolutely will work with other grant programs, and we have a referral program for them to bring us good teams. But the crossover will probably be more with OCL and the AF more than questbook. I would love to see us launch some Orbit Chains’ Gas Tokens on q/acc, like we did for Prismo in season 1. We compliment existing grant programs well, because we don’t impose product deadlines or milestones, it is pure incentive alignment. If projects do well and the market buys a lot of tokens, they collect revenue and have clear upside in their own success (they have over 50% of the Max Supply). If they don’t well then they don’t collect revenue and market pushes their token price down.

Actually, low market caps are our sweet spot :-D. Even though the market caps are low, the market caps for the Season 1 teams during their q/acc round were even LOWER!

Every single person who bought in during the first q/acc round got a very good deal on the token, and relative to POL, the price people paid is up at worst 6% and in the case of Prismo, supporters are up 34%. There was a horrible market down turn in Q1 so in dollars people are down in some of the projects… but it would be worse if they were just holding the POL they put in, and much worse if they were holding low cap alts in the same market cap range.

Here is the list of prices people paid and the current market price for Season 1 projects:

Price for q/acc buyers (in POL) Price on May 15 (in POL) % Increase since q/acc 1
Prismo Technology 0.2602 0.3492 34.23%
Xade Finance 0.2636 0.3271 24.09%
Citizen Wallet 0.3028 0.371 22.52%
x23.ai 0.4035 0.4903 21.51%
The Grand Timeline 0.2521 0.281 11.46%
Akarun 0.2272 0.2457 8.14%
Ancient Beast 0.2229 0.2389 7.18%
Melodex by DjookyX 0.2233 0.2377 6.45%

We launch at low market caps and provide deep liquidity for legit utility tokens. This round ended right before Trump came to office and the market TANKED… yet the tokens are still alive, they didn’t crash like the other small caps. There is reduced risk, so there is also reduced upside… It is not really built like other launchpads which are really just a complicated form of gambling… Investors can make small steady gains (relative to ARB) while supporting builders.

That said, tokens bought during the first q/acc round unlock in June, and stream for 6 months, so the gains made so far are not locked in. The teams still need to do well for investors to make money. There is no magic money making tokenomics here… Teams have to produce for their supporters to make a profit.

100%, some projects don’t need a token or aren’t ready for a token. This program is NOT for them. It is not a one size fits all solution, it is only for projects that can benefit from launching a low cap utility token with deep liquidity, and they want to do a fair launch (not a pump and dump). However, you would be surprised at how many teams there are like this.

On the legal side, we partnered with MIDAO to give our builders a legal structure in the Marshal Islands that works with our token design, some of the projects took that route and others already had a legal structure that worked that they set up before being accepted into our program.

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The 1.76M POL is the amount of POL given to the teams (not including the overhead cost). Which is about the same design for this proposal, the only difference is 10 teams instead of 8, the Polygon season 1 round had the same $250k Matching Pool and $50k to launch each bonding curve, and $5k for each Arb Bot.

There are 2 main reasons we chose 10 teams for this round. #1 to keep the overhead low, the overhead is 24% here. Our first draft of this proposal was for 2 seasons and 30 teams which had the overhead at 18%, but the initial feedback from Raam and others that we discussed with was to reduce the budget. So we thought 10 was a happy medium.

#2 The more teams in the q/acc round, the more network effects. I have run a dozen QF rounds and there is a clear correlation between the number of teams participating and the overall activity of the round. Imagine, each team brings an average of 30 supporters… and then each supporter buys tokens on an average of 3 teams… and you can see how exponential the math is. More teams = better!

That said, we can reduce the number of teams more, but it will definitely increase the overhead as a % of the grant, as the deployment costs are hard to reduce.

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Hi @Griff,

Thanks for this interesting and innovative proposal. I’d love to better understand your broader operating model so we can set expectations clearly.

From what I gather, q/acc is positioned as a multi-chain protocol that you’re deploying across different ecosystems (e.g., Polygon, now potentially Arbitrum), rather than something exclusive to one chain. That makes sense! Especially if the goal is to standardize more sustainable token launches across Web3.

That said, I’d appreciate clarification on a few points to better understand how this fits within Arbitrum’s strategy:

  1. How do you prioritize chain-specific alignment when running q/acc across multiple ecosystems? For example, are you planning to tailor cohorts to each chain’s priorities, or do you envision more generalized deployment?

  2. Could you share more on your governance and funding model? For instance, do DAOs fund each cohort separately, or is there shared infrastructure (dev, ops, tooling) across chains?

  3. Would Arbitrum have any ongoing role e.g. representatives, visibility, or feedback loops in guiding cohort selection, KPIs, or narrative direction if this pilot is funded?

  4. Finally, are you planning to run a cohort with another ecosystem at the same time as the proposed Arbitrum cohort, or would this be a dedicated focus?

q/acc seems like a cool model. I’m simply looking to understand more clearly how it would operate with Arbitrum, especially given your cross-chain strategy.

Thank you

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Below are the opinions of the UADP:

Thanks @Griff for this proposal. It’s nice to see creative alternatives to customary grant programs like this.

There are a handful of aspects that we like about the q/acc setup, as it—

  • Makes the DAO a stakeholder in the grantee’s project (shared upside)
  • Creates a type of utility/sink for ARB (by locking it up temporarily)
  • Encourages the grantee to succeed and draw investors (because they don’t get the ARB unless they do)

We strongly believe that one of the criteria for selecting candidates is whether or not the project issuing a token is warranted. The majority of token launches are a form of raising capital as opposed to some sort of utility or actual ownership over a business/subject to yield. The latter is of course more difficult due to regulations, and we’ve seen smaller projects simply issue traditional equity to investors as opposed to offering a token—these projects also apply for grants solely for funding without explicit association to a token. If projects don’t have a concrete vision for their token, it may be best for the q/acc team to divert them to alternative grant programs. One other aspect would be to work with other grant teams, having them funnel promising projects that may be ready to issue a token. We more easily conceive the q/acc setup as a later-stage funding mechanism, kind of like a follow-on investment. Many grant programs suffer from not doubling down on their winners, so there’s merit to this approach. This may also make your due diligence process easier where builders can take an initial survey, and if they indicate no desire for a token now—or are too early in development/traction—they can be routed elsewhere.

Looks like overall program KPIs are presented, but could we get some more clarity on the KPIs required for the unlock to happen as a project graduates? Are these projects specific or generalized? How public will they be/is there a place to view milestones till graduation?

What’s the long-term vision behind dealing with the tokens that Arbitrum receives, and who will manage this portfolio of small caps? Should DAO-held tokens be used for treasury diversification, sold for cash, burned, used in retroactive reward programs, etc? This doesn’t have to be fully answered right now, but a vision is helpful.

We would heed caution on starting this program until after the results of the Polygon initiative are clear. The small cap tokens from the initial funding round are still partly locked for the stated Polygon projects. If the majority of early buyers participate expecting a pump, due to a “price floor” and low float, it may actually create sharp price crashes once lockups fully expire. This could make the Arbitrum DAO allocation worth a lot less. A good way to mitigate long-term issues around token price is to effectively diligence projects. Tokens that actually have some sort of usecase or financial backing demonstrate less downside volatility. The counterargument is that this is following a more venture-esque approach with a few expected home runs. But when the portfolio of projects is limited to 10, the instance of a home run can also be limited since there’s always a luck component to venture investing, even if the initial vetting process has a stated ~4% acceptance rate.

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First and foremost, Griff, I want to applaud you for establishing such a net-positive model. Often grant programs are large gambles for the ecosystem. But, the alignment here has managed to assuage the vast majority of economic risk while also preserving, and in some ways expanding, benefits to the recipients.

I echo a lot of the positive feedback as well as some of the points of consideration (namely, token necessity) which have been stated, and you largely addressed.

A couple of new points of consideration which I’d love your thoughts on are around administrative considerations for the DAO. If we assume this becomes a readily adopted and seasonal model utilized by the DAO, the treasury, in a sense, becomes a venture portfolio with micro allocations of dozens of q/acc funded project tokens. I by no means think this is a blocker, but I do believe this opens a couple of avenues warranting greater consideration:

  1. Accounting: How does the process of acquiring, selling, and transferring these micro investments impact treasury accounting?
  2. Operational Decision Making: The decision tree around selling (reinvesting?), staking, voting with, or otherwise utilizing these received assets seems important. Simultaneously, I am not sure that it would warrant a DAO proposal for every adjustment. Perhaps, within the proposal, there should be some affordance toward a portfolio manager or management team, or this could simply be an added role ascribed to the q/acc program managers. In either case, this would be a need that persists well beyond the round itself, so maybe partnering with other capital management initiatives already extant might be a solution as well.

Interested to hear your thoughts and past experiences on these points ^

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From a market-oriented standpoint, the Quadratic Accelerator hits all the right notes. It transforms ecosystem funding into an organic experiment and I love it!.

Really aligned with this direction. qacc is the kind of experiment we need more of — market-driven, lean, and focused on real outcomes without relying on artificial support, it’s really interesting how the clear winner of season 1 was x23ai a product that probably all delegates are using.

In most ecosystems, public goods funding ends up rewarding participation or presence, not results. qacc flips that script — it ties funding to actual demand, and that’s the right approach. If no one cares about your project, it doesn’t get resources. Simple.

I also like that this isn’t trying to become a permanent bureaucracy. It’s scoped, targeted, and has clear bounds. Run it, measure it, and decide based on outcomes. That’s exactly how governance experiments should be done — small, measurable, and easy to shut off if it doesn’t work.

From a tokenomics angle, it’s a smart structure. Instead of flooding the market with ARB that gets dumped, it locks it up and releases it only when there’s traction. That protects token value while still incentivizing builders.

Fully support trying this out. (:blue_heart:​,:gem_stone:)​

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12

We absolutely are excited to tailor cohorts to each chain’s priorities, at least from our side. I am excited to see the finalization of SOS to do so. Also of course, if we have programs running on Arbitrum and Polygon, they will have 2 different applications and the teams will sort themselves. In general, many teams will have a preference for what chain they will want to launch on, and they really get the final choice.

DAOs will fund each cohort separately. As far as funding model, we have an initial deployment fee, a 10% capital allocation fee, trading fees from DEXs and we get some of each tokens that are launched.

We are currently building a new UI that can handle multiple chains and will be shared with Arbitrum and Polygon to amplify network effects, IMO the people buying tokens care more about the project than necessarily what chain they are on, so we want to make the experience as easy as possible.

And of course, we are a small team and will be managing both chains with the same team.

I would imagine we would work with an AAE, probably the foundation… as that seems to be the direction the DAO is moving.

For KPIs I have them here:

KPIs & Success Metrics

To measure success, we will track:

:pushpin: Onchain Growth – 10x – Market cap growth (in ARB) compared to ARB granted to teams. E.g If we give the teams a total of 1M ARB, we will produce 10M ARB worth of market caps

:pushpin: ARB Demand Ratio – 25% – Ratio of ARB in protocol vs ARB granted to teams. E.g If we give the teams a total of 1M ARB, we will capture 1.25M worth of ARB in the protocol, creating 250k worth of ARB buying pressure.

:pushpin: Sustained Value – 1 year – Long-term market cap growth (in ARB) of tokens. E.g The 10x growth will last for at least a year.

:pushpin: First-time Arbitrum Users – 500 – Number of q/acc participants new to Arbitrum that buy more than $10 of tokens. E.g 500 users that pass our sybil filter will have never used Arbitrum before.

:pushpin: On-Chain Activity – Varied – Trading volume, user participation, and liquidity metrics. This will be tracked but it is so gameable, it’s not worth creating an exact metric, but we will create a lot of onchain activity.

We aren’t planning to run them at the same time, but I’ll be honest, we can’t always control these things. There are a lot of timelines and resources to manage with lots of different teams so we will just do what we think is best given the situation. There might be some network effects to running them at the same time though! So we’ll think about it :thinking:

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They are not project specific, they are mostly economic, and the data is very public

The default graduation KPIs consider several factors:

  1. Minimum 50% of the supply circulating (which will take ~14 months)
  2. Market Cap above $15M (at $8M market cap ($1M in the bonding curve) we turn off minting)
  3. Enough liquidity in DEXs to handle the supply.
  4. (For the first few) Sign off from the q/acc team to protect community from unknowns.

However, we are early in experimenting with this mechanism and have gotten feedback that this is too strict so we are currently working on an accelerated graduation plan that can allow teams to change from time based vesting for their token unlock to a KPI based unlock for the Team’s token. This is still early in it’s design though, and no promises it will validated enough to make it into the first season.

Another great question! I would personally advise to hodl and count it as treasury diversification, but we will need to get advice on this from some AAEs about the ideal address to set in the protocol for Arbitrum’s hodlings. I would imagine the AF will hold the funds and it would be managed by some treasury committee… but the initial tokens are locked for a year and then streamed for a year… so there is a lot of time to figure out the management.

Wow! You really get it! Thank you for diving in so deep to this, it’s pretty complicated but you really seem to understand the mechanism.

Yes, not every team is going to be a winner… some projects will fail and the tokens won’t be worth much… but as you said that is standard for small cap investments (and grant programs). The projects have 6 months to prove token demand before the buyers in the q/acc round have their tokens start to unlock, and a year before the larger team allocations start to unlock.

The best thing to do is to look at the quality of our projects and decide if you think they are worth betting on.

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  1. Polygon did not want to own any of the tokens surprisingly… We offered it to them, but their legal set up for their grant programs didn’t work for it, so we don’t have direct experience with this. But I can outline how the process works:

Everytime a token is launched, 5% of the initially minted supply (320k tokens) would be locked for a year in the Payment Processor contract and then streamed for a year, claimable by an address that an AAE would control (I assume a multisig).

We would need guidance from an AAE on this IMO.

  1. I would steer clear of the bloat that would come with bringing in a “portfolio manager” or equivalent because when you bloat a proposal with money managers, things get expensive and inefficient. This was happening early on in Arbitrum where multisig signers were getting $6k a month to sign a tx… Then we started MSS, which was more efficient… but still not ideal. Now we are headed towards the AF taking on most payment functions.

I assume one of the AAE’s can take this on for the DAO. Given the diagram below it fals under either the AF or Entropy.

Screenshot 2025-05-16 at 4.47.57 PM
Screenshot 2025-05-16 at 4.47.57 PM1920×1074 119 KB

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Below is a v1 pre-vote feedback report from the Event Horizon community and agents (note: these perspectives are subject to change with the inclusion of continued forum discussion):

Summary

Below is a comprehensive analysis of the proposal and the community’s reasoning, along with a simulated expert debate, recommendations for improvements, and novel enhancements suggested by the swarm.

Votes in favor of the proposal: 226 out of 230.

─────────────────────────────

Rationales

– Innovative: Most voters favor the Quadratic Accelerator (q/acc) because it offers an innovative, mechanism‐driven alternative to traditional grant programs that have long suffered from issues such as immediate token sell pressure, misaligned incentives, and unsustainable funding. The proposal’s design – using quadratic funding, token lock‐ups, ABC bonding curves, and fair‐launch mechanisms – is seen as an effective way to create self‐sustaining token economies that align the interests of projects, the Arbitrum DAO, and the community.

– Track Record: Voters are reassured by q/acc’s proven track record on Polygon’s zkEVM, where very rigorous project selection (acceptance rates <4%), clear KPIs, and strong onchain growth (10× market cap multiplier, new user adoption, etc.) demonstrated tangible impact.

– Assurances Robust risk-mitigation strategies (smart contract audits, treasury volatility buffers, regulatory safeguards, and multisig DAO oversight) further instill confidence in the proposal’s long‐term value creation and ecosystem alignment.

Overall, the model is seen as a way to drive significant ARB demand, improve key onchain metrics, and transform the funding process by letting the community capture the upside of a project’s success.

Arguments Against (Hypothetical Critiques):

– Complexity & Overhead: Some worry that the multi‐layered mechanisms (bonding curves, lock‐ups, fair launches) might create user friction or become too complex for new entrants.
– Replication Risk: Although successful on Polygon, market dynamics on Arbitrum may differ. Skeptics question whether similar growth and token demand can be replicated on Arbitrum and whether the program might expose the ecosystem to unforeseen risks.
– Regulatory & Technical Uncertainty: Despite risk mitigations, the complexity of token economies and evolving regulatory norms could pose challenges that are not fully addressed.

For Mitigating Potential Weaknesses:

• Simplify Mechanisms Where Possible—Streamline the number of moving parts to reduce user confusion while maintaining core benefits.
• Strengthen Regulatory Buffers—Consider additional geoblocking measures and a tiered approval process for larger grant allocations.
• Monitor and Adapt—Establish a clear feedback cycle after Season 1 on Arbitrum to fine-tune the model based on real-world performance data.

Simulated and Truncated Debate

Representative A (Proponent): q/acc addresses longstanding funding inefficiencies. It locks capital into growth cycles, deters short-term dumping, and encourages community alignment. The 4% acceptance rate on Polygon signals rigor, not inflation.

Representative B (Skeptic): Mechanically, it’s promising. But the operational complexity might deter use, and its replicability on Arbitrum isn’t guaranteed. Ecosystem dynamics are non-transferable. What mechanisms will enforce long-term accountability?

Representative A: Three: First, tie fund disbursements to real usage metrics—retention, DAU, onchain actions. Second, create incentives for ecosystem-level contributions—tools, integrations, open standards. Third, allow projects to opt-in to ARB buyback pledges post-launch. These create structure, interdependence, and voluntary alignment.

Representative B: Retention-based milestones are critical. Public goods incentives are good—but underrepresented. The buyback concept is rare in grant ecosystems and could shift norms. What ensures the DAO learns from failed projects?

Representative A: Every project should submit post-program reporting: metrics, learnings, failures. These should be published, curated, and used to shape cohort design. Transparency compounds governance intelligence.

Representative B: With those extensions—tiered funding, cross-product rewards, ARB buybacks, and structured postmortems—I’d consider the proposal not just viable, but a new baseline. Provided UX and compliance hurdles are addressed, this becomes a scalable model.

Voter Conviction Before and After Discourse

Strength of Conviction and Voter Sway Analysis Before the Debate:

– Proponents’ Conviction: ~90/100
– Skeptics’ Conviction: ~40/100

After the Debate:

– Proponents remain strongly convinced at ~85/100—confidence softens slightly due to recognition of execution complexity but remains high given the track record and built-in mitigations.
– Skeptics shift to ~50–60/100 with integration of specific improvements:

  • Cross-Product Rewards addresses ecosystem-wide value creation.
  • ARB Buyback Commitments improves long-term alignment with ARB.
  • Post-Program Reporting builds transparency and institutional learning.

Estimated Voter Sway: ~15–20% of voters previously on the fence likely to support the proposal if these enhancements are committed to, while hardened opposition remains minimal (<5%).

Novel Improvements

1. Cross-Product Rewards: Create bonus incentives for projects that build shared infrastructure, tooling, or integrations used by other q/acc participants. This promotes collaboration and ecosystem cohesion.

2. ARB Buyback Commitments: Allow projects to voluntarily commit a portion of future revenue toward ARB buybacks or returning value to the DAO treasury. It’s an opt-in model that aligns successful projects with long-term ARB demand.

3. Post-Program Reporting: Require all funded projects to submit a standardized post-mortem (successes, failures, metrics, and lessons learned). This builds institutional knowledge and strengthens DAO decision-making in future cohorts.

Conclusion

The Quadratic Accelerator proposal is widely supported for its innovative approach that addresses longstanding issues in traditional grant programs. A strong case is made through its clear tokenomics, proven success on Polygon, and comprehensive risk management. The simulated debate highlights that while there are execution and complexity concerns, these can be mitigated through additional UX improvements, further audits, and strengthened community engagement. The proposed novel enhancements—from tiered funding to post-program reporting—add even more robustness and long-term alignment to the initiative. Overall, the proposal is seen as a transformative opportunity that, with further refinements, should significantly enhance the Arbitrum ecosystem’s sustainability and growth.

2 Likes
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Really liking the direction here, especially the effort to move away from traditional grant farming and build something that rewards long-term builders. Just curious — since projects will be issuing tokenized grants, have you thought about how to handle potential risks in secondary markets? Like speculative trading or farming behavior after token issuance. Are there any built-in mechanisms to ensure tokens stay tied to actual product milestones, rather than becoming a short-term hype vehicle?

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WOW! Thats amazing! I love that you guys added an AI Agent swarm to your offering! This is super cool!

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Yes! Bonding curves actually dampen volatility, as the price goes up, more tokens are minted, as the price goes down, tokens are burned. This desing naturally combats the a short-term hype cycles.

Tying token prices to product results however is just impossible sadly… I wish the free market worked that way :frowning: Each project that goes through our program must have a plan for ACTUAL token utility. So there will be some correlation of course… but in my experience, tokens go up and down based on anything but product advancement.

4 Likes
19

Thank you, @Griff, for bringing this compelling proposal to the Forum. We, who are also members of the Gitcoin Governance Council, have been supportive of quadratic funding and other innovative grant distribution models that align clear community signaling with meaningful incentive structures. This proposal is exciting as it introduces novel mechanisms by combining ABC bonding curves and quadratic funding, explicitly designed to address persistent issues like sell pressure on ARB and incentive misalignment that often plague traditional grants.

However, precisely because we understand both the promise and the practical challenges inherent in such mechanisms, we have identified several strategic points we believe warrant further clarity before proceeding to a formal vote.

1. Effectiveness for funded projects

Liquidity vs. Capital Needs

Early-stage projects typically indicate that their primary constraint is operational capital rather than secondary market liquidity. While ABC bonding curves lock 50k ARB per project, complemented by matching pools, we are concerned about the actual effectiveness of this liquidity provision.

Examining the Polygon pilot, particularly the top-funded cohort such as x23.ai, the current liquidity is under $120k against a fully diluted valuation (FDV) of approximately $800k (link). Considering the scale of investment, such limited liquidity may neither significantly extend project runway nor improve token price discovery. In practice, it could inadvertently amplify token launch risks rather than alleviating funding pressures.

We ask you to explicitly evaluate the liquidity provision mechanism’s empirical effectiveness in meeting builders’ core financial needs to see if this is better than simply giving funds to them.

You already provided some perspectives on this by clarifying detailed targeting of this funding, but we’d appreciate further clarity on if this is actually helping projects based on some actual data.

Token issuance complexity

Requiring every recipient to spin up a live token adds a layer of operational drag that many seed-stage teams are ill-equipped to handle. Beyond smart contract deployment, founders must craft vesting schedules, mediate community expectations, often before product-market fit.

Although it seems there is some legal support provided, that’s not the entirety of this complexity. How do you think this complexity/cost can be overcome or mitigated?

2. Effectiveness for Arbitrum DAO

Sell Pressure Mitigated, or Essentially Just Burned?

We recognize the ABC mechanism significantly reduces immediate sell pressure on ARB tokens by locking them within liquidity pools. However, this approach effectively immobilizes capital in very low-turnover micro-pools (in certain amount of cases), functionally resembling a token burn. Or, is there any way the DAO can reclaim ARB provided at some point?

Incentive Alignment & Upside Capture

Although receiving 5% of each project’s token issuance is attractive, governance tokens from small-cap projects are notoriously illiquid and may impose significant portfolio-management overhead relative to the potential return. If we are to focus on this aspect, employing a dedicated investment vehicle, similar to the GCP, might offer a more strategically sound approach to capturing economic upside from supported projects. We’d love to understand the rationale of gaining tokens of projects that this type of funding mechanism targets actually benefits Arbitrum DAO financially after some operational overhead.

Comparative Precision and Evaluation Metrics

Gitcoin’s recent transition from broad quadratic funding (QF) rounds to the more focused DDA framework underscores some needs toward precision capital deployment. Likewise, Arbitrum’s own DDA pilot programs have demonstrated the operational advantages of DDA-based funding.

In that regard, it would be beneficial to outline explicitly how q/acc’s structure specifically outperforms DDA on key dimensions such as project targeting accuracy, evaluation overhead or so.

Or, it is also beneficial to demonstrate strong post-launch KPI performance (revenue, user retention, and actual product-market fit) clearly linked to the ABC and quadratic funding structures. Transparent and detailed reporting of these outcomes will ensure this design could potentially outperform the existing funding scheme.

3.Requests for the next revision

At this point, we are reluctant to endorse the proposal. Our hesitation stems from several points noted above: certain aspects remain insufficiently clear, and we are not yet convinced that the mechanisms outlined would potentially provide an effective solution for the Arbitrum DAO or its broader ecosystem. Thus, we still think it would be more straightforward to do a simple quadratic funding rather than this mechanism if we are to do something different from the existing one.

If there are existing data, empirical findings, or even well-reasoned hypotheses that could bolster the current design and address the uncertainties we have raised, we would greatly appreciate it if you could share them. Such evidence would go a long way toward strengthening the proposal and facilitating an informed decision.

To reiterate, we do recognize the value and importance of innovative experiments of this kind, and in principle we are eager to lend our support. Our goal is simply to ensure that any initiative we back is both robust and beneficial to the community, at least hypothetically.

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Thank you for presenting such an ambitious and thoughtfully constructed proposal. We appreciate the innovative approach q/acc brings to the table, especially its focus on sustainable token economies, on-chain capital formation, and reducing the inefficiencies seen in traditional grant programs. The use of bonding curves, quadratic funding, and protocol-aligned token launches aligns well with Arbitrum’s ethos of experimentation and community-driven development.

That said, before moving forward to an onchain vote, we’d like to share two key areas we believe could be improved to enhance the proposal’s impact and sustainability:

Strengthen Long-Term Value Alignment with Arbitrum

Given q/acc’s track record on Polygon and cross-chain operability, we’d like to see stronger mechanisms that ensure enduring alignment with Arbitrum. While this deployment may initially target Arbitrum-native teams, there’s a risk that some projects might migrate or operate cross-chain post-launch, diluting the value created for the Arbitrum ecosystem.

We suggest exploring:

  • Exclusive launch commitments or delayed multi-chain deployment periods to retain stickiness for teams launched through q/acc.
  • ARB-denominated milestones or reward unlocks that incentivize measurable contributions to the Arbitrum ecosystem (e.g., transactions generated, unique users).
  • Encouraging participating teams to explore Orbit deployment paths or integrate deeply with Arbitrum-native infra and community programs.

Anchoring q/acc participants more tightly to Arbitrum will ensure the DAO captures more lasting upside from its initial investment.

Recalibrate Grant Allocations to Improve Capital Efficiency

The proposal requests $500K in ARB for project bonding curve collateral, roughly 50% of the total ask. While we understand the mechanism is structured to be non-dilutive and potentially recoupable, it still represents significant upfront capital risk.

We believe the DAO could benefit from a more modular and performance-based allocation model, particularly for early-stage cohorts.

Suggestions include:

  • Reducing the per-project ARB allocation to $25–30K for initial cohorts, scaling upward based on community traction or usage milestones.
  • Conditioning the release of collateral on demonstrated KPIs like volume, active users, or protocol fees.
  • Defining a clawback or reallocation mechanism if projects fail to graduate or meet minimal engagement thresholds.

This would allow the DAO to experiment with the q/acc model while containing downside exposure, especially in the program’s initial season.

q/acc offers a novel approach to ecosystem development that feels well suited to Arbitrum’s DeFi leadership and innovation-focused community. If appropriately structured and aligned with Arbitrum’s long-term strategy, this program has the potential to complement traditional grant structures with a more self-sustaining alternative.